Business 201 - Chapter 5

Question 1

Three main financial statements

Answer 1

Income Statement
Balance Sheet
Statement of Cash Flow

Question 2

Income statements responds to the question of…?

Answer 2

Are we earning a profit

Question 3

Income statement identifies profit by …?

Answer 3

Revenue - expenses

Question 4

Income statements are a good barometer of …?

Answer 4

Efficiency and Effectiveness

Question 5

Sales Revenue - Product Costs =

Answer 5

Gross Profit Margin

Question 6

Gross Profit Margin - general operating expenses =

Answer 6

Earnings before interest and taxes

Question 7

Earnings before interest and taxes - interest payments =

Answer 7

Earnings before taxes

Question 8

Earnings before taxes - taxes =

Answer 8

net profit (or loss)

Question 9

Balance sheet mainly displays

Answer 9

resources and financial obligations

Question 10

Assets =

Answer 10

Liabilites + Owners Equity

Question 11

Balance sheet is a snapshot of

Answer 11

Position at a specific point in time

Question 12

Balance sheet is a good barometer of

Answer 12

Capacity and liquidity

Question 13

Assets are

Answer 13

Resources at disposal that can be used to generate business activity

Question 14

Current assets are

Answer 14

liquid
cash
easily converted to cash

Question 15

Non current assets are

Answer 15

fixed
capital assets
equipment
land
non tangible assets

Question 16

Liabilites

Answer 16

debts or financial obligations

Question 17

Short term liabilites

Answer 17

pay within the current year
line of credit
accounts payable

Question 18

Long term liabilites

Answer 18

extend into future
loans
mortgages
bonds
leases

Question 19

Owners equity

Answer 19

value of capital received from the owners, includes retained earnings

Question 20

Statement of cash flows

Answer 20

Shows total movement of cash in and out of a business

Question 21

Statement of cashflows is the best source for

Answer 21

current and projected liquidity

Question 22

Statement of cashflows summarizes

Answer 22

sources and uses of an organizations cash

Question 23

Designated Restricted Assets

Answer 23

assets earmarked for a specific purpose within a NFP

Question 24

NFP true surplus funds avaliable =

Answer 24

cash and near cash assets - designated restricted cash and near cash assets