1.4 Financial Statements Flashcards
(2 cards)
1
Q
Common Ratios
A
2
Q
CFP Board released exam question 1999
Robert Smith asks for your help in preparing his cash flow statement. He tells you that his salary before taxes is $250,000 and that he has no mortgage on his home. Which of the following statements is true about Robert’s cash flow statement?
A
The value of the home would be an income source since there is no mortgage.
✘ The value of the home would be an asset.
The taxes on his salary would be a liability.
✔ The taxes on his salary would be an expense.
Option A is incorrect because Robert’s primary residence does not generate income and options B & C refer to entries on a balance sheet.
