Preparation of the Financial Statements

Question 1

this will help determine the business financial position at a specific point in time and over a period of time

Answer 1

Financial statements

Question 2

The information from the accounting journal and the general ledger is used in preparation of your business financial statements, these are?

Answer 2

Income statement
statement of retained earnings
balance sheet
statement of cash flows

Question 3

is almost uniquely important because it shows the overall profitability of your company for the time period in question

Answer 3

Income Statement

Question 4

Also called a profit and loss statement

Answer 4

Income statement

Question 5

this is the bottom line of the income statement

Answer 5

Net income or profit

Question 6

it is either retained by the firm for growth or paid out as dividends to the firm’s owners and investors, depending on the company’s dividend policy

Answer 6

Net income

Question 7

Net profit or loss must be calculated before the statement of retained earnings can be prepared

Answer 7

Statement of Retained Earnings

Question 8

It is the second financial statement to be prepared in the accounting cycle

Answer 8

Statement of Retained Earnings

Question 9

This statement shows distribution of profits that are retained by the company and which re distributed as dividends

Answer 9

Statement of Retained Earnings

Question 10

is the financial statement that illustrate the firm’s financial position at a given point in time – the last day of accounting cycle

Answer 10

Statement of Financial Position

Question 11

In Statement of Financial position, ___ are what the business owns

Answer 11

Assets

Question 12

In Statement of Financial position, ___ are what the business owes

Answer 12

Liabilities and Equity

Question 13

This statement compares two time periods of financial data and shows how cash has changed in the revenue, expenses, asset, liability and equity accounts during these time periods.

Answer 13

Statement of Cash Flow

Question 14

this financial statement must be prepared last because it takes information from all three previously prepared financial statements

Answer 14

Statement of Cash Flow

Question 15

shows and records the revenue when it was earned

Answer 15

Accrual Basis

Question 16

Provides a record of revenue actually received, from the firm’s customers in most cases

Answer 16

Cash Basis

Question 17

(T or F)Statement of Cash flows shows the firm’s position on a Accrural basis rather than a Cash basis

Answer 17

False