TRUE OR FALSE

Question 1

Notes to financial statements are important because they do not warn stakeholders about potential financial risks

Answer 1

False ( they do warn)

Question 2

financial statements are crucial documents that summarizes a company’s financial health

Answer 2

True

Question 3

Balance sheet reports a company’s revenues, expenses, and profits or losses over specific period

Answer 3

False (Income statement)

Question 4

A key purpose of notes to financial statements is to disclose potential financial obligations, such as lawsuits or pending tax disputes

Answer 4

True

Question 5

Segment reporting- for companies operating in multiple business sectors, this note provides details on revenues and profits by segment

Answer 5

True

Question 6

Financial reporting does not help companies meet legal and tax obligations

Answer 6

False (they help)

Question 7

Nites to financial statements, also known as footnotes, are additional explanations and details provided along with financial statements to give a clearer picture of ab organizations financial position and performance

Answer 7

True

Question 8

Cashflow statement shoes changes in shareholders iwnership over a period

Answer 8

False (statement of changes in equity)

Question 9

The balance sheet equation: asset + liability= equity

Answer 9

False (asset= liability+ equity)

Question 10

Financing activities are cash from issuing shares, loans or dividends

Answer 10

True

Question 11

Financial statements are formal records of an organizations financial activites, summarizing its financial position, performañce, and cash flows over a specific period

Answer 11

True

Question 12

Financial statements are used by various stakeholders including investors and shareholders for strategic planning

Answer 12

False (management)

Question 13

Investors and banks use financial statements to assess a company’s stability

Answer 13

True

Question 14

Financial reporting is essential for businesses, investors, creditors, regulatory bodies, and the public to understand an entity’s financial health, profitability, and cash flows

Answer 14

True

Question 15

Statements of changes in equity tracks movements of cash in and out of a business, categorized into operating, investing and financing activites

Answer 15

False (Cashflow statement)

Question 16

Equity are financial obligations such as loans, accounts payable, and salaries owed

Answer 16

False (Liability)

Question 17

Tax Liabilities and deffered taxes- explains tax expenses, tax credits, or any deferred tax liabilities/assets.

Answer 17

True

Question 18

Net Income( Profit or Loss)= Revenue-Cost of goods sold

Answer 18

False ( Gross profit)

Question 19

Income statement provides a snapshot of a company’s financial position at a specific date

Answer 19

False (Balance Sheet)

Question 20

Financial reporting is the process of disclosing financial information about a business, organization, or individual to provide transparency and accountability to stakeholders

Answer 20

True