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15 Multiple Choice Questions about Financial Analysis (Balance Sheet – Income Statement – Cash Flow Statement) 1. What is the main purpose of balance sheet analysis? A. Calculation of VATB. Evaluation of the company’s financial positionC. Control of salesD. Preparation of the budget 2. What does total assets represent on the balance sheet? A. The company’s profitsB. The company’s liabilitiesC. The resources owned by the companyD. Cash flows 3. Which of the following belongs to current assets? A. BuildingsB. MachineryC. InventoryD. Long-term loans 4. What does the current ratio measure? A. Profitability of the companyB. Ability to cover short-term liabilitiesC. Speed of receivables collectionD. Relationship between equity and liabilities 5. What does the liabilities side of the balance sheet include? A. Revenues and expensesB. AssetsC. Liabilities and equityD. Cash flows 6. Which ratio is used to evaluate capital structure? A. Liquidity ratioB. Profitability ratioC. Leverage ratioD. Inventory turnover ratio 7.…

24 ACCOUNTING BASICS THAT EVERYBODY NEEDS TO KNOW 1. ASSETS Resources owned by a business that have economic value. 2. LIABILITIES Obligations or debts owed by a business. 3. EQUITY The owner’s interest in the business. 4. REVENUE Income earned from normal business operations. 5. EXPENSES Costs incurred in the process of earning revenue. 6. PROFIT Financial gain after deducting expenses from revenue. 7. LOSS Occurs when expenses exceed revenue. 8. CASH FLOW The movement of money in and out of a business. 9. GROSS MARGIN Revenue minus the cost of goods sold. 10. NET INCOME Total revenue minus total expenses. 11. BALANCE SHEET Financial statement showing assets, liabilities, and equity. 12. INCOME STATEMENT Financial statement showing revenue, expenses, and profit over time. 13. CASHFLOW STATEMENTS Financial statement showing cash inflows and outflows. 14. DEBITS AND CREDITS Entries used to record transactions in double-entry accounting. 15. JOURNAL ENTRIES Records of…

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