Question

1. The three heading lines of financial statements typically include which of the following?

a. name of auditor, statement title, fiscal year end

b. statement title, time period of report, name of preparer

c. company headquarters, statement title, name of preparer

d. company, statement title, time period of report

2. Working capital is an indication of the firm’s ________.

a. amount of noncurrent liabilities

b. amount of noncurrent assets

c. asset utilization

d. liquidity

3. Which of the following is the correct order of preparing the financial statements?

a. income statement, statement of owner’s equity, balance sheet, statement of cash flows

b. income statement, statement of cash flows, balance sheet, statement of owner’s equity

c. income statement, balance sheet, statement of cash flows, statement of owner’s equity

d. income statement, balance sheet, statement of owner’s equity, statement of cash flows

4. The accounting equation is expressed as ________.

a. Assets – Noncurrent Assets = Liabilities

b. Assets = Liabilities + Investments by Owners

c. Assets + Liabilities = Owner’s Equity

d. Assets = Liabilities + Owner’s Equity

Answer 1

Ans 1 D

company, statement title, time period of report

Reason:-

This is the heading of each financial statement

Ans 2

d. liquidity

Reason: - Working capital= Current asset - Current Liab

Ans 3

a. income statement, statement of owner’s equity, balance sheet, statement of cash flow

Ans 4

d. Assets = Liabilities + Owner’s Equity

Reason:- As per fundamental accounting principle

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