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Financial Statements 1 Test 6

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Financial Statements 1 Test 6
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The stakeholders are ______ of financial statements.
    Solution
    A stakeholder is either an individual, group or organization who is impacted by the outcome of a project. They have an interest in the success of the project, and can be within or outside the organization that is sponsoring the project. Stakeholders can have a positive or negative influence on the project.
     Financial statements are reports prepared by a company’s management to present the financial performance and position at a point in time. A general-purpose set of financial statements usually includes a balance sheet, income statements, statement of owner’s equity, and statement of cash flows. These statements are prepared to give users outside of the company, like investors and creditors, more information about the company’s financial positions.
    These financial statements are used by stakeholders such as bankers, government, creditors, debtors etc.

  • Question 2
    1 / -0
    _______ is concerned about the rights of all stakeholders are protected.
    Solution
    A person, group or organization that has interest or concern in an organization.
    Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources.
    Not all stakeholders are equal. A company's customers are entitled to fair trading practices but they are not entitled to the same consideration as the company's employees.
    Stakeholders have interest in business organisation and hence they have some rights against business, protection of which is look after by government.
  • Question 3
    1 / -0
    _________ is interested in adequacy of profits only as an assurance of return of principal and interest back in time.
    Solution
    Bank is interested in adequacy of profits only as an assurance of return of principal and interest back in time. Bank is equally concerned about the form in which the assets are held by the business. When more assets are held in cash or near cash form, the aspect is known as liquidity.
  • Question 4
    1 / -0
    ________ is interested in information about past profits and financial position.
    Solution

    Everyone in business must keep records. Keeping good records is very important to business. Good records will help owner do the following:

    • Monitor the progress of your business
    • Prepare your financial statements
    • Identify sources of your income
    • Keep track of your deductible expenses
    • Keep track of your basis in property
    • Prepare your tax returns
    • Support items reported on your tax returns.
  • Question 5
    1 / -0
    The term current assets does not include _____________.
    Solution
    Current Assets are those which generated during the course of business operations and changes with each of the transaction. Examples are sundry debtors, stock in trade, Bills receivables, cash on hand, cash at bank etc. 

    Furniture is an item of fixed assets and to be shown in the assets side under the heading of fixed assets. 
  • Question 6
    1 / -0
    Operating profit is the profit a business earns from the business through the _________.
    Solution
    Operating Profit is the profit which a business Earns through main business Activities of the business.
    The money earned from the core business is known as operating profit.
    The formula for calculating the Operating profit is 

    Operating Profit = Gross Profit – Operating Expenses – Depreciation – Amortization.
    or
    Operating Profit =     Net Profit + Interest Expenses + Taxes
  • Question 7
    1 / -0
    Which of the following items are not considered while calculating operating profit?
  • Question 8
    1 / -0
    EBIT stands for ____________.
    Solution
    Earning before Interest and Tax is termed as "EBIT" in short. 

    Earning before Interest and Tax means the situation where the interest paid and taxes are not considered while deducting the expenses from the income. 
  • Question 9
    1 / -0
    Sales - Cost of goods sold = ______________.
    Solution
    Gross Profit is referred as the profit generated out of the core trading activity of the business. 
    This can be calculated as: 

    Sales - Cost of goods sold = Gross Profit

    Cost of goods sold= Opening Stock + Purchases - Closing Stock 
  • Question 10
    1 / -0
    ___________ is finance expense.
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