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Homework answers / question archive / Chapter 14 Accounting and Financial Statements Quiz 1

Chapter 14 Accounting and Financial Statements Quiz 1

Business

Chapter 14 Accounting and Financial Statements Quiz

1. Only businesses use accounting information to demonstrate how their funds are being used. 
Select one: True False
2. Bookkeeping is only one aspect of accounting and involves the recording of routine, day-to-day business transactions. 
Select one: True 
False 
3. Budgets are valuable tools because they break down cash inflows and outflows to help individuals and organizations clearly see where financial problems may lie. 
Select one: True False 

4. Net income is the profit (or sometimes loss) after all expenses, excluding taxes, have been deducted from revenue. 
Select one: True 
False
5. Balance sheets show revenues, expenses, and profits. 
Select one: True False  
6. Owners' equity includes owners' contributions to their business along with income retained to finance growth and development. 
Select one: True  False 

7. Negative cash flow always indicates that a company is in financial trouble. 
Select one: True False 
8. After ratios are computed, it is not much help to compare them with those of similar organizations. 
Select one: True False  
9. Liquidity ratios show how fast a company can turn current assets into cash to pay off short-term debt. 
Select one: True  False 

10. Debt utilization ratios measure how much debt a company is using relative to other sources of capital. 
Select one: True 
False 
 

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