Company Performance Quiz Answers

Additional Quiz Answers

Quiz 1: Orientation Quiz

Q1. This course includes _ modules.

Q2. I am required to purchase a textbook for this course.

True
False

Q3. Which of the following activities is NOT required in each module?

Watch the lecture videos
Complete the practice quizzes
Complete the module quizzes

Complete the peer-reviewed assignment

Q4. The following tool(s) will help me use the discussion forums:

Upvoting posts

Reporting inappropriate posts
Following a thread
All of the other options are correct.

Q5. If I have a problem in the course I should:

Email the instructor
Call the instructor

Drop the class
Report it to the Learner Help Center (if the problem is technical) or to the Content Issues forum (if the problem is an error in the course materials)

Quiz 2: Practice Quiz

Q1. Revenue should only increase once the company has received a cash payment. True or false?

True
False

Q2. The income statement addresses the measurement question, “What do you own?” True or false?

True
False

Quiz 3: Practice Quiz

Q1. Cost of goods sold refers to the cost of inventory being exchanged for payment when the inventory item is sold. True or false?

True
False

Q2. A company must choose a cost flow assumption for determining cost of goods sold based on the physical flow of goods. True or false?

True
False

Additional Quiz Answers

Q1. What is the measurement question that is not answered by the balance sheet but can be answered by looking at the income statement?

What do you owe?
What do you own?
How did you perform?

What do you know?

Q2. What financial statement looks at what occurred during a period of time that changed the company’s financial position?

Both balance sheet and income statement

Statement of cash flows
Income statement
Balance sheet

Q3. Which account would be found on the income statement?

Revenue
Cost of goods sold

Selling, general, and administrative expense
All of the above

Q4. Say you buy a sandwich from a shop. The shop’s revenue is an increase in assets or a decrease in liabilities brought about by a normal activity for the shop. True or false?

True
False

Q5. Revenue has to be brought about by an activity that is central to the company’s normal operations. True or false?

True
False

Q6. What is revenue minus cost of goods sold equal to?

Gross profit
Total expenses
Net income

Income taxes

Q7. Income taxes are deducted to calculate net income. True or false?

True

False

Q8. An athletic apparel store that sells you a cupcake would report that money as revenue on its financial statements. True or false?

True

False

Q9. The income statement represents a substitute attribute for a company’s what?

Performance

Position
Liquidity
All of the above

Q10. What are the “goods” defined as in “cost of goods sold”?

Assets purchased with the intent to be sold to customers
Assets manufactured with the intent to be sold to customers

Both of the above
None of the above

Q11. There is no relationship between cost of goods sold and inventory. True or false?

True
False

Q12. The total cost of goods available for sale can be thought of as the cost of inventory that was sold during the year plus the cost of inventory that wasn’t sold left on the balance sheet as inventory. True or false?

True
False

Q13. Which is NOT a cost flow assumption?

LIFO
Average cost
SIFO

FIFO

Q14. What is an important indicator of the company’s performance and future prospects?

Cost of goods sold

Gross profit
Average cost
LIFO

Q15. The cost flow assumption that a company adopts need not match the physical flow of goods. True or false?

True
False

Q16. If a company has a large gross profit, it might suggest what about the company?

It is more at risk to small changes in the price of manufacturing.
It is less at risk to small changes in the price of BOTH purchasing inventory and manufacturing.

It is less at risk to small changes in the price of purchasing inventory.
It is less at risk to small changes in the price of manufacturing.

Q17. What is another name for cost of goods sold that might appear instead on the income statement?

Cost of sales
Revenue
Cost of assets

All of the above

Q18. If a company adopts a FIFO cost flow assumption and sells only one item during the year, the cost of the first item of inventory it acquired would be the cost used on the financial statements, regardless of whether the item acquired first was the one actually sold. True or false?

True

False

Q19. How would a company assign costs when using the average cost assumption?

Calculate the cost using the last-in-first-out approach

Estimate the average cost for each good remaining in inventory and assign that cost to each item sold
Calculate the weighted average cost for goods available for sale during the year and assign that cost to each item sold
None of the above

Q20. Cost of goods sold is found on both the balance sheet and income statement. True or false?

True
False

week 2: Practice Quiz

Q1. Depreciation expense allocates the cost of an asset over the periods a company expects to use the asset. True or false?

True
False

Q2. Depreciation expense represents an allocation of a portion of the asset’s total cost to the period covered by the income statement. True or false?

True
False

Quiz 2: Practice Quiz

Q1. The statement of cash flows documents how net income has changed from the beginning of the period to the end of the period. True or false?

True
False

Q2. The indirect approach to preparing the statement of cash flows uses net income to derive cash flows from investing activities. True or false?

True
False

Additional Quiz Answers

Q1. What represents outlays of resources as part of normal operating activities?

Revenue
Liabilities

Assets
Expenses

Q2. Expenses are associated with operating transactions that …

Decrease company assets
Increase company liabilities
Increase company assets

Decrease company assets AND increase company liabilities

Q3. An employee working at the store gets wages that will be shown as an expense on the income statement. True or false?

True

False

Q4. Advertising expense would not be shown on the income statement but rather on the balance sheet only. True or false?

True

False

Q5. Which is an example of an expense that a company might incur?

Salaries and wages

Advertising expense
Selling, general, and administrative expense
All of the above

Q6. An expensive mixer at a bakery is an example of an item that the company would not expense in the year it purchases the mixer, but rather depreciate over a set number of years. True or false?

True
False

Q7. What would be recorded on the income statement if a bakery sold one of the two mixers it uses to prepare cookie dough and cake batter?

Revenue
Asset

Gain/loss on sale of equipment
None of the above

Q8. Depreciation expense allows a company to spread the cost of an asset over the periods it expects to benefit from the asset. True or false?

True
False

Q9. What is a gain or loss that arises from events that are both unusual AND infrequent, where unusual means that the event could be judged as unforeseen?

Unusual gain or loss
Normal gain or loss
Extraordinary gain or loss
All of the above

Q10. What account on the income statement often serves as a summary measure for a company’s performance?

Cost of goods sold
Total revenue
Total expenses
Net income

Q11. Which is an activity that could indicate a company would have other comprehensive income?

Holding an investment in another company that has a change in value
Offering employees a pension for retirement
Having significant operations outside of its home country
All of the above

Q12. Even if a company has no other comprehensive income, the company still has to prepare a statement of comprehensive income. True or false?

True
False

Q13. Which financial statement tells us the story of how the company’s cash position changed from the beginning of the period to the end of the period?

Statement of cash flows
Income statement
Statement of comprehensive income
Balance sheet

Q14. “Cash flow” refers to cash leaving the company or arriving into the company as a result of transactions or events. True or false?

True
False

Q15. Which is NOT one of the three sections on the cash flow statement?

Normal activities
Financing activities
Operating activities
Investing activities

Q16. When using the indirect method, there are adjustments on the statement of cash flows for items that affect net income but don’t affect cash. True or false?

True
False

Q17. Which is an adjustment found on the operating activities section of the statement of cash flows?

Items that affect net income but don’t affect cash

Items that affect net income and cash but aren’t related to operating activities

Timing differences between transactions’ effect on net income and their effect on cash

All of the above

Q18. Which activity on the statement of cash flows relates to the impact of transactions associated with the company’s long-term assets?

Operating
Investing
Financing
All of the above

Q19. Which activity on the statement of cash flows relates to the impact of transactions associated with the company’s long-term liabilities or its equity?

Operating
Investing
Financing
All of the above

Q20. At the bottom of the cash flow statement, there is a sum of cash inflows and outflows of all three sections. True or False?

True
False

Additional Quiz Answers

Quiz 1: Practice Quiz

Q1. Loss contingencies should be included as a liability on the balance sheet if they can be estimated. True or false?

True
False

Q2. Gain contingencies should not be included as an asset on the balance sheet. True or false?

True
False

Quiz 2: Practice Quiz

Q1. An auditor’s report that includes a qualified opinion is more desirable than a report that includes an unqualified opinion. True or false?

True
False

Q2. Not all companies’ financial statements are required to include an auditor’s opinion. True or False?

True
False

Additional Quiz Answers

Q1. Financial statement notes usually accompany financial statements and usually appear after the statement of cash flows. True or false?

True
False

Q2. Where would a company disclose the cost assumption of FIFO on their financials?

Note
Beginning of balance sheet
Net income
Gross profit

Q3. There are some notes that are required to be reported by companies.

True
False

Q4. The note labeled “summary of significant accounting policies” would include the assumption about what flow of inventory the company uses when determining cost of goods sold. True or false?

True
False

Q5. Where would the type of depreciation the company uses be disclosed?

It does not need to be disclosed.
Summary of significant accounting policies note
Subsequent event note
Contingency note

Q6. If something significant and relevant happens to the company after the fiscal year end, but before the financial statements are issued, where should the company report it on the financials?

Summary of significant accounting policies note
Subsequent event note
It does not need to be disclosed since it happened after fiscal year end.
Contingency note

Q7. A contingent liability depends on the outcome of some future event. True or false?

True
False

Q8. What companies are required to produce an auditor’s report?

Public
Private
Both of the above
No companies require an auditor’s report

Q9. The auditor’s report is a formal opinion regarding a set of financial statements written by whom?

Public
Internal auditor
Independent auditor
Investors

Q10. Notes on most company’s financial statements have declined over the years. True or false?

True
False

Q11. The auditor’s report may include which of the following elements?

Description of auditor’s responsibility
Description of management’s responsibility
Scope of the audit
All of the above

Q12. A company with a clean auditor’s report means that investors should invest in the company. True or false?

True
False

Q13. The public can use the auditor’s report to learn that the financials are a fair representation of the company. True or false?

True
False

Q14. Which should be disclosed by a company in its notes?

Change in methodology to estimate allowance for bad debt
Change in depreciation
Both of the above
None of the above

Q15. What are reasons why there are more notes disclosed by companies now as compared to the past?

More standards in accounting require more notes
More complexity of business
More transparency wanted from investors
All of the above

Q16. The auditor’s signature is included in the auditor’s report. True or false?

True
False

Q17. Disclosures in notes can be a means for a company to manage its own risk as it relates to informing readers of risks. True or false?

True
False

Q18. A contingency loss should be recorded as a liability on the balance sheet if what?

The loss is probable.
The amount of loss can be estimated.
Both of the above
A contingency loss should never be recorded as a liability on the balance sheet.

Q19. A contingency loss should only be presented as a disclosure in the notes if what?

The loss is not judged probable.
The amount of loss CAN be estimated.
The amount of loss is probable and CAN be estimated.
The amount of loss is probable and CANNOT be estimated.

Q20. Companies want to get a qualified opinion on their financial statements, not an unqualified opinion. True or false

True
False

Additional Quiz Answers

Quiz 1: Practice Quiz

Q1. Risk ratios are most helpful in analyzing the performance of the company. True or false?

True
False

Q2. Interpreting the outcome of a ratio analysis is made easier with the use of benchmarks. True or false?

True
False

Quiz 2: Practice Quiz

Q1. The statement of cash flows is similar to the balance sheet because it considers how the company’s cash has changed. True or false?

True
False

Q2. The company’s financial statements are designed with decision makers inside the company primarily in mind. True or false?

True
False

Additional Quiz Answers

Q1. Comparing different companies’ net incomes but nothing else can give you a clear picture of who is doing well. True or false?

True
False

Q2. What profitability ratio divides net income by the average total assets?

Earnings per share
Risk ratio
Current ratio
Return on assets

Q3. Which profitability ratio indicates the amount of net income earned for each share of common stock outstanding?

Return on assets
Current ratio
Risk ratio
Earnings per share

Q4. Companies whose stock is sold on public exchanges are NOT required to report earnings per share on their income statements. True or false?

True
False

Q5. Financial ratios are useful when comparing companies that are different sizes or in different industries. True or false?

True
False

Q6. What risk ratio would indicate a company’s ability to meet its liabilities by using its current assets?

Current ratio
Return on assets
Earnings per share
None of the above

Q7. Accounting is fundamentally about measurement. True or false?

True
False

Q8. The cash flow statement shows how one balance sheet item changed from the beginning to the end of the period. True or false?

True
False

Q9. What financial statement would tell you what events or transactions increased assets or decreased liabilities, or decreased assets or increased liabilities?

Balance sheet
Income statement
Statement of cash flows
All of the above

Q10. A company’s financial performance can be represented through the balance sheet. True or false?

True
False

Q11. A company’s assets and liabilities are presented on the balance sheet. True or false?

True
False

Q12. A company’s revenue and expenses are reported in which financial statement?

Balance sheet
Income statement
Statement of cash flows
All of the above

Q13. The balance sheet is a representation of the company’s what?

Position
Performance
Successfulness
Position AND performance

Q14. Detail about a company’s operating, investment, and financing activities can be found on which financial statement?

Balance sheet
Income statement
Statement of cash flows
All of the above

Q15. Notes can be an important part of understanding the financial statements. True or false?

True
False

Q16. When deciding between two companies to invest in, you only need to look at each company’s cash and choose the larger of the two. True or false?

True
False

Q17. Benchmarks of ratios can help us analyze companies against each other and a standard. True or false?

True
False

Q18. Which is one way that ratios can be helpful?

Help compare companies of different sizes
Help compare a company to prior periods
Help compare a company to its competitors
All of the above

Q19. EPS stands for what?

Equity per share
Earnings per share
Earnings performance standard
None of the above

Q20. The income statement is a snapshot of the position of the company. True or false?

True
False

Conclusion:

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This course is intended for audiences of all experiences who are interested in learning about new skills in a business context; there are no prerequisite courses.

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Company Performance Quiz Answers – Why Quiz