Chapter 3: Financial statements: Interrelations and construction

The statement of cash flows consists of the following sections: (Difficulty: Easy)
1. Operating and non-operating
2. Current and non-current
3. Trading and financial
4. None of these
Which of the following statements is true? (Difficulty: Easy)
1. There is no link between the balance sheet, the income statement and the statement of cash flows
2. There are links only between the balance sheet and the statement of cash flows
3. The balance sheet, the income statement and the statement of cash flows are totally linked
4. There are links only between the income statement and the statement of cash flows
Revenues and expenses not collected or paid during the year have an impact on the statement of cash flows. (Difficulty: Easy)
1. True
2. False
Purchases of property, plant and equipment are included in the operating activities in the statement of cash flows. (Difficulty: Easy)
1. True
2. False
Where does a debt account decrease? (Difficulty: Easy)
1. On the debit side
2. On the credit side
3. Neither a nor b
4. Both a and b
In general, the assets side of the balance sheet/statement of financial position is designed to summarize balance sheet accounts with: (Difficulty: Easy)
1. Credit balances
2. Debit balances
3. Neither a nor b
4. Both a and b
Alf sells merchandise on credit to Bob for 100 CU. How will the transaction be recorded in Alf’s accounting records? (Difficulty: Moderate)
Which mechanism is entirely based on the fundamental idea that each individual accounting transaction has two sides, which are always balanced? (Difficulty: Easy)
1. Accrual accounting
2. Double entry bookkeeping
3. Prudence principle
4. Cash accounting
Which of the following statements is false? (Difficulty: Moderate)
1. If you increase an asset account, you could increase a liability account
2. If you decrease an asset account, you could increase a shareholders’ equity account
3. If you increase an asset account, you could decrease an asset account
4. If you decrease an asset account, you could decrease a shareholders’ equity account
Each accounting transaction originates in a: (Difficulty: Easy)
1. Document
2. Ledger
3. Journal
4. Trial balance
In which order does the journal list transactions? (Difficulty: Easy)
1. Alphabetical
2. Decreasing
3. Increasing
4. Chronological
Which of the following accounts is expected to present a debit balance? (Difficulty: Moderate)
1. Bank overdrafts
2. Financial income
3. Financial interest
4. Bank borrowing
What is the final stage of the accounting process? (Difficulty: Easy)
1. Journal
2. Financial statement
3. Ledger
4. Trial balance
A chart of accounts is a logically organized list of all recognized accounts used in recording all transactions in a firm. (Difficulty: Easy)
1. True
2. False

Chapter 3: Financial statements: Interrelations and construction

Quiz