financial statement analysis coursera week 2 quiz answers

Income Statement Practice Quiz

1. True or False: Horizontal analysis results can be listed as either percentages or dollar amounts.

  • True
  • False

2. The following are aspects of the Income Statement except:

  • Net Profit
  • Gross Revenue
  • Sales, General, and Administrative (SG&A)
  • Long-term Liabilities

3. True or False: In vertical analysis, the gross sales or revenue is the base amount on a P&L statement.

  • False
  • True

4. If Amy's Aroma's operating expenses in 2020 were $45,000, and in 2019 they were $37,000, what would the percent change be? (hint, remember the formula: 𝚫% = $recent year - $older year / $older year x 100)

  • 0.21%
  • 112%
  • -21%
  • 21%

5. True or False: In vertical analysis, you compare each line item in the financial statement to the base amount as a percentage of that base amount.

  • True
  • False

Interpreting the Balance Sheet Practice Quiz

6. Deferred Revenues is an account that is found in:

  • Current Assets
  • Noncurrent Liabilities
  • Current Liabilities
  • Noncurrent Assets

7. Short-term Investments is an account that is found in:

  • Noncurrent Liabilities
  • Noncurrent Assets
  • Current Liabilities
  • Current Assets

8. Long-term debt securities issued by the company are called:

  • Notes Payable
  • Bonds Payable
  • Deferred Revenue
  • Common Stock

Interpret the Statement of Cash Flows Practice Quiz

9. Which section of the Statement of Cash Flows would you look to find cash flows related to inventory?

  • Investing Activities
  • Financing Activities
  • Operating Activities

10. Which section of the Statement of Cash Flows would you look to find cash flows related to notes payable?

  • Operating Activities
  • Financing Activities
  • Investing Activities

11. Which would be considered deferred revenue?

  • Cash Outflow
  • Cash Inflow

12. A line item on the Statement of Cash Flows shows a loan amount of -$2,000. What does this mean?

  • The company is receiving a loan for the amount of $2,000.
  • The company is paying off a loan for the amount of $2,000.

Financial Statements Assessment

13. If operating expenses in 2020 (recent year) were $55,000 and in 2019 (older year) they were $36,000, what would the percent change be? Hint: remember the formula: (($recent year - $older year) / $older year) x 100 = 𝚫% (enter your answer as a whole number without punctuation, round if needed)

53

14. Where are Short-term Investments found on the Balance Sheet?

  • Current Assets
  • Noncurrent Liabilities
  • Current Liabilities
  • Noncurrent Assets

15. Which section of the Statement of Cash Flow would you look to find cash flows related to inventory?

  • Operating Activities
  • Net Cash
  • Financing Activities
  • Investing Activities

16. Long-term Debt Securities issued by the company are called:

  • Owner’s Draw
  • Common Stock
  • Guaranteed Payments
  • Bonds Payable

17. The following are aspects of the income statement except:

  • Stakeholders Equity
  • SG&A
  • Net Profit
  • Gross Revenue

18. The Net Income on the Cash Flow Statement should match the bottom line on the _________, and the Cash at end of the period should match Cash on the _________.

  • Profit and Loss, Statement of Equity
  • Sales Report, Balance Sheet
  • Balance Sheet, Profit and Loss
  • Income Statement, Balance Sheet

19. True or False: Horizontal Analysis Results can be listed as percentages and dollar amounts as long as one or the other is consistently used.

  • True
  • False

20. A line item on the Statement of Cash Flows shows a loan amount of -$4,000. What does this mean?

  • The company is paying off a loan amount of $4,000
  • The company is receiving a loan amount of $4,000

21. Land improvements would be found on which of the following documents?

  • Income Statement
  • Balance Sheet
  • Shareholder’s Equity
  • Statement of Cash Flows

22. True or False: In vertical analysis, you compare each line item in the financial statement to a base amount.

  • False
  • True

23. The Principal Balance of any long-term debt due within a year would go under which account on the Balance Sheet?

  • Short Term Loans Payable
  • Accounts Receivable
  • Current portion of Long-Term Debt
  • Other receivables

24. True or False: Vertical analysis is the proportional analysis of a financial statement.

  • True
  • False

25. Where would you locate Deferred Revenues on the Balance Sheet?

  • Noncurrent Liabilities
  • Current Assets
  • Current Liabilities
  • Noncurrent Assets

26. True or False: In vertical analysis, the Gross Sales or Revenue is the base amount on a P&L statement.

  • False
  • True

27. Sales Tax and Payroll Tax are both considered _______________ and found on the ______________.

  • Liabilities, Balance Sheet
  • Deferred Revenue, Statement of Cash flows
  • Investments, Balance Sheet
  • Assets, Income Statement

28. True or False: Deferred Revenue is considered a Cash Inflow.

  • True
  • False

29. True or False: On the Statement of Cash Flows, the cash at the end of the period is calculated by adding the net cash increase for that period to the cash at the beginning of the period.

  • True
  • False

30. Which of the following is the bottom line on the P&L statement?

  • Net Revenue
  • Gross Profit
  • Gross Revenue
  • Net Profit

31. Which section of the Statement of Cash Flows would you look to find cash flows related to Notes Payable?

  • Investing Activities
  • Investing Activities
  • Operating Activities
  • Financing Activities

32. True or False: On the Statement of Cash Flows, the Ending Cash of the period matches the Net Profit on the P&L for that same period.

  • False
  • True

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