CHAPTER 9:
Section 3 The Balance Sheet and the Statement of Cash Flows
1.
The ability of a company to pay its current debts as they become due can be measured by
a.
a yard stick
b.
a liquidity ratio
c.
current assets
d.
the return on sales
2.
The balance sheet reports the balances
a.
in asset and liability accounts
b.
in revenue accounts and owner`s equity
c.
in asset and revenue accounts
d.
in asset, liability and owner`s equity accounts
3.
The current ratio is determined by dividing
a.
current assets by current liabilities
b.
cash and receivables by current liabilities
c.
net income by sales
d.
income by expense
4.
The accounts reported on the balance sheet are
a.
permanent accounts
b.
temporary capital accounts
c.
only the assets
d.
owner`s equity accounts
5.
The comparison of two amounts on a financial statement and the evaluation of the relationship between theses amounts is called
a.
current assets
b.
current liabilities
c.
ratio analysis
d.
income analysis
6.
The return on sales ratio is determined by dividing
a.
sales by net income
b.
current assets by current liabilities
c.
cash and receivables by current liabilities
d.
net income by sales
7.
The quick ratio is determined by dividing
a.
current assets by current liabilities
b.
cash and receivables by current liabilities
c.
net income by sales
d.
return on sales by current ratio
8.
The basic accounting equation is
a.
assets + liabilities = owner`s equity
b.
revenue - expenses = owner`s equity
c.
assets = liabilities + owner`s equity
d.
revenue + assets + owner`s equity