Financial Reporting and Statements Flashcards
6 cards from real Financial Management for Project Managers practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Reporting and Statements flashcards as text
Which financial statement shows a company's assets, liabilities, and shareholders' equity at a specific point in time?
Answer: Balance sheet
The balance sheet (statement of financial position) is a snapshot of what a company owns, owes, and the residual equity belonging to shareholders at a given date.
The income statement primarily reports:
Answer: Revenues, expenses, and net income over a reporting period
The income statement (profit and loss statement) summarizes revenues earned and expenses incurred over a specific accounting period to show net income or loss.
Gross profit on an income statement is calculated as:
Answer: Net sales minus cost of goods sold
Gross profit represents net sales revenue less the direct cost of goods sold, before deducting operating expenses.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is used primarily to measure:
Answer: Operating profitability and cash-generating ability
EBITDA approximates operating cash flow and is widely used to compare profitability across companies and capital structures without financing or accounting differences.
On the balance sheet, current liabilities are obligations expected to be settled within:
Answer: One year or the operating cycle, whichever is longer
Current liabilities are debts or obligations due within one year or the operating cycle (whichever is longer), distinguishing them from long-term liabilities.
Which accounting principle requires that revenues be recognized when earned, regardless of when cash is received?
Answer: Accrual accounting principle
The accrual accounting principle recognizes revenue when it is earned and expenses when incurred, not when cash changes hands.