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← Introduction to Financial Analysis

Part I. Financial Statements and Ratio Analysis and Forecasting

2.12: Chapter 2 Review Questions

20 of 150 · 247 words

From Introduction to Financial Analysis by LibreTexts (Kenneth S. Bigel, Touro University), used under the CC BY 4.0 licence. Written for a general audience, not for NEPSE.

  1. 1Is the Balance Sheet a “flow” or a “static” statement? Do its numbers get bigger (flow) , smaller, or neither, as time over the course of the period passes?
  2. 2When, if ever, and, if so, how do Balance Sheet numbers revert to zero?
  3. 3How often, at most, is a public corporation required to issue financial statements?
  4. 4Are assets debit- or credit-balance accounts?
  5. 5Are liabilities and equity debit- or credit-balance accounts?
  6. 6What is the basic accounting equation?
  7. 7List all typical Current Assets and Current Liabilities.
  8. 8When a Credit Sale is booked, what Balance Sheet item is affected?
  9. 9What is meant by “current”?
  10. 10What are all the equity section accounts?
  11. 11Rank these items in terms of who gets paid first: Preferred stock dividends – interest on debt – common stock dividends.
  12. 12When it is said that “dividends have accumulated in arrears,” to which class of stock may we refer – preferred or common? Explain.
  13. 13Trace the link from Net Income to the Balance Sheet.
  14. 14What are the tax ramifications to the corporation regarding interest and dividends paid?
  15. 15To which Capital Component does the word, “Default” apply?
  16. 16Which Capital Component (Debt, Preferred Stock, Common Stock, or Retained Earnings) is riskiest? Why?
  17. 17Is Bankruptcy “the end”?
  18. 18Using the template below, search on-line for a real, true-to-life company’s Balance Sheet and transfer the numbers to the template below. Imagine an airline or a retailer, etc. – perhaps Amazon or Apple. What might their numbers look like?
  19. 19Who owns a company’s Retained Earnings?

This chapter at LibreTexts (Kenneth S. Bigel, Touro University). Tables and text are reproduced; images, videos and quizzes are not.