Multiple choice Financial statements

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Quick exercises – Financial Statements 1 ACCOUNTING, FINANCE AND CONTROL 2018-2019 MULTIPLE CHOICE TEST– FINANCIAL STATEMENT RECOVERY For each question, select the correct answer (only 1 answer is correct) 1. The Income Statement:  Can be prepared through a Direct or Indirect Method;  Can be prepared according to both an accrual or a cash logic;  Provides a picture of the resources the company has at a specific point in time;  Can be prepared aggregating costs on the basis of the activities they are referred to. 2. Which is the difference between the Income Statement by Nature and by Function (or by destination)?  In the Income Statement by Function, costs are aggregated in raw materials costs, staff costs, depreciation and amortisation and so on;  In the Income statement by Function costs are aggregated in product and period costs;  There is no difference;  EBIT has a different value. 3. According to Accounting Conservatism (i.e, prudence):  Possible gains should be anticipated and registered as soon as possible;  Possible future losses should be anticipated and registered as soon as possible;  Both assets and liabilities are potentially understated;  Both revenues and expenses are potentially understated. 4. According to IAS/IFRS, preparing the Cash Flow Statement through an Indirect Method requires:  Starting from the Gross Margin of the year;  Adjusting EBIT, subtracting, among others, Depreciation and Amortization;  Considering changes in Net Working Capital across two sequent years;  Starting from the Revenues of the year. 5. Which one of the following sentences on the Balance Sheet is TRUE? Quick exercises – Financial Statements 2  The amount of TOTAL NON CURRENT ASSETS is always equal to the TOTAL amount of NON CURRENT LIABILITIES;  The amount…