Exercise
Answer the following questions.
1. In fundamental stock analysis, the _____ is a snapshot of a company’s financial condition at a point in time, whereas the _____ shows the results of the company’s earnings and expenses over a particular period of time.
I. Income statement
II. Pro forma
III. Quick ratio
IV. Balance sheet
A. I and IV
B. II and IV
C. IV and I
D. III and II
2. In a typical income statement, which of the following items is not deducted from gross revenues to arrive at operating income?
A. Taxes
B. Selling, general, and administrative expenses
C. Depreciation and amortization
D. Cost of goods sold
3. Which of the following would appear on a company’s cash flow statement?
A. Property
B. Dividends
C. Assets
D. Salaries
4. All of the following would be found on the company’s income statement except:
A. Sales
B. Cost of goods sold
C. Pre-tax income
D. Owner’s equity
Answers
1. C. Income statements are always stated for a time period, whereas balance sheets are stated as of a particular date.
2. A. Taxes are the last item deducte