Problem 2-1 Multiple choice (IAA)

1. The components financial statements included all of the following except

a. Statement of financial position
b. Income statement
c. Statement of cash flows
d. Statement of retained earnings
2. The major financial statements include all. Except
a. Statement of financial position
b. Statement of change in financial position
c. Statement of comprehensive income
d. Statement of changes equity
3. Which of the following represents a form of communication through financial
reporting but not through financial statement?
a. Statement of financial position
b. President’s letter
c. Income statement
d. Notes to financial statement
4. The statement of financial position is useful for analyzing all of the following except
a. Liquidity
b. Solvency
c. Profitability
d. Financial flexibility
5. The amount of time that is expected to elapse until an asset is realized or otherwise
converted into cash is referred to as.
a. Solvency
b. Financial flexibility
c. Liquidity
d. Exchange ability
6. The statement of financial position provide a basis for all of the following except
a. Computing rate of return
b. Evaluating capital structure
c. Determining increase in cash due to operation
d. Assessing liquidity and financial flexibility
7. The information reported is the statement of financial position is useful for all of the
following, except
a. To compute rate of return
b. To analyze cash inflows and outflows for the period
c. To evaluate capital structure
d. To asses future cash flow
8. Which criticism is not normally aimed as the statement of financial position
a. Failure to reflect current value information
b. The extensive use of separate classification
c. An extensive use of estimate
d. Failure to include items of financial value
9. The statement of financial position
a. Omits many items that are financial value
b. Make very limited use of judgment and estimate
c. Use fair value for most assets and liabilities
d. All of the choices are correct regarding the statement of financial position
10. Which of the following is a limitation of the statement of financial position?
a. Many items that are of financial value are omitted
b. Judgment and estimate are used
c. Current fair value is not reported
d. All of these are considered limitation of the statement of financial position