A Report That Shows the Financial Picture of a Company

question 39

Multiple Choice

A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders' equity is referred to as a(n)

• A)profit and loss statement.
• B)balance sheet.
• C)expense report.
• D)income statement.
• E)budget report.

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, or insurance premiums.

Break-Even Quantity

The amount you need to sell to at least break even (make zero profit). The formula (assuming that you can sell all you want at price and with constant marginal cost) is Q = F/(P - MC), where F is fixed costs, P is price, and MC is marginal cost.

Zero Profits

Zero profits, or normal profit, occur when a company's total revenues exactly match total costs, leaving no net profit or loss.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.