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1. Financial statement analysis must be:

   1. All of the above are correct

   2. As good as the bas information on which the analysis is made

   3. viewed in the wider context of the industry and the political and social environments

   4. targeted to the needs of the users of the analysis

2. Which of the following is not recorded as a business transaction of a sole trader who uses an accrual accounting system?

   1. Owner uses cash from the business to pay for a holiday

   2. Owner contributes cash to start the business

   3. Owner agrees to hire a job applicant to start next month on a salary of $50,000 p.a.

   4. Owner performs work for a customer but will not receive cash until next month

   5. Owner wins the lottery and deposit winnings in the business bank account

3. Activities that involve the production or delivery of goods for sale or the providing of services for sale should be listed under which classification on a cash flow statement?

   1. Investing activities

   2. Financing activities

   3. Operating activities

   4. Refunding activities

4. The return on total assets evaluates managements use of resources, essentially evaluating the return on the owners investment.

   1. Ture

   2. False

5. Which of the following events is properly classified as an investing activity?

   1. Selling goods to customers

   2. Borrowing money from creditors

   3. Purchase of equipment

   4. Running the factory

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