Question 1

Which of the following correctly describes the effect of Mogul Company declaring and distributing a 10% common stock dividend?

Accepted Answer

A) Mogul's current ratio decreased. 
B) Mogul's return on equity ratio decreased. 
C) Mogul's debt-to-equity ratio remained the same. 
D) Mogul's return on assets decreased. 
A) Mogul's current ratio decreased. 
B) Mogul's return on equity ratio decreased. 
C) Mogul's debt-to-equity ratio remained the same. 
D) Mogul's return on assets decreased.

Question 2

Component percentages are used to express items on financial statements as a percentage of a single base amount.

Accepted Answer

A) True 
 B)False

Question 3

Complete the following income statement for the dollar amounts and the component percentages:

Accepted Answer

The answer of Complete the following income statement for the...

Question 4

Teague Company's working capital was $40,000 and total current liabilities were one-fourth of that amount.What was the current ratio?

Accepted Answer

A) 1.00 
B) 1.25 
C) 3.00 
D) 5.00 
A) 1.00 
B) 1.25 
C) 3.00 
D) 5.00

Question 5

Which of the following statements is incorrect?

Accepted Answer

A) If selling and administrative expenses as a percentage of sales increases,then gross profit percentage will decrease. 
B) If the cost of goods sold percentage decreases and other expenses do not change,then net profit margin will increase as a percentage of sales. 
C) If sales dollars decrease,a company might still report a higher gross profit percentage if cost of goods sold decreases at a faster rate than the decrease in sales. 
D) It is possible that when selling and administrative expense in dollars decrease,selling and administrative expenses as a percentage of sales will increase. 
A) If selling and administrative expenses as a percentage of sales increases,then gross profit percentage will decrease. 
B) If the cost of goods sold percentage decreases and other expenses do not change,then net profit margin will increase as a percentage of sales. 
C) If sales dollars decrease,a company might still report a higher gross profit percentage if cost of goods sold decreases at a faster rate than the decrease in sales. 
D) It is possible that when selling and administrative expense in dollars decrease,selling and administrative expenses as a percentage of sales will increase.

Question 6

The price/earnings ratio is affected by the amount of risk that investors are willing to take.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following ratios is not considered to be a test of profitability?

Accepted Answer

A) Current ratio. 
B) Net profit margin. 
C) Return on assets. 
D) Earnings per share. 
A) Current ratio. 
B) Net profit margin. 
C) Return on assets. 
D) Earnings per share.

Question 8

The following financial data are available for Murphy Company:
   Calculate each of the following ratios.Round your answers to two decimal places.
A.Return on equity
B.Price/earnings ratio
C.Dividend yield

Accepted Answer

A.Return on equity = 19.93% =

Question 9

Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?

Accepted Answer

A) Mylan's current ratio remained the same. 
B) Mylan's return on equity ratio remained the same. 
C) Mylan's debt-to-equity ratio remained the same. 
D) Mylan's earnings per share remained the same. 
A) Mylan's current ratio remained the same. 
B) Mylan's return on equity ratio remained the same. 
C) Mylan's debt-to-equity ratio remained the same. 
D) Mylan's earnings per share remained the same.

Question 10

Which of the accounting ratios considers the importance of cash flows relating to required interest payments?

Accepted Answer

A) Times interest earned. 
B) Debt-to-equity. 
C) Cash coverage. 
D) Quick. 
A) Times interest earned. 
B) Debt-to-equity. 
C) Cash coverage. 
D) Quick.

Question 11

Time-series analysis is a comparison of information for a specific company over a period of time to determine changes in operations.

Accepted Answer

A) True 
 B)False

Question 12

Trenton Company has provided the following information: • Net income,$240,000
• Preferred shares issued,6,000
• Weighted average number of shares of common stock issued,24,000
• Cash dividends declared and paid on common stock,$30,000
• Market price per share,$36
• Weighted average number of treasury shares of common stock,4,000
-
What is Trenton's price/earnings ratio?

Accepted Answer

A) 3.0 
B) 5.1 
C) 3.4 
D) 4.5 
A) 3.0 
B) 5.1 
C) 3.4 
D) 4.5

Question 13

Liquidity ratios concentrate on:

Accepted Answer

A) The operating cycle. 
B) Profitability. 
C) Short-term financial strength. 
D) Ability to pay interest on loans. 
A) The operating cycle. 
B) Profitability. 
C) Short-term financial strength. 
D) Ability to pay interest on loans.

Question 14

The records of Washington Company showed the following:
   *10,000 shares outstanding at 1/1 and at 12/31;current market price,$30
**Including income tax;income tax rate is 30%
Calculate each of the following ratios:
A.Return on assets
B.Return on equity
C.Net profit margin
D.Earnings per share

Accepted Answer

A.Return on assets = $17,000 ÷

Question 15

At the end of 2019,Doran Corporation reported net income of $70,000,gross sales revenue of $1,525,000,and sales returns of $125,000.
Calculate the net profit margin ratio.

Accepted Answer

Net profit margin =

Question 16

Which of the following transactions increase both the quick ratio and the current ratio assuming that both ratios are greater than 1?

Accepted Answer

A) Collecting an account receivable. 
B) Purchasing inventory on account. 
C) Accruing revenue earned at year-end. 
D) Selling inventory on account at the cost of the inventory. 
A) Collecting an account receivable. 
B) Purchasing inventory on account. 
C) Accruing revenue earned at year-end. 
D) Selling inventory on account at the cost of the inventory.

Question 17

Which of the following transactions does not affect earnings per share?

Accepted Answer

A) A 2-for-1 common stock split. 
B) A 10% common stock dividend distribution. 
C) Accruing revenue at year-end. 
D) Issuing additional shares of preferred stock. 
A) A 2-for-1 common stock split. 
B) A 10% common stock dividend distribution. 
C) Accruing revenue at year-end. 
D) Issuing additional shares of preferred stock.

Question 18

A higher current ratio is preferable for companies that do not have predictable cash flows.

Accepted Answer

A) True 
 B)False

Question 19

The quick ratio decreases when the adjusting entry to record bad debt expense is recorded.

Accepted Answer

A) True 
 B)False

Question 20

The debt-to-equity ratio measures which of the following?

Accepted Answer

A) Liquidity. 
B) Solvency. 
C) Profitability. 
D) Market strength. 
A) Liquidity. 
B) Solvency. 
C) Profitability. 
D) Market strength.

Which of the following correctly describes the effect of Mogul Company declaring and distributing a 10% common stock dividend?

Component percentages are used to express items on financial statements as a percentage of a single base amount.

Complete the following income statement for the dollar amounts and the component percentages:

Teague Company's working capital was $40,000 and total current liabilities were one-fourth of that amount.What was the current ratio?

Which of the following statements is incorrect?

The price/earnings ratio is affected by the amount of risk that investors are willing to take.

Which of the following ratios is not considered to be a test of profitability?

The following financial data are available for Murphy Company: Calculate each of the following ratios.Round your answers to two decimal places. A.Return on equity B.Price/earnings ratio C.Dividend yield

Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?

Which of the accounting ratios considers the importance of cash flows relating to required interest payments?

Time-series analysis is a comparison of information for a specific company over a period of time to determine changes in operations.

Liquidity ratios concentrate on:

The records of Washington Company showed the following: *10,000 shares outstanding at 1/1 and at 12/31;current market price,$30 **Including income tax;income tax rate is 30% Calculate each of the following ratios: A.Return on assets B.Return on equity C.Net profit margin D.Earnings per share

At the end of 2019,Doran Corporation reported net income of $70,000,gross sales revenue of $1,525,000,and sales returns of $125,000. Calculate the net profit margin ratio.

Which of the following transactions increase both the quick ratio and the current ratio assuming that both ratios are greater than 1?

Which of the following transactions does not affect earnings per share?

A higher current ratio is preferable for companies that do not have predictable cash flows.

The quick ratio decreases when the adjusting entry to record bad debt expense is recorded.

The debt-to-equity ratio measures which of the following?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

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Exam 13: Analyzing Financial Statements

Which of the following correctly describes the effect of Mogul Company declaring and distributing a 10% common stock dividend?

Component percentages are used to express items on financial statements as a percentage of a single base amount.

Complete the following income statement for the dollar amounts and the component percentages:

Teague Company's working capital was $40,000 and total current liabilities were one-fourth of that amount.What was the current ratio?

Which of the following statements is incorrect?

The price/earnings ratio is affected by the amount of risk that investors are willing to take.

Which of the following ratios is not considered to be a test of profitability?

The following financial data are available for Murphy Company: Calculate each of the following ratios.Round your answers to two decimal places. A.Return on equity B.Price/earnings ratio C.Dividend yield

Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?

Which of the accounting ratios considers the importance of cash flows relating to required interest payments?

Time-series analysis is a comparison of information for a specific company over a period of time to determine changes in operations.

Liquidity ratios concentrate on:

The records of Washington Company showed the following: *10,000 shares outstanding at 1/1 and at 12/31;current market price,$30 **Including income tax;income tax rate is 30% Calculate each of the following ratios: A.Return on assets B.Return on equity C.Net profit margin D.Earnings per share

At the end of 2019,Doran Corporation reported net income of $70,000,gross sales revenue of $1,525,000,and sales returns of $125,000. Calculate the net profit margin ratio.

Which of the following transactions increase both the quick ratio and the current ratio assuming that both ratios are greater than 1?

Which of the following transactions does not affect earnings per share?

A higher current ratio is preferable for companies that do not have predictable cash flows.

The quick ratio decreases when the adjusting entry to record bad debt expense is recorded.

The debt-to-equity ratio measures which of the following?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Reporting and Interpreting Investments in Other Corporations

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