Question 1

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

Accepted Answer

A) True 
 B)False

Question 2

To compute trend percentages the analyst should:

Accepted Answer

A) Select a base period,assign each item in the base period statement a weight of 100%,and then express financial numbers from other periods as a percent of their base period number. 
B) Subtract the analysis period number from the base period number. 
C) Subtract the base period amount from the analysis period amount,divide the result by the analysis period amount,then multiply that amount by 100. 
D) Compare amounts across industries using Dun and Bradstreet. 
E) Compare amounts to a competitor. 
A) Select a base period,assign each item in the base period statement a weight of 100%,and then express financial numbers from other periods as a percent of their base period number. 
B) Subtract the analysis period number from the base period number. 
C) Subtract the base period amount from the analysis period amount,divide the result by the analysis period amount,then multiply that amount by 100. 
D) Compare amounts across industries using Dun and Bradstreet. 
E) Compare amounts to a competitor.

Question 3

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Accepted Answer

A) True 
 B)False

Question 4

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

Accepted Answer

A) True 
 B)False

Question 5

External users of accounting information make the strategic and operating decisions of a company.

Accepted Answer

A) True 
 B)False

Question 6

Express the following income statement information in common-size percentages and in trend percentages using 2014 as the base year.

Accepted Answer

The answer of Express the following income statement information in...

Question 7

Horizontal analysis is used to reveal patterns in data covering successive periods.

Accepted Answer

A) True 
 B)False

Question 8

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:

Accepted Answer

A) 141%. 
B) 71%. 
C) ($56,000). 
D) $56,000. 
E) 41%. 
A) 141%. 
B) 71%. 
C) ($56,000). 
D) $56,000. 
E) 41%.

Question 9

Analysis of a single financial number is often of limited value.

Accepted Answer

A) True 
 B)False

Question 10

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

Accepted Answer

A) True 
 B)False

Question 11

Use the following selected information from Wheeler,LLC to determine the 2015 and 2014 common size percentages for cost of goods sold using Net sales as the base.

Accepted Answer

A) 36.4% for 2015 and 41.1% for 2014. 
B) 55.0% for 2015 and 56.0% for 2014. 
C) 119.4% for 2015 and 100.0% for 2014. 
D) 117.2% for 2015 and 100.0% for 2014. 
E) 65.1% for 2015 and 56.0% for 2014. 
A) 36.4% for 2015 and 41.1% for 2014. 
B) 55.0% for 2015 and 56.0% for 2014. 
C) 119.4% for 2015 and 100.0% for 2014. 
D) 117.2% for 2015 and 100.0% for 2014. 
E) 65.1% for 2015 and 56.0% for 2014.

Question 12

Refer to the following selected financial information from McCormik,LLC.Compute the company's days' sales in inventory for Year 2.

Accepted Answer

A) 43.9. 
B) 42.3. 
C) 46.2. 
D) 80.0. 
E) 113.3. 
A) 43.9. 
B) 42.3. 
C) 46.2. 
D) 80.0. 
E) 113.3.

Question 13

General standards of comparisons,developed from experience,include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 14

Carducci Corporation reported Net sales of $3.6 million and average Total assets of $1.1 million.The Total asset turnover is:

Accepted Answer

A) 0.31 times. 
B) 3.27 times. 
C) 4.30 times. 
D) 2.27 times. 
E) 0.77 times. 
A) 0.31 times. 
B) 3.27 times. 
C) 4.30 times. 
D) 2.27 times. 
E) 0.77 times.

Exam 17: Analysis of Financial Statements

Graphical analysis of the balance sheet can be useful in assessing sources of financing.

To compute trend percentages the analyst should:

Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.

Trend analysis is a form of horizontal analysis that can reveal patterns in data across successive periods.

External users of accounting information make the strategic and operating decisions of a company.

Express the following income statement information in common-size percentages and in trend percentages using 2014 as the base year.

Horizontal analysis is used to reveal patterns in data covering successive periods.

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The working capital is:

Analysis of a single financial number is often of limited value.

Standards for comparison when interpreting financial statement analysis include competitor and industry performance data.

Use the following selected information from Wheeler,LLC to determine the 2015 and 2014 common size percentages for cost of goods sold using Net sales as the base.

Refer to the following selected financial information from McCormik,LLC.Compute the company's days' sales in inventory for Year 2.

General standards of comparisons,developed from experience,include the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Carducci Corporation reported Net sales of $3.6 million and average Total assets of $1.1 million.The Total asset turnover is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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