Question 1

Analysts are interested in sustainable income, which is equal to the past year's net income.

Accepted Answer

A) True 
 B)False

Question 2

In a common size income statement, net sales are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 3

Boone Trading Company reported net sales of $400,000, $440,000, and $560,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what is the trend percentage for 2018?

Accepted Answer

A)  71% 
B)  127% 
C)  140% 
D)  110% 
A)  71% 
B)  127% 
C)  140% 
D)  110%

Question 4

The accounting for each of the following is the same under IFRS and GAAP except for

Accepted Answer

A)  changes in accounting estimates. 
B)  discontinued operations. 
C)  changes in accounting principles. 
D)  IFRS and GAAP accounting is the same for each of the items. 
A)  changes in accounting estimates. 
B)  discontinued operations. 
C)  changes in accounting principles. 
D)  IFRS and GAAP accounting is the same for each of the items.

Question 5

The income statement for the Carolina Service Company for the year ended December 31, 2017, appears below. $$\begin{array} { l l } 
\text { Sales revenue } & \$ 670,000 \
\text { Cost of goods sold } & 390,000 \
\text { Gross profit } & 280,000 \
\text { Expenses } &{180,000 ^ { * } } \
\text { Net income } & \$ 100,000
\end{array}$$ *Includes $25,000 of interest expense and $20,000 of income tax expense.
Additional information:
1. Common stock outstanding on January 1, 2017, was 50,000 shares. On July 1, 2017, 10,000 more shares were issued.
2. The market price of Carolina's stock was $22 at the end of 2017.
3. Cash dividends of $35,000 were paid, $5,000 of which were paid to preferred stockholders.
Instructions
Compute the following ratios for 2017:
(a) Earnings per share.
(b) Price-earnings.
(c) Times interest earned.

Accepted Answer

The answer of The income statement for the Carolina Service...

Question 6

Comparative balance sheets

Accepted Answer

A)  are usually prepared for at least one year. 
B)  are usually prepared for at least two years. 
C)  do not show both dollar amount and percentage changes. 
D)  do not show a comparison of total stockholders' equity. 
A)  are usually prepared for at least one year. 
B)  are usually prepared for at least two years. 
C)  do not show both dollar amount and percentage changes. 
D)  do not show a comparison of total stockholders' equity.

Question 7

Which of the following items appears on the income statement before income before income taxes?

Accepted Answer

A)  Other comprehensive income 
B)  Comprehensive income 
C)  Other revenues and gains 
D)  Discontinued operations 
A)  Other comprehensive income 
B)  Comprehensive income 
C)  Other revenues and gains 
D)  Discontinued operations

Question 8

Which of the following statements is true with respect to financial statement reporting a change in accounting principle?

Accepted Answer

A)  Comparability across periods is impaired 
B)  Only a footnote is required to report the change 
C)  Changes in both depreciation methods and inventory methods are reported retroactively. 
D)  Management must show that the new accounting principle is preferable to the old method. 
A)  Comparability across periods is impaired 
B)  Only a footnote is required to report the change 
C)  Changes in both depreciation methods and inventory methods are reported retroactively. 
D)  Management must show that the new accounting principle is preferable to the old method.

Question 9

In performing a vertical analysis, the base for sales revenues on the income statement is

Accepted Answer

A)  net sales. 
B)  sales revenue. 
C)  net income. 
D)  cost of goods available for sale. 
A)  net sales. 
B)  sales revenue. 
C)  net income. 
D)  cost of goods available for sale.

Question 10

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

Accepted Answer

A) True 
 B)False

Question 11

The current ratio is a measure of all the ratios calculated for the current year.

Accepted Answer

A) True 
 B)False

Question 12

Ratios are used as tools in financial analysis

Accepted Answer

A)  instead of horizontal and vertical analyses. 
B)  because they can provide information that may not be apparent from inspection of the individual components of the financial statements. 
C)  because even single ratios by themselves are quite meaningful. 
D)  because they are prescribed by GAAP. 
A)  instead of horizontal and vertical analyses. 
B)  because they can provide information that may not be apparent from inspection of the individual components of the financial statements. 
C)  because even single ratios by themselves are quite meaningful. 
D)  because they are prescribed by GAAP.

Question 13

The return on assets will be greater than the rate of return on common stockholders' equity if the company has been successful in trading on the equity at a gain.

Accepted Answer

A) True 
 B)False

Question 14

In a common size income statement, the 100% figure is

Accepted Answer

A)  net income. 
B)  cost of goods sold. 
C)  gross profit. 
D)  net sales. 
A)  net income. 
B)  cost of goods sold. 
C)  gross profit. 
D)  net sales.

Question 15

Match the ratios with their formulas by entering the appropriate letter in the space provided. 
-
Market price per share/Earnings per share

Accepted Answer

A) Current ratio 
B) Price-earnings ratio 
C) Profit margin 
D) Asset turnover 
E) Earnings per share
F)Times interest earned
G)Inventory turnover
H)Average collection period
I)Days in inventory
J)Payout ratio 
A) Current ratio 
B) Price-earnings ratio 
C) Profit margin 
D) Asset turnover 
E) Earnings per share
F)Times interest earned
G)Inventory turnover
H)Average collection period
I)Days in inventory
J)Payout ratio

Question 16

Winsor Clothing Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The average collection period of the accounts receivable in terms of days was

Accepted Answer

A)  30 days. 
B)  81.1 days. 
C)  42.4 days. 
D)  40.6 days. 
A)  30 days. 
B)  81.1 days. 
C)  42.4 days. 
D)  40.6 days.

Question 17

If Hard in Parle Company had net income of $620,000 in 2017 and it experienced a 19% increase in net income over 2016, what was its 2016 net income?

Accepted Answer

The answer of If Hard in Parle Company had net...

Question 18

A solvency ratio measures the income or operating success of a company for a given period of time.

Accepted Answer

A) True 
 B)False

Question 19

One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

Accepted Answer

A) True 
 B)False

Question 20

Vertical analysis is a technique that expresses each item in a financial statement

Accepted Answer

A)  in dollars and cents. 
B)  as a percent of the item in the previous year. 
C)  as a percent of a base amount. 
D)  starting with the highest value down to the lowest value. 
A)  in dollars and cents. 
B)  as a percent of the item in the previous year. 
C)  as a percent of a base amount. 
D)  starting with the highest value down to the lowest value.

Analysts are interested in sustainable income, which is equal to the past year's net income.

In a common size income statement, net sales are represented by 100%.

Boone Trading Company reported net sales of $400,000, $440,000, and $560,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what is the trend percentage for 2018?

The accounting for each of the following is the same under IFRS and GAAP except for

Comparative balance sheets

Which of the following items appears on the income statement before income before income taxes?

Which of the following statements is true with respect to financial statement reporting a change in accounting principle?

In performing a vertical analysis, the base for sales revenues on the income statement is

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

The current ratio is a measure of all the ratios calculated for the current year.

Ratios are used as tools in financial analysis

The return on assets will be greater than the rate of return on common stockholders' equity if the company has been successful in trading on the equity at a gain.

In a common size income statement, the 100% figure is

Match the ratios with their formulas by entering the appropriate letter in the space provided. - Market price per share/Earnings per share

Winsor Clothing Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The average collection period of the accounts receivable in terms of days was

If Hard in Parle Company had net income of $620,000 in 2017 and it experienced a 19% increase in net income over 2016, what was its 2016 net income?

A solvency ratio measures the income or operating success of a company for a given period of time.

One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

Vertical analysis is a technique that expresses each item in a financial statement

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

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Exam 13: Financial Statement Analysis

Analysts are interested in sustainable income, which is equal to the past year's net income.

In a common size income statement, net sales are represented by 100%.

Boone Trading Company reported net sales of $400,000, $440,000, and $560,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what is the trend percentage for 2018?

The accounting for each of the following is the same under IFRS and GAAP except for

Comparative balance sheets

Which of the following items appears on the income statement before income before income taxes?

Which of the following statements is true with respect to financial statement reporting a change in accounting principle?

In performing a vertical analysis, the base for sales revenues on the income statement is

A change in accounting principle occurs when the principle used in the current year is different from the one used by competitors in the current year.

The current ratio is a measure of all the ratios calculated for the current year.

Ratios are used as tools in financial analysis

The return on assets will be greater than the rate of return on common stockholders' equity if the company has been successful in trading on the equity at a gain.

In a common size income statement, the 100% figure is

Match the ratios with their formulas by entering the appropriate letter in the space provided. - Market price per share/Earnings per share

Winsor Clothing Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The average collection period of the accounts receivable in terms of days was

If Hard in Parle Company had net income of $620,000 in 2017 and it experienced a 19% increase in net income over 2016, what was its 2016 net income?

A solvency ratio measures the income or operating success of a company for a given period of time.

One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

Vertical analysis is a technique that expresses each item in a financial statement

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters