Question 1

Comparisons of company data with industry averages provide information about a company's relative position within the industry.

Accepted Answer

A) True 
 B)False

Question 2

The loss on disposal of a significant component of a business is disclosed in the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 3

The comparative balance sheet of Delta Company appears below:   Instructions
(a) Using horizontal analysis, show the percentage change for each balance sheet item using 2016 as a base year.
(b) Using vertical analysis, prepare a common size comparative balance sheet.

Accepted Answer

The answer of The comparative balance sheet of Delta Company...

Question 4

In the vertical analysis of an income statement, each item is generally stated as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 5

The inventory turnover is calculated by dividing

Accepted Answer

A)  cost of goods sold by the ending inventory. 
B)  cost of goods sold by the beginning inventory. 
C)  cost of goods sold by the average inventory. 
D)  average inventory by cost of goods sold. 
A)  cost of goods sold by the ending inventory. 
B)  cost of goods sold by the beginning inventory. 
C)  cost of goods sold by the average inventory. 
D)  average inventory by cost of goods sold.

Question 6

All of the following statements regarding changes in accounting principles are true except which of the following?

Accepted Answer

A)  Most changes in accounting principles are only reported in current periods when the principle change takes place. 
B)  Changes in accounting principles are allowed when new principles are preferable to old ones. 
C)  Most changes in accounting principles are retroactively reported. 
D)  Consistency is one of the biggest concerns when a change in accounting principle is undertaken. 
A)  Most changes in accounting principles are only reported in current periods when the principle change takes place. 
B)  Changes in accounting principles are allowed when new principles are preferable to old ones. 
C)  Most changes in accounting principles are retroactively reported. 
D)  Consistency is one of the biggest concerns when a change in accounting principle is undertaken.

Question 7

Which of the following would be considered an "Other comprehensive income" item?

Accepted Answer

A)  Loss on disposal of discontinued operations 
B)  Unrealized loss on available-for-sale securities 
C)  Discontinued operations gain 
D)  Net income 
A)  Loss on disposal of discontinued operations 
B)  Unrealized loss on available-for-sale securities 
C)  Discontinued operations gain 
D)  Net income

Question 8

Ed's Drive-In had $175,000 of current assets and $80,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Ed's Drive-In's current ratio?

Accepted Answer

A)  The ratio remained unchanged. 
B)  The change in the current ratio cannot be determined. 
C)  The ratio decreased. 
D)  The ratio increased. 
A)  The ratio remained unchanged. 
B)  The change in the current ratio cannot be determined. 
C)  The ratio decreased. 
D)  The ratio increased.

Question 9

A company has an average inventory on hand of $90,000 and its average days in inventory is 36.5 days. What is the cost of goods sold?

Accepted Answer

A)  $900,000 
B)  $2,102,400 
C)  $2,106,000 
D)  $1,051,200 
A)  $900,000 
B)  $2,102,400 
C)  $2,106,000 
D)  $1,051,200

Question 10

The debt to assets ratio measures

Accepted Answer

A)  the company's profitability. 
B)  whether interest can be paid on debt in the current year. 
C)  the proportion of interest paid relative to dividends paid. 
D)  the percentage of the total assets provided by creditors. 
A)  the company's profitability. 
B)  whether interest can be paid on debt in the current year. 
C)  the proportion of interest paid relative to dividends paid. 
D)  the percentage of the total assets provided by creditors.

Question 11

Vertical analysis is also known as

Accepted Answer

A)  perpendicular analysis. 
B)  common size analysis. 
C)  trend analysis. 
D)  straight-line analysis. 
A)  perpendicular analysis. 
B)  common size analysis. 
C)  trend analysis. 
D)  straight-line analysis.

Question 12

Horizontal, vertical, and circular analyses are the basic tools of financial statement analysis.

Accepted Answer

A) True 
 B)False

Question 13

Junebag Corporation reported net income $24,000; net sales $400,000; and average assets $600,000 for 2017. What is the 2017 profit margin?

Accepted Answer

A)  6% 
B)  4% 
C)  40% 
D)  67% 
A)  6% 
B)  4% 
C)  40% 
D)  67%

Question 14

A balance sheet that displays only component percentages is called a ________ balance sheet.

Accepted Answer

A)  condensed 
B)  common size 
C)  comparative 
D)  trendy 
A)  condensed 
B)  common size 
C)  comparative 
D)  trendy

Question 15

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Accepted Answer

A)  Total revenues 
B)  Income from operations 
C)  Net income 
D)  Gross profit 
A)  Total revenues 
B)  Income from operations 
C)  Net income 
D)  Gross profit

Question 16

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

Accepted Answer

A) True 
 B)False

Question 17

For analysis of the financial statements, ratios can be classified into three types: (1)_____________ ratios, (2)_____________ ratios, and (3)______________ ratios.

Accepted Answer

liquidity

Question 18

An income statement would not include

Accepted Answer

A)  other revenue and gains. 
B)  income from operations. 
C)  discontinued operations. 
D)  dividends paid. 
A)  other revenue and gains. 
B)  income from operations. 
C)  discontinued operations. 
D)  dividends paid.

Question 19

Savory Thymes, Inc. had net credit sales of $9,000,000 and cost of goods sold of $5,250,000 for the year. The average inventory for the year amounted to $1,250,000. The inventory turnover for the year is

Accepted Answer

A)  7.2 times. 
B)  5.6 times. 
C)  5.2 times. 
D)  4.2 times. 
A)  7.2 times. 
B)  5.6 times. 
C)  5.2 times. 
D)  4.2 times.

Question 20

If the average collection period is 73 days, what is the accounts receivable turnover?

Accepted Answer

A)  5 times 
B)  20 times 
C)  10 times 
D)  6 times 
A)  5 times 
B)  20 times 
C)  10 times 
D)  6 times

Comparisons of company data with industry averages provide information about a company's relative position within the industry.

The loss on disposal of a significant component of a business is disclosed in the statement of retained earnings.

The comparative balance sheet of Delta Company appears below: Instructions (a) Using horizontal analysis, show the percentage change for each balance sheet item using 2016 as a base year. (b) Using vertical analysis, prepare a common size comparative balance sheet.

In the vertical analysis of an income statement, each item is generally stated as a percentage of net income.

The inventory turnover is calculated by dividing

All of the following statements regarding changes in accounting principles are true except which of the following?

Which of the following would be considered an "Other comprehensive income" item?

Ed's Drive-In had $175,000 of current assets and $80,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Ed's Drive-In's current ratio?

A company has an average inventory on hand of $90,000 and its average days in inventory is 36.5 days. What is the cost of goods sold?

The debt to assets ratio measures

Vertical analysis is also known as

Horizontal, vertical, and circular analyses are the basic tools of financial statement analysis.

Junebag Corporation reported net income $24,000; net sales $400,000; and average assets $600,000 for 2017. What is the 2017 profit margin?

A balance sheet that displays only component percentages is called a ________ balance sheet.

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

For analysis of the financial statements, ratios can be classified into three types: (1)_______ ratios, (2)_ ratios, and (3)________ ratios.

An income statement would not include

Savory Thymes, Inc. had net credit sales of $9,000,000 and cost of goods sold of $5,250,000 for the year. The average inventory for the year amounted to $1,250,000. The inventory turnover for the year is

If the average collection period is 73 days, what is the accounts receivable turnover?

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

Exam 13: Financial Statement Analysis

Comparisons of company data with industry averages provide information about a company's relative position within the industry.

The loss on disposal of a significant component of a business is disclosed in the statement of retained earnings.

The comparative balance sheet of Delta Company appears below: Instructions (a) Using horizontal analysis, show the percentage change for each balance sheet item using 2016 as a base year. (b) Using vertical analysis, prepare a common size comparative balance sheet.

In the vertical analysis of an income statement, each item is generally stated as a percentage of net income.

The inventory turnover is calculated by dividing

All of the following statements regarding changes in accounting principles are true except which of the following?

Which of the following would be considered an "Other comprehensive income" item?

Ed's Drive-In had $175,000 of current assets and $80,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Ed's Drive-In's current ratio?

A company has an average inventory on hand of $90,000 and its average days in inventory is 36.5 days. What is the cost of goods sold?

The debt to assets ratio measures

Vertical analysis is also known as

Horizontal, vertical, and circular analyses are the basic tools of financial statement analysis.

Junebag Corporation reported net income $24,000; net sales $400,000; and average assets $600,000 for 2017. What is the 2017 profit margin?

A balance sheet that displays only component percentages is called a ________ balance sheet.

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness.

For analysis of the financial statements, ratios can be classified into three types: (1)_____________ ratios, (2)_____________ ratios, and (3)______________ ratios.

An income statement would not include

Savory Thymes, Inc. had net credit sales of $9,000,000 and cost of goods sold of $5,250,000 for the year. The average inventory for the year amounted to $1,250,000. The inventory turnover for the year is

If the average collection period is 73 days, what is the accounts receivable turnover?

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

For analysis of the financial statements, ratios can be classified into three types: (1)_______ ratios, (2)_ ratios, and (3)________ ratios.