Question 1

Which one of the following is not a tool in financial statement analysis?

Accepted Answer

A) Horizontal analysis 
B) Circular analysis 
C) Vertical analysis 
D) Ratio analysis 
A) Horizontal analysis 
B) Circular analysis 
C) Vertical analysis 
D) Ratio analysis

Question 2

The following amounts were taken from the financial statements of Ando Company: $\begin{array}{lrr}&2017&2016\
\text { Total assets } & \$ 800,000 & \$ 1,0 \overline{00,000} \
\text { Net sales } & 720,000 & 650,000 \
\text { Gross profit } & 352,000 & 320,000 \
\text { Net income } & 108,000 & 117,000 \
\text { Weighted average number of } & & \
\quad \text { common shares outstanding } & 90,000 & 90,000 \
\text { Market price of common stock } & \$ 42 & \$ 39
\end{array}$ The price-earnings ratio for 2017 is

Accepted Answer

A) 35 times. 
B) 30 times. 
C) 42 times. 
D) 3 times. 
A) 35 times. 
B) 30 times. 
C) 42 times. 
D) 3 times.

Question 3

In a common size financial statement, which of the following is given a percentage of 100 percent?

Accepted Answer

A) Total liabilities 
B) Net income 
C) Total assets 
D) Cost of goods sold 
A) Total liabilities 
B) Net income 
C) Total assets 
D) Cost of goods sold

Question 4

On January 1, 2017, Tri-State Industries had cash and common stock of $180,000. At that date the company had no other asset, liability or equity balances. On January 2, 2017, it purchased $160,000 of equity securities for cash that it classified as available-for-sale. It received cash dividends of $12,000 during the year on these securities. In addition, it had an unrealized holding gain on these securities of $32,000 net of tax. Based on this information, what is the amount of comprehensive income in 2017?

Accepted Answer

A) $44,000 
B) $20,000 
C) $12,000 
D) $32,000 
A) $44,000 
B) $20,000 
C) $12,000 
D) $32,000

Question 5

Under IFRS, the components of other comprehensive income can be reported in each of the following ways except

Accepted Answer

A) the one-statement approach. 
B) the two-statement approach. 
C) the statement of stockholders' equity approach. 
D) All of the above are acceptable. 
A) the one-statement approach. 
B) the two-statement approach. 
C) the statement of stockholders' equity approach. 
D) All of the above are acceptable.

Question 6

In reporting discontinued operations, the income statement should show in a special section
1.	gains on the disposal of a discontinued component.
2.	losses on the disposal of a discontinued component.

Accepted Answer

A) 1 only. 
B) 2 only. 
C) neither 1 nor 2. 
D) both 1 and 2. 
A) 1 only. 
B) 2 only. 
C) neither 1 nor 2. 
D) both 1 and 2.

Question 7

A company that is leveraged is one that

Accepted Answer

A) has a high earnings per share. 
B) contains debt financing. 
C) contains equity financing. 
D) has a high current ratio. 
A) has a high earnings per share. 
B) contains debt financing. 
C) contains equity financing. 
D) has a high current ratio.

Question 8

Bill's Dollar 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 $6,400,000. The accounts receivable turnover was

Accepted Answer

A) 7.6 times. 
B) 8.4 times. 
C) 8.0 times. 
D) 4.0 times. 
A) 7.6 times. 
B) 8.4 times. 
C) 8.0 times. 
D) 4.0 times.

Question 9

Under IFRS, the statement of comprehensive income can be prepared under

Accepted Answer

A) the one-statement approach only. 
B) the two-statement approach only. 
C) either the one-statement approach or the two-statement approach. 
D) either the two-statement approach or the stockholders' equity statement approach. 
A) the one-statement approach only. 
B) the two-statement approach only. 
C) either the one-statement approach or the two-statement approach. 
D) either the two-statement approach or the stockholders' equity statement approach.

Question 10

LKN Company had net credit sales of $5,005,000 and cost of goods sold of $3,500,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The accounts receivable turnover was

Accepted Answer

A) 8.4 times. 
B) 7.7 times. 
C) 3.9 times. 
D) 7.1 times. 
A) 8.4 times. 
B) 7.7 times. 
C) 3.9 times. 
D) 7.1 times.

Question 11

The following schedule is a display of what type of analysis? $\begin{array}{lrr}&\text { Amount }& \text { Percent }\
\text { Current assets } & \$ 100,000 & 25 \% \
\text { Property, plant, and equipment } &{300,000}& {75 \%} \
\text { Total assets } &{\$ 400,000} &{100 \%}
\end{array}$

Accepted Answer

A) Horizontal analysis 
B) Differential analysis 
C) Vertical analysis 
D) Ratio analysis 
A) Horizontal analysis 
B) Differential analysis 
C) Vertical analysis 
D) Ratio analysis

Question 12

From a creditor's point of view, the higher the debt to assets ratio, the lower the risk that the company may be unable to pay its obligations.

Accepted Answer

A) True 
 B)False

Question 13

Salamagundi, Inc. has the following Income Statement (in millions): SALAMAGUNDI, INC.
Income Statement
For the Year Ended December 31, 2017
$\begin{array}{lr}
\text { Net Sales } & \$ 160 \
\text { Cost of Goods Sold } & 100 \
\text { Gross Profit } & 60 \
\text { Operating Expenses } & 40 \
\text { Net Income } & \$ 20
\end{array}$ Using vertical analysis, what percentage is assigned to gross profit?

Accepted Answer

A) 37.5% 
B) 100% 
C) 60% 
D) 62.5% 
A) 37.5% 
B) 100% 
C) 60% 
D) 62.5%

Question 14

Liquidity ratios measure the ability of the company to survive over a long period of time.

Accepted Answer

A) True 
 B)False

Question 15

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

Accepted Answer

A) True 
 B)False

Question 16

Which measure(s) is(are) useful in evaluating the efficiency in managing inventories?
1.	Inventory turnover 
2.	Days in inventory

Accepted Answer

A) 1 only. 
B) 2 only. 
C) Both 1 and 2. 
D) Neither 1 nor 2. 
A) 1 only. 
B) 2 only. 
C) Both 1 and 2. 
D) Neither 1 nor 2.

Question 17

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 18

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 19

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 20

Leverage and return on equity are closely related.

Accepted Answer

A) True 
 B)False

Which one of the following is not a tool in financial statement analysis?

In a common size financial statement, which of the following is given a percentage of 100 percent?

Under IFRS, the components of other comprehensive income can be reported in each of the following ways except

In reporting discontinued operations, the income statement should show in a special section 1. gains on the disposal of a discontinued component. 2. losses on the disposal of a discontinued component.

A company that is leveraged is one that

Bill's Dollar 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 $6,400,000. The accounts receivable turnover was

Under IFRS, the statement of comprehensive income can be prepared under

LKN Company had net credit sales of $5,005,000 and cost of goods sold of $3,500,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The accounts receivable turnover was

The following schedule is a display of what type of analysis? Amount Percent Current assets \ 100,000 25\% Property, plant, and equipment 300,000 75\% Total assets \ 400,000 100\%

From a creditor's point of view, the higher the debt to assets ratio, the lower the risk that the company may be unable to pay its obligations.

Liquidity ratios measure the ability of the company to survive over a long period of time.

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

Which measure(s) is(are) useful in evaluating the efficiency in managing inventories? 1. Inventory turnover 2. Days in inventory

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

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.

The inventory turnover is calculated by dividing

Leverage and return on equity are closely related.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 12: Financial Analysis: The Big Picture

Which one of the following is not a tool in financial statement analysis?

In a common size financial statement, which of the following is given a percentage of 100 percent?

Under IFRS, the components of other comprehensive income can be reported in each of the following ways except

In reporting discontinued operations, the income statement should show in a special section 1. gains on the disposal of a discontinued component. 2. losses on the disposal of a discontinued component.

A company that is leveraged is one that

Bill's Dollar 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 $6,400,000. The accounts receivable turnover was

Under IFRS, the statement of comprehensive income can be prepared under

LKN Company had net credit sales of $5,005,000 and cost of goods sold of $3,500,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The accounts receivable turnover was

The following schedule is a display of what type of analysis? Amount Percent Current assets \ 100,000 25\% Property, plant, and equipment 300,000 75\% Total assets \ 400,000 100\%

From a creditor's point of view, the higher the debt to assets ratio, the lower the risk that the company may be unable to pay its obligations.

Liquidity ratios measure the ability of the company to survive over a long period of time.

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%.

Which measure(s) is(are) useful in evaluating the efficiency in managing inventories? 1. Inventory turnover 2. Days in inventory

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

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.

The inventory turnover is calculated by dividing

Leverage and return on equity are closely related.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters