Question 1

What is Jane's rate of return on total assets if total assets are $125,000,net income is $2,000,interest expense is $1,600,and income tax is $3,000?

Accepted Answer

A) 4)66% 
B) 5)28% 
C) 5)65% 
D) 2)33% 
A) 4)66% 
B) 5)28% 
C) 5)65% 
D) 2)33%

Question 2

Common-size statements deal with the percentage of change in a certain item over several years.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following ratios measures the earnings of a company on each sales dollar?

Accepted Answer

A) Return on assets 
B) Return on sales 
C) Return on inventory 
D) Return on stockholders' equity 
A) Return on assets 
B) Return on sales 
C) Return on inventory 
D) Return on stockholders' equity

Question 4

The ratios that measures a company's mix of debt and equity financing are known as:

Accepted Answer

A) Liquidity Ratios. 
B) Debt Management Ratios. 
C) Profitability Ratios. 
D) None of the above 
A) Liquidity Ratios. 
B) Debt Management Ratios. 
C) Profitability Ratios. 
D) None of the above

Question 5

If beginning and ending inventories are $20,000 and $30,000,respectively,and cost of goods sold is $450,000,what is the inventory turnover ratio?

Accepted Answer

A) 18 
B) 16 
C) 15.5 
D) 15 
A) 18 
B) 16 
C) 15.5 
D) 15

Question 6

The current ratio determines the ability of a company to:

Accepted Answer

A) pay off all payables. 
B) pay off current payables. 
C) manage its ability to earn profit. 
D) use its equity. 
A) pay off all payables. 
B) pay off current payables. 
C) manage its ability to earn profit. 
D) use its equity.

Question 7

Carla's Fashions has an average collection period of 30 days.You could infer that Carla's Fashions:

Accepted Answer

A) bills her customers semi-monthly. 
B) bills her customers quarterly. 
C) has an accounts receivable turnover of approximately 12. 
D) Both A and C can be inferred. 
A) bills her customers semi-monthly. 
B) bills her customers quarterly. 
C) has an accounts receivable turnover of approximately 12. 
D) Both A and C can be inferred.

Question 8

Saxon Corporation's beginning inventory was $15,000.The cost of goods sold was $350,000 for the year,with an ending inventory of $20,000.Inventory turnover for the year is:

Accepted Answer

A) 20 times. 
B) 10 times. 
C) 11.67 times. 
D) 8)75 times. 
A) 20 times. 
B) 10 times. 
C) 11.67 times. 
D) 8)75 times.

Question 9

The acid test ratio is usually lower than the current ratio.

Accepted Answer

A) True 
 B)False

Question 10

If current assets were $140,000,merchandise inventory was $50,000,and current liabilities were $15,000,the acid test ratio is:

Accepted Answer

A) 6:1. 
B) 4:1. 
C) 2:1. 
D) 1:2. 
A) 6:1. 
B) 4:1. 
C) 2:1. 
D) 1:2.

Question 11

The debt-to-equity ratio measures the extent of (or proportion of)borrowed capital to equity,with which a business operates.

Accepted Answer

A) True 
 B)False

Question 12

If management wishes to determine the average degree of delinquency of the charge customers,they could use the:

Accepted Answer

A) rate of return on total assets. 
B) rate of return on common stockholders' equity. 
C) accounts receivable turnover. 
D) quick (acid test)ratio. 
A) rate of return on total assets. 
B) rate of return on common stockholders' equity. 
C) accounts receivable turnover. 
D) quick (acid test)ratio.

Question 13

A vertical analysis of an income statement automatically provides the return on sales ratio and the gross profit ratio.

Accepted Answer

A) True 
 B)False

Question 14

Complete the horizontal analysis of Soopy's Used Cars.(Round all percentages to the nearest tenth of a percent. )

Accepted Answer

The answer of Complete the horizontal analysis of Soopy's Used...

Question 15

Compute the gross profit rate when sales are $500,000;net sales are $450,000 and gross profits are $100,000.

Accepted Answer

A) 22.22% 
B) 20.00% 
C) 0)2222 to 1 
D) 0)2000 to 1 
A) 22.22% 
B) 20.00% 
C) 0)2222 to 1 
D) 0)2000 to 1

Question 16

If management wishes to know how well the inventory is moving for a business,they could use the:

Accepted Answer

A) accounts receivable turnover. 
B) inventory turnover. 
C) acid test ratio. 
D) current ratio. 
A) accounts receivable turnover. 
B) inventory turnover. 
C) acid test ratio. 
D) current ratio.

Question 17

Isaiah Company has net income before interest and taxes of $825,000;beginning total assets of $2,100,000;and ending total assets of $2,500,000.Isaiah's return on total assets is:

Accepted Answer

A) 33.0%. 
B) 11.2%. 
C) 3)1%. 
D) 31.3%. 
A) 33.0%. 
B) 11.2%. 
C) 3)1%. 
D) 31.3%.

Question 18

If management wishes to evaluate the amount of assets which were financed by creditors,they could use the:

Accepted Answer

A) debt to total assets. 
B) rate of return on common stockholders' equity. 
C) debt to total liabilities. 
D) times interest earned. 
A) debt to total assets. 
B) rate of return on common stockholders' equity. 
C) debt to total liabilities. 
D) times interest earned.

Question 19

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Accepted Answer

A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis. 
A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis.

Question 20

A form of analysis in which each item on a report is shown as a percent of net sales is called a horizontal analysis of the income statement.

Accepted Answer

A) True 
 B)False

Exam 22: Analyzing Financial Statements

What is Jane's rate of return on total assets if total assets are $125,000,net income is $2,000,interest expense is $1,600,and income tax is $3,000?

Common-size statements deal with the percentage of change in a certain item over several years.

Which of the following ratios measures the earnings of a company on each sales dollar?

The ratios that measures a company's mix of debt and equity financing are known as:

If beginning and ending inventories are $20,000 and $30,000,respectively,and cost of goods sold is $450,000,what is the inventory turnover ratio?

The current ratio determines the ability of a company to:

Carla's Fashions has an average collection period of 30 days.You could infer that Carla's Fashions:

Saxon Corporation's beginning inventory was $15,000.The cost of goods sold was $350,000 for the year,with an ending inventory of $20,000.Inventory turnover for the year is:

The acid test ratio is usually lower than the current ratio.

If current assets were $140,000,merchandise inventory was $50,000,and current liabilities were $15,000,the acid test ratio is:

The debt-to-equity ratio measures the extent of (or proportion of)borrowed capital to equity,with which a business operates.

If management wishes to determine the average degree of delinquency of the charge customers,they could use the:

A vertical analysis of an income statement automatically provides the return on sales ratio and the gross profit ratio.

Complete the horizontal analysis of Soopy's Used Cars.(Round all percentages to the nearest tenth of a percent. )

Compute the gross profit rate when sales are $500,000;net sales are $450,000 and gross profits are $100,000.

If management wishes to know how well the inventory is moving for a business,they could use the:

Isaiah Company has net income before interest and taxes of $825,000;beginning total assets of $2,100,000;and ending total assets of $2,500,000.Isaiah's return on total assets is:

If management wishes to evaluate the amount of assets which were financed by creditors,they could use the:

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

A form of analysis in which each item on a report is shown as a percent of net sales is called a horizontal analysis of the income statement.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters