Question 1

Accounts receivable turnover is calculated by dividing (gross) sales by the average (gross) amount of accounts receivable.

Accepted Answer

A) True 
 B)False

Question 2

A company has cash, $85,000; temporary investments, $30,000; net receivables, $60,000; and inventory, $350,000. Current liabilities are $300,000. The current ratio is

Accepted Answer

A)  0.58 to 1. 
B)  0.74 to 1. 
C)  1.75 to 1. 
D)  1.86 to 1. 
A)  0.58 to 1. 
B)  0.74 to 1. 
C)  1.75 to 1. 
D)  1.86 to 1.

Question 3

Profitability measures focus on relationships between key income statement and balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 4

A period of two consecutive years is sufficient to establish a long-term trend.

Accepted Answer

A) True 
 B)False

Question 5

Match the terms with the definitions.
-A measure of how efficiently a company used its assets to generate sales.

Accepted Answer

A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover 
A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover

Question 6

If a corporation has only common stock outstanding, book value per share can be determined by dividing the total stockholders' equity by the number of shares outstanding at the end of the year.

Accepted Answer

A) True 
 B)False

Question 7

Consider the following:   Required:
Prepare a horizontal comparative income statement.

Accepted Answer

The answer of Consider the following:   Required:
Prepare a...

Question 8

Match the terms with the definitions.
-A comparison of the amounts for the same item in the financial statements of two or more periods.

Accepted Answer

A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover 
A) profitability measures 
B) operating income ratio 
C) cost of goods sold ratio 
D) ratio of liabilities to stockholders' equity 
E) return on total assets
F)ratio of net sales to assets
G)horizontal analysis
H)leverage
I)net income ratio
J)liquidity
K)liquidity measures
L)merchandise inventory turnover

Question 9

Use the comparative income statements and balance sheets below to complete the required ratio analysis.     Additional information:
All sales are made on account. Balances of selected accounts for December 31, 20-A are accounts receivable (net), $73,800; merchandise inventory, $139,200; total assets, $906,900; common stockholders' equity, $527,200; and common shares outstanding 42,000. $\begin{array}{lrr}&20-\mathrm{C}&20-\mathrm{B}\
\text { Number of common shares } & 42,000 & 42,000 \
\text { Dividends paid } & \$ 44,400 & \$ 49,000
\end{array}$ Prepare a profitability analysis by calculating for 20-B and 20-C the (a) net sales to assets, (b) return on total assets, (c) return on common stockholders' equity, (d) earnings per share, and (e) book value per share. Indicate whether there has been an improvement or not from 20-B to 20-C. Round to two decimal places.

Accepted Answer

The answer of Use the comparative income statements and balance...

Question 10

The net income of a company for the year just ended is $230,000. Income tax is $80,500 and interest expense is $20,000. The number of times interest was earned would be

Accepted Answer

A)  0.05. 
B)  10.5. 
C)  11.5. 
D)  16.5. 
A)  0.05. 
B)  10.5. 
C)  11.5. 
D)  16.5.

Question 11

A company has 6,000 shares of common stock outstanding and the total common stockholders' equity is $1,500,000. The book value per share of common stock is

Accepted Answer

A)  $.004. 
B)  $2.50. 
C)  $4.00. 
D)  $250.00. 
A)  $.004. 
B)  $2.50. 
C)  $4.00. 
D)  $250.00.

Question 12

Match the terms with the definitions.
-The ratio of quick assets to current liabilities.

Accepted Answer

A) accounts receivable turnover 
B) book value per share 
C) working capital 
D) current ratio (working capital ratio) 
E) earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio 
A) accounts receivable turnover 
B) book value per share 
C) working capital 
D) current ratio (working capital ratio) 
E) earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio

Question 13

Match the terms with the definitions.
-The ratio of current assets to current liabilities.

Accepted Answer

A) accounts receivable turnover 
B) book value per share 
C) working capital 
D) current ratio (working capital ratio) 
E) earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio 
A) accounts receivable turnover 
B) book value per share 
C) working capital 
D) current ratio (working capital ratio) 
E) earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio

Question 14

Consider the following:
​   Required:
Prepare a vertical comparative income statement basing percentages on net sales for each year.

Accepted Answer

The answer of Consider the following:
​   Required:
Prepare a...

Question 15

The accounts receivable turnover measures how promptly receivables are collected.

Accepted Answer

A) True 
 B)False

Question 16

Dividing cost of goods sold by the average of merchandise inventory is the calculation for the

Accepted Answer

A)  accounts receivable turnover. 
B)  working capital turnover. 
C)  merchandise inventory turnover. 
D)  plant and equipment turnover. 
A)  accounts receivable turnover. 
B)  working capital turnover. 
C)  merchandise inventory turnover. 
D)  plant and equipment turnover.

Question 17

The quick or acid-test ratio is calculated by dividing current assets by current liabilities.

Accepted Answer

A) True 
 B)False

Question 18

Use the following comparative income statements and balance sheets to complete the required ratio analysis.     Additional information:
All sales are made on account. Balances of selected accounts for December 31, 20-A are accounts receivable (net), $73,800; merchandise inventory, $153,100; total assets, $906,900; common stockholders' equity, $527,200; and common shares outstanding, 42,000.   Required:
Prepare a liquidity analysis by calculating for 20-B and 20-C the (a) current ratio, (b) quick ratio, (c) accounts receivable turnover, and (d) merchandise inventory turnover. Indicate whether there has been an improvement or not from 20-B to 20-C. Round all answers to two decimal places.

Accepted Answer

The answer of Use the following comparative income statements and...

Question 19

Total liabilities divided by total stockholders' equity is the calculation for the

Accepted Answer

A)  current ratio. 
B)  ratio of liabilities to stockholders' equity. 
C)  return on equity ratio. 
D)  times interest earned ratio. 
A)  current ratio. 
B)  ratio of liabilities to stockholders' equity. 
C)  return on equity ratio. 
D)  times interest earned ratio.

Question 20

Match the terms with the definitions.
-The excess of a company's current assets over current liabilities.

Accepted Answer

A) accounts receivable turnover 
B) book value per share 
C) working capital 
D) current ratio (working capital ratio) 
E) earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio 
A) accounts receivable turnover 
B) book value per share 
C) working capital 
D) current ratio (working capital ratio) 
E) earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio

Exam 24: Analysis of Financial Statements

Accounts receivable turnover is calculated by dividing (gross) sales by the average (gross) amount of accounts receivable.

A company has cash, $85,000; temporary investments, $30,000; net receivables, $60,000; and inventory, $350,000. Current liabilities are $300,000. The current ratio is

Profitability measures focus on relationships between key income statement and balance sheet accounts.

A period of two consecutive years is sufficient to establish a long-term trend.

Match the terms with the definitions. -A measure of how efficiently a company used its assets to generate sales.

If a corporation has only common stock outstanding, book value per share can be determined by dividing the total stockholders' equity by the number of shares outstanding at the end of the year.

Consider the following: Required: Prepare a horizontal comparative income statement.

Match the terms with the definitions. -A comparison of the amounts for the same item in the financial statements of two or more periods.

The net income of a company for the year just ended is $230,000. Income tax is $80,500 and interest expense is $20,000. The number of times interest was earned would be

A company has 6,000 shares of common stock outstanding and the total common stockholders' equity is $1,500,000. The book value per share of common stock is

Match the terms with the definitions. -The ratio of quick assets to current liabilities.

Match the terms with the definitions. -The ratio of current assets to current liabilities.

Consider the following: ​ Required: Prepare a vertical comparative income statement basing percentages on net sales for each year.

The accounts receivable turnover measures how promptly receivables are collected.

Dividing cost of goods sold by the average of merchandise inventory is the calculation for the

The quick or acid-test ratio is calculated by dividing current assets by current liabilities.

Total liabilities divided by total stockholders' equity is the calculation for the

Match the terms with the definitions. -The excess of a company's current assets over current liabilities.

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Statement of Cash Flows

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

Filters

Consider the following: Required: Prepare a vertical comparative income statement basing percentages on net sales for each year.