Question 1

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

Accepted Answer

A) True 
 B)False

Question 2

The balance sheets at the end of each of the first two years of operations indicate the following:  
-If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?

Accepted Answer

A)  10.4% 
B)  11.9% 
C)  10.5% 
D)  8.4% 
A)  10.4% 
B)  11.9% 
C)  10.5% 
D)  8.4%

Question 3

Match each ratio that follows to its use items a-h). Items may be used more than once.
-rate earned on total assets

Accepted Answer

A) assess the profitability of the assets 
B) assess the effectiveness in the use of assets 
C) indicate the ability to meet currently maturing obligations 
D) indicate the margin of safety to creditors 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders 
A) assess the profitability of the assets 
B) assess the effectiveness in the use of assets 
C) indicate the ability to meet currently maturing obligations 
D) indicate the margin of safety to creditors 
E) indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders

Question 4

What is the rate earned on total assets for this company?
-The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.

Accepted Answer

A)  8.1% 
B)  6.8% 
C)  10.5% 
D)  16.1% 
A)  8.1% 
B)  6.8% 
C)  10.5% 
D)  16.1%

Question 5

Corporate annual reports typically do not contain

Accepted Answer

A)  management discussion and analysis 
B)  an SEC statement expressing an opinion 
C)  accompanying notes 
D)  an auditor's report 
A)  management discussion and analysis 
B)  an SEC statement expressing an opinion 
C)  accompanying notes 
D)  an auditor's report

Question 6

From the following data for Norton Company for the year ended December 31, prepare a multiple-step income statement. Show earnings per share for the following: income from continuing operations, loss on discontinued operations less applicable income tax), income before extraordinary item, extraordinary item less applicable income tax), and net income.

Accepted Answer

The answer of From the following data for Norton Company...

Question 7

A company reports the following income statement and balance sheet information for the current year: $$\begin{array} { | l | l | } 
\hline \text { Net income } & \$ 180,000 \
\hline \text { Interest expense } & 20,000 \
\hline \text { Average total assets } & 2,000,000 \
\hline
\end{array}$$ Determine the rate earned on total assets. Round your answer to one decimal place.

Accepted Answer

Rate earned on assets = Net income + Int

Question 8

An increase in the accounts receivable turnover may be due to an improvement in the collection of receivables or to a change in the granting of credit and/or in collection practices.

Accepted Answer

A) True 
 B)False

Question 9

The following information is available for Meyer Company: Dividends per share of common stock $1.80
Market price per share of common stock $30.00
Which of the following statements is correct?

Accepted Answer

A)  The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks. 
B)  The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments. 
C)  The dividend yield is 16.7%, which is of interest to bondholders. 
D)  The dividend yield is 16.7% which is an important measure of solvency. 
A)  The dividend yield is 6.0%, which is of interest to investors seeking an increase in market price of their stocks. 
B)  The dividend yield is 6.0%, which is of special interest to investors seeking to earn revenue on their investments. 
C)  The dividend yield is 16.7%, which is of interest to bondholders. 
D)  The dividend yield is 16.7% which is an important measure of solvency.

Question 10

The following information has been condensed from the December 31 balance sheets of Gabriel Co.:   a) Determine the ratio of fixed assets to long-term liabilities for each year.
b) Determine the ratio of liabilities to stockholders' equity for each year.
c) Comment on the year-to-year changes for both ratios. Round your answers to two decimal places.

Accepted Answer

@#IMG-DLM& c) In the second year, there are fewer

Question 11

What is the rate earned on total assets for this company?
-A company reports the following: Net income
$160,000
Preferred dividends
$10,000
Shares of common stock outstanding
20,000
Market price per share of common stock
$35
The company's earnings per share on common stock is

Accepted Answer

A)  $13.33 
B)  $8.50 
C)  $7.50 
D)  $35.00 
A)  $13.33 
B)  $8.50 
C)  $7.50 
D)  $35.00

Question 12

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

Accepted Answer

A) True 
 B)False

Question 13

Assume the following sales data for a company: Current year $325,000
Preceding year 250,000
What is the percentage increase in sales from the preceding year to the current year?

Accepted Answer

A)  70% 
B)  76.9% 
C)  30% 
D)  50% 
A)  70% 
B)  76.9% 
C)  30% 
D)  50%

Question 14

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.  
-What is the rate earned on total assets for Diane Company?

Accepted Answer

A)  10.0% 
B)  8.0% 
C)  0.10% 
D)  1.0% 
A)  10.0% 
B)  8.0% 
C)  0.10% 
D)  1.0%

Question 15

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

Accepted Answer

A) True 
 B)False

Question 16

Based on the following data, what is the accounts receivable turnover? Sales on account during year
$700,000
Cost of merchandise sold during year
270,000
Accounts receivable, beginning of year
45,000
Accounts receivable, end of year
35,000
Inventory, beginning of year
90,000
Inventory, end of year

Accepted Answer

A)  17.5 110,000 
B)  2.6 
C)  20.0 
D)  15.5 
A)  17.5 110,000 
B)  2.6 
C)  20.0 
D)  15.5

Question 17

Hsu Company reported the following on its income statement: Income before income taxes
$420,000
Income tax expense
120,000
Net income
$300,000
Interest expense was $80,000. Hsu Company's times interest earned is

Accepted Answer

A)  8 times 
B)  6.25 times 
C)  5.25 times 
D)  5 times 
A)  8 times 
B)  6.25 times 
C)  5.25 times 
D)  5 times

Question 18

Define solvency and profitability. How are they alike?

Accepted Answer

Solvency is the ability of a company to

Question 19

The following data are taken from the financial statements:   a) Assuming that credit terms on all sales are n/45, determine for each year 1) the accounts receivable turnover and 2) the number of days' sales in receivables.
Round intermediate calculations to whole numbers and final answers to two decimal places.
b) Comment on any significant trends revealed by the data.

Accepted Answer

a) @#IMG-DLM& b) Although sales increased during t

Question 20

An extraordinary item can result from

Accepted Answer

A)  a segment of the business being sold 
B)  corporate income tax being paid 
C)  a change from one accounting method to another acceptable accounting method 
D)  a transaction or event that is unusual and occurs infrequently 
A)  a segment of the business being sold 
B)  corporate income tax being paid 
C)  a change from one accounting method to another acceptable accounting method 
D)  a transaction or event that is unusual and occurs infrequently

Exam 15: Financial Statement Analysis

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?

Match each ratio that follows to its use items a-h). Items may be used more than once. -rate earned on total assets

What is the rate earned on total assets for this company? -The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.

Corporate annual reports typically do not contain

A company reports the following income statement and balance sheet information for the current year: Net income \ 180,000 Interest expense 20,000 Average total assets 2,000,000 Determine the rate earned on total assets. Round your answer to one decimal place.

An increase in the accounts receivable turnover may be due to an improvement in the collection of receivables or to a change in the granting of credit and/or in collection practices.

The following information is available for Meyer Company: Dividends per share of common stock $1.80 Market price per share of common stock $30.00 Which of the following statements is correct?

What is the rate earned on total assets for this company? -A company reports the following: Net income $160,000 Preferred dividends $10,000 Shares of common stock outstanding 20,000 Market price per share of common stock $35 The company's earnings per share on common stock is

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

Assume the following sales data for a company: Current year $325,000 Preceding year 250,000 What is the percentage increase in sales from the preceding year to the current year?

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. -What is the rate earned on total assets for Diane Company?

Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.

Based on the following data, what is the accounts receivable turnover? Sales on account during year $700,000 Cost of merchandise sold during year 270,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year

Hsu Company reported the following on its income statement: Income before income taxes $420,000 Income tax expense 120,000 Net income $300,000 Interest expense was $80,000. Hsu Company's times interest earned is

Define solvency and profitability. How are they alike?

An extraordinary item can result from

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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