Question 1

In ratio analysis, the ratios are never expressed as a

Accepted Answer

A) rate. 
B) negative figure. 
C) percentage. 
D) simple proportion. 
A) rate. 
B) negative figure. 
C) percentage. 
D) simple proportion.

Question 2

Dean Corporation reported net income $58,000, net sales $500,000, and average assets $800,000 for 2015. The 2015 profit margin was:

Accepted Answer

A) 5.8%. 
B) 11.6%. 
C) 62.5%. 
D) 160%. 
A) 5.8%. 
B) 11.6%. 
C) 62.5%. 
D) 160%.

Question 3

A weakness of the current ratio is

Accepted Answer

A) the difficulty of the calculation. 
B) that it doesn't take into account the composition of the current assets. 
C) that it is rarely used by sophisticated analysts. 
D) that it can be expressed as a percentage, as a rate, or as a proportion. 
A) the difficulty of the calculation. 
B) that it doesn't take into account the composition of the current assets. 
C) that it is rarely used by sophisticated analysts. 
D) that it can be expressed as a percentage, as a rate, or as a proportion.

Question 4

What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?

Accepted Answer

A) Leverage 
B) Solvency 
C) Profitability 
D) Liquidity 
A) Leverage 
B) Solvency 
C) Profitability 
D) Liquidity

Question 5

Assume the following sales data for a company:   If 2014 is the base year, what is the percentage increase in sales from 2014 to 2015?

Accepted Answer

A) 76.9% 
B) 30% 
C) 40% 
D) 71.4% 
A) 76.9% 
B) 30% 
C) 40% 
D) 71.4%

Question 6

In vertical analysis, the base amount in an income statement is usually net sales.

Accepted Answer

A) True 
 B)False

Question 7

All revenue and expense items are considered ordinary in nature under

Accepted Answer

A) both IFRS and GAAP. 
B) GAAP. 
C) IFRS. 
D) neither IFRS or GAAP. 
A) both IFRS and GAAP. 
B) GAAP. 
C) IFRS. 
D) neither IFRS or GAAP.

Question 8

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?

Accepted Answer

A) Liquidity 
B) Profitability 
C) Marketability 
D) Solvency 
A) Liquidity 
B) Profitability 
C) Marketability 
D) Solvency

Question 9

Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000. The average number of days in inventory during the year was

Accepted Answer

A) 365 days. 
B) 60.8 days. 
C) 50.7 days. 
D) 30 days. 
A) 365 days. 
B) 60.8 days. 
C) 50.7 days. 
D) 30 days.

Question 10

Pan Inc. has an investment in available-for-sale securities of $70,000. This investment experienced an unrealized loss of $6,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be

Accepted Answer

A) no effect. 
B) $70,000 increase. 
C) $24,500 decrease. 
D) $6,000 decrease. 
A) no effect. 
B) $70,000 increase. 
C) $24,500 decrease. 
D) $6,000 decrease.

Question 11

Comparative balance sheets are usually prepared for

Accepted Answer

A) one year. 
B) two years. 
C) three years. 
D) four years. 
A) one year. 
B) two years. 
C) three years. 
D) four years.

Question 12

The current ratio may also be referred to as the

Accepted Answer

A) short run ratio. 
B) acid-test ratio. 
C) working capital ratio. 
D) contemporary ratio. 
A) short run ratio. 
B) acid-test ratio. 
C) working capital ratio. 
D) contemporary ratio.

Question 13

Saira, Inc. has the following income statement (in millions):   Using vertical analysis, what percentage is assigned to Net Income?

Accepted Answer

A) 625% 
B) 40% 
C) 25% 
D) None of these answer choices are correct. 
A) 625% 
B) 40% 
C) 25% 
D) None of these answer choices are correct.

Question 14

When performing vertical analysis, the base amount for administrative expense is generally

Accepted Answer

A) administrative expense in a previous year. 
B) net sales. 
C) gross profit. 
D) fixed assets. 
A) administrative expense in a previous year. 
B) net sales. 
C) gross profit. 
D) fixed assets.

Question 15

Horizontal analysis evaluates a series of financial statement data over a period of time

Accepted Answer

A) that has been arranged from the highest number to the lowest number. 
B) that has been arranged from the lowest number to the highest number. 
C) to determine which items are in error. 
D) to determine the amount and/or percentage increase or decrease that has taken place. 
A) that has been arranged from the highest number to the lowest number. 
B) that has been arranged from the lowest number to the highest number. 
C) to determine which items are in error. 
D) to determine the amount and/or percentage increase or decrease that has taken place.

Question 16

Vertical and horizontal analyses are concerned with the format used to prepare financial statements.

Accepted Answer

A) True 
 B)False

Question 17

The debt to assets ratio

Accepted Answer

A) is a solvency ratio. 
B) is computed by dividing total assets by total debt. 
C) measures the total assets provided by stockholders. 
D) is a profitability ratio. 
A) is a solvency ratio. 
B) is computed by dividing total assets by total debt. 
C) measures the total assets provided by stockholders. 
D) is a profitability ratio.

Question 18

The accounting for each of the following is the same under IFRS and GAAP except for

Accepted Answer

A) extraordinary items. 
B) discontinued operations. 
C) changes in accounting principles. 
D) changes in accounting estimates. 
A) extraordinary items. 
B) discontinued operations. 
C) changes in accounting principles. 
D) changes in accounting estimates.

Question 19

A loss on the write down of obsolete inventory should be reported as

Accepted Answer

A) "other expenses and losses." 
B) part of discontinued operations. 
C) an operating expense. 
D) an extraordinary item. 
A) "other expenses and losses." 
B) part of discontinued operations. 
C) an operating expense. 
D) an extraordinary item.

Question 20

Troy, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division's assets with a book value of $1,260,000 are sold for $840,000. Operating income from January 1 to June 30 for the division amounted to $130,000. Ignoring income taxes, what total amount should be reported on Troy's income statement for the current year under the caption, Discontinued Operations?

Accepted Answer

A) $130,000 
B) $290,000 loss 
C) $420,000 loss 
D) $550,000 
A) $130,000 
B) $290,000 loss 
C) $420,000 loss 
D) $550,000

In ratio analysis, the ratios are never expressed as a

Dean Corporation reported net income $58,000, net sales $500,000, and average assets $800,000 for 2015. The 2015 profit margin was:

A weakness of the current ratio is

What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?

Assume the following sales data for a company: If 2014 is the base year, what is the percentage increase in sales from 2014 to 2015?

In vertical analysis, the base amount in an income statement is usually net sales.

All revenue and expense items are considered ordinary in nature under

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?

Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000. The average number of days in inventory during the year was

Pan Inc. has an investment in available-for-sale securities of $70,000. This investment experienced an unrealized loss of $6,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be

Comparative balance sheets are usually prepared for

The current ratio may also be referred to as the

Saira, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to Net Income?

When performing vertical analysis, the base amount for administrative expense is generally

Horizontal analysis evaluates a series of financial statement data over a period of time

Vertical and horizontal analyses are concerned with the format used to prepare financial statements.

The debt to assets ratio

The accounting for each of the following is the same under IFRS and GAAP except for

A loss on the write down of obsolete inventory should be reported as

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Filters

Exam 14: Financial Statement Analysis

In ratio analysis, the ratios are never expressed as a

Dean Corporation reported net income $58,000, net sales $500,000, and average assets $800,000 for 2015. The 2015 profit margin was:

A weakness of the current ratio is

What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?

Assume the following sales data for a company: If 2014 is the base year, what is the percentage increase in sales from 2014 to 2015?

In vertical analysis, the base amount in an income statement is usually net sales.

All revenue and expense items are considered ordinary in nature under

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?

Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000. The average number of days in inventory during the year was

Pan Inc. has an investment in available-for-sale securities of $70,000. This investment experienced an unrealized loss of $6,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be

Comparative balance sheets are usually prepared for

The current ratio may also be referred to as the

Saira, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to Net Income?

When performing vertical analysis, the base amount for administrative expense is generally

Horizontal analysis evaluates a series of financial statement data over a period of time

Vertical and horizontal analyses are concerned with the format used to prepare financial statements.

The debt to assets ratio

The accounting for each of the following is the same under IFRS and GAAP except for

A loss on the write down of obsolete inventory should be reported as

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Filters