Question 1

Horizontal analysis of comparative financial statements includes the

Accepted Answer

A) development of common size statements. 
B) calculation of liquidity ratios. 
C) calculation of dollar amount and percentage changes from financial statements over a period of time, as compared to a base year. 
D) evaluation of financial statement data that expresses each item in a financial statement as a percentage of a base amount. 
A) development of common size statements. 
B) calculation of liquidity ratios. 
C) calculation of dollar amount and percentage changes from financial statements over a period of time, as compared to a base year. 
D) evaluation of financial statement data that expresses each item in a financial statement as a percentage of a base amount.

Question 2

In performing a vertical analysis, the base for cost of goods sold is

Accepted Answer

A) total selling expenses. 
B) net sales. 
C) total revenues. 
D) total expenses. 
A) total selling expenses. 
B) net sales. 
C) total revenues. 
D) total expenses.

Question 3

Winsor Clothing 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 $7,200,000.The average collection period of the accounts receivable in terms of days was

Accepted Answer

A) 30 days. 
B) 81.1 days. 
C) 42.4 days. 
D) 40.6 days. 
A) 30 days. 
B) 81.1 days. 
C) 42.4 days. 
D) 40.6 days.

Question 4

Comparisons of company data with industry averages provide information about a company's relative position within the industry.

Accepted Answer

A) True 
 B)False

Question 5

A balance sheet that displays only component percentages is called a ________ balance sheet.

Accepted Answer

A) condensed 
B) common size 
C) comparative 
D) trendy 
A) condensed 
B) common size 
C) comparative 
D) trendy

Question 6

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.     What is the return on common stockholders' equity for this company?

Accepted Answer

A) 25.8% 
B) 12.9% 
C) 22.6% 
D) 32.3% 
A) 25.8% 
B) 12.9% 
C) 22.6% 
D) 32.3%

Question 7

Dandy Candy Company sold its licorice division resulting in a loss of $80,000.Assuming a tax rate of 25%, the loss on this disposal will be reported on the income statement at what amount?

Accepted Answer

A) $100,000 
B) $20,000 
C) $80,000 
D) $60,000 
A) $100,000 
B) $20,000 
C) $80,000 
D) $60,000

Question 8

Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2021, 2022, and 2023, respectively.If 2021 is the base year, what percentage do 2023 sales represent of the base?

Accepted Answer

A) 108% 
B) 120% 
C) 83% 
D) 20% 
A) 108% 
B) 120% 
C) 83% 
D) 20%

Question 9

Vertical analysis is a technique that expresses each item in a financial statement

Accepted Answer

A) in dollars and cents. 
B) as a percent of the item in the previous year. 
C) as a percent of a base amount. 
D) starting with the highest value down to the lowest value. 
A) in dollars and cents. 
B) as a percent of the item in the previous year. 
C) as a percent of a base amount. 
D) starting with the highest value down to the lowest value.

Question 10

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.     What is the return on common stockholders' equity for this company?

Accepted Answer

A) 13.3% 
B) 5.0% 
C) 23.3% 
D) 53.3% 
A) 13.3% 
B) 5.0% 
C) 23.3% 
D) 53.3%

Question 11

Salamagundi, Inc.has the following Income Statement (in millions):   Using vertical analysis, what percentage is assigned to net sales?

Accepted Answer

A) 160% 
B) Can't be computed. 
C) 60% 
D) 100% 
A) 160% 
B) Can't be computed. 
C) 60% 
D) 100%

Question 12

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 13

Intracompany comparisons of the same financial statement items are often useful to detect changes in financial relationships and significant trends.

Accepted Answer

A) True 
 B)False

Question 14

All of the following may be indicators of channel stuffing except

Accepted Answer

A) deep discounts to customers. 
B) customers incentives for buying early. 
C) an extremely good earnings period followed by several subsequent bad periods. 
D) inventory levels that reflect seasonal demand levels. 
A) deep discounts to customers. 
B) customers incentives for buying early. 
C) an extremely good earnings period followed by several subsequent bad periods. 
D) inventory levels that reflect seasonal demand levels.

Question 15

In vertical analysis,

Accepted Answer

A) a base amount is required. 
B) a base amount is optional. 
C) the same base is used across all financial statements analyzed. 
D) the results of the horizontal analysis are necessary inputs for performing the analysis. 
A) a base amount is required. 
B) a base amount is optional. 
C) the same base is used across all financial statements analyzed. 
D) the results of the horizontal analysis are necessary inputs for performing the analysis.

Question 16

Common size analysis expresses each item in a financial statement as a percent of a base amount.

Accepted Answer

A) True 
 B)False

Question 17

The debt to assets ratio measures

Accepted Answer

A) the company's profitability. 
B) whether interest can be paid on debt in the current year. 
C) the proportion of interest paid relative to dividends paid. 
D) the percentage of the total assets provided by creditors. 
A) the company's profitability. 
B) whether interest can be paid on debt in the current year. 
C) the proportion of interest paid relative to dividends paid. 
D) the percentage of the total assets provided by creditors.

Question 18

Which of the following is the best definition of sustainable income?

Accepted Answer

A) Sustainable income is a measure of solvency that does not include capital expenditure. 
B) Sustainable income is the same as net income. 
C) Sustainable income is income that is unusual in nature and infrequent in occurrence. 
D) Sustainable income is the most likely level of income to be obtained in the future. 
A) Sustainable income is a measure of solvency that does not include capital expenditure. 
B) Sustainable income is the same as net income. 
C) Sustainable income is income that is unusual in nature and infrequent in occurrence. 
D) Sustainable income is the most likely level of income to be obtained in the future.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Assume the following sales data for a company:   If 2021 is the base year, what is the percentage increase in sales from 2021 to 2022?

Accepted Answer

A) 60% 
B) 25% 
C) 125% 
D) 160% 
A) 60% 
B) 25% 
C) 125% 
D) 160%

Horizontal analysis of comparative financial statements includes the

In performing a vertical analysis, the base for cost of goods sold is

Winsor Clothing 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 $7,200,000.The average collection period of the accounts receivable in terms of days was

Comparisons of company data with industry averages provide information about a company's relative position within the industry.

A balance sheet that displays only component percentages is called a ________ balance sheet.

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

Dandy Candy Company sold its licorice division resulting in a loss of $80,000.Assuming a tax rate of 25%, the loss on this disposal will be reported on the income statement at what amount?

Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2021, 2022, and 2023, respectively.If 2021 is the base year, what percentage do 2023 sales represent of the base?

Vertical analysis is a technique that expresses each item in a financial statement

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

Salamagundi, Inc.has the following Income Statement (in millions): Using vertical analysis, what percentage is assigned to net sales?

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

Intracompany comparisons of the same financial statement items are often useful to detect changes in financial relationships and significant trends.

All of the following may be indicators of channel stuffing except

In vertical analysis,

Common size analysis expresses each item in a financial statement as a percent of a base amount.

The debt to assets ratio measures

Which of the following is the best definition of sustainable income?

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

Assume the following sales data for a company: If 2021 is the base year, what is the percentage increase in sales from 2021 to 2022?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

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Exam 13: Financial Analysis: The Big Picture

Horizontal analysis of comparative financial statements includes the

In performing a vertical analysis, the base for cost of goods sold is

Winsor Clothing 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 $7,200,000.The average collection period of the accounts receivable in terms of days was

Comparisons of company data with industry averages provide information about a company's relative position within the industry.

A balance sheet that displays only component percentages is called a ________ balance sheet.

The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

Dandy Candy Company sold its licorice division resulting in a loss of $80,000.Assuming a tax rate of 25%, the loss on this disposal will be reported on the income statement at what amount?

Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2021, 2022, and 2023, respectively.If 2021 is the base year, what percentage do 2023 sales represent of the base?

Vertical analysis is a technique that expresses each item in a financial statement

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

Salamagundi, Inc.has the following Income Statement (in millions): Using vertical analysis, what percentage is assigned to net sales?

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

Intracompany comparisons of the same financial statement items are often useful to detect changes in financial relationships and significant trends.

All of the following may be indicators of channel stuffing except

In vertical analysis,

Common size analysis expresses each item in a financial statement as a percent of a base amount.

The debt to assets ratio measures

Which of the following is the best definition of sustainable income?

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

Assume the following sales data for a company: If 2021 is the base year, what is the percentage increase in sales from 2021 to 2022?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

Filters