Question 1

A debt-equity ratio in excess of 1 indicates that a majority of the entity's resources was provided by the shareholders' or is reflected in shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 2

To calculate the book value per common share, total shareholders' equity (including retained earnings)must be allocated to the respective common and preferred equities.

Accepted Answer

A) True 
 B)False

Question 3

A qualified auditor's opinion means that in the judgment of the auditor:

Accepted Answer

A) a number of substantive items on the financial statements are doubtful as to their ultimate outcome. 
B) one, or only a few minor, items on the financial statements are doubtful as to their ultimate outcome. 
C) all items on the financial statements are in conformity with GAAP. 
D) the audit was not completed. 
E) None of these choices are correct. 
A) a number of substantive items on the financial statements are doubtful as to their ultimate outcome. 
B) one, or only a few minor, items on the financial statements are doubtful as to their ultimate outcome. 
C) all items on the financial statements are in conformity with GAAP. 
D) the audit was not completed. 
E) None of these choices are correct.

Question 4

What do the liquidity ratios focus on? Name two liquidity ratios.

Accepted Answer

Current ratio, quick ratio, defensive-in

Question 5

The accounts receivable turnover ratio is a measure of:

Accepted Answer

A) The average length of time that it takes to collect the accounts receivable. 
B) The amount of time that it takes to create more receivables. 
C) The number of days that it takes to collect the receivables. 
D) None of these choices are correct. 
A) The average length of time that it takes to collect the accounts receivable. 
B) The amount of time that it takes to create more receivables. 
C) The number of days that it takes to collect the receivables. 
D) None of these choices are correct.

Question 6

The section on significant accounting policies describes where deviations from GAAP have occurred.

Accepted Answer

A) True 
 B)False

Question 7

Upon analyzing the financial statements of KER Ltd., you notice that there have been few capital asset acquisitions and that capital assets seem low relative to the type of business the company is in.This observation may mean that KER Ltd.is engaged in a(n):

Accepted Answer

A) Off-balance-sheet financing. 
B) Smoothing strategy. 
C) Profit maximization strategy. 
D) Income tax minimization strategy. 
A) Off-balance-sheet financing. 
B) Smoothing strategy. 
C) Profit maximization strategy. 
D) Income tax minimization strategy.

Question 8

A statement of accounting policies is required to be clearly enunciated in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Information from LMN's balance sheet at December 31, 2014, is as follows in millions: Current assets:   Current liabilities:   What is the quick (acid-test)ratio?

Accepted Answer

A) $968/$1,044 
B) $448/$204 
C) $440/$324 
D) $440/$204 
E) None of these choices are correct 
A) $968/$1,044 
B) $448/$204 
C) $440/$324 
D) $440/$204 
E) None of these choices are correct

Question 10

The quick (or acid-test)ratio always will be less than, or equal to, the current ratio.

Accepted Answer

A) True 
 B)False

Question 11

Which division has the lowest return on sales?

Accepted Answer

The magazine divisio

Question 12

Which of the following ratios is an indicator of liquidity?

Accepted Answer

A) The Debt-to-Total Assets Ratio. 
B) The Inventory Turnover Ratio 
C) The Current Ratio. 
D) The Age of Receivables Ratio. 
A) The Debt-to-Total Assets Ratio. 
B) The Inventory Turnover Ratio 
C) The Current Ratio. 
D) The Age of Receivables Ratio.

Question 13

Horizontal analysis:

Accepted Answer

A) is exactly the same as "vertical analysis". 
B) refers to the development of percentages indicating the proportionate change in the same item over time. 
C) is useful for balance sheet but not for income statement. 
D) involves the expression of each item on a particular period's financial statements as a percent of one specific item which is referred to as a base. 
E) None of these choices are correct. 
A) is exactly the same as "vertical analysis". 
B) refers to the development of percentages indicating the proportionate change in the same item over time. 
C) is useful for balance sheet but not for income statement. 
D) involves the expression of each item on a particular period's financial statements as a percent of one specific item which is referred to as a base. 
E) None of these choices are correct.

Question 14

Profit margin on sales is very relevant for purposes of comparison, both between periods and between similar companies.

Accepted Answer

A) True 
 B)False

Question 15

A clean opinion is another term to describe a company that has received an unqualified audit report.

Accepted Answer

A) True 
 B)False

Question 16

Disclosure of significant accounting policies results from application of the:

Accepted Answer

A) full disclosure principle. 
B) matching principle. 
C) consistency principle. 
D) reliability principle. 
A) full disclosure principle. 
B) matching principle. 
C) consistency principle. 
D) reliability principle.

Question 17

There are certain situations where it is necessary to recast the financial statements in order to analyze them.All of the following are examples of the need to recast except:

Accepted Answer

A) Interest on long-term debt amounted to $1,000,000. 
B) The income statement contains a number of gains not expected to occur in the future. 
C) There have been a number of temporary differences.They remain on the balance sheet. 
D) Asset purchases were made during the year. 
A) Interest on long-term debt amounted to $1,000,000. 
B) The income statement contains a number of gains not expected to occur in the future. 
C) There have been a number of temporary differences.They remain on the balance sheet. 
D) Asset purchases were made during the year.

Question 18

What do efficiency ratios measure?

Accepted Answer

Efficiency ratios attempt to m

Question 19

Solvency ratios can be further classified as:

Accepted Answer

A) Liquidity ratios. 
B) Asset ratios. 
C) Fixed ratios. 
D) Leverage ratios. 
A) Liquidity ratios. 
B) Asset ratios. 
C) Fixed ratios. 
D) Leverage ratios.

Question 20

In calculating the book value per common share, total owners equity must be allocated to the respective common and preferred.

Accepted Answer

A) True 
 B)False

A debt-equity ratio in excess of 1 indicates that a majority of the entity's resources was provided by the shareholders' or is reflected in shareholders' equity.

To calculate the book value per common share, total shareholders' equity (including retained earnings)must be allocated to the respective common and preferred equities.

A qualified auditor's opinion means that in the judgment of the auditor:

What do the liquidity ratios focus on? Name two liquidity ratios.

The accounts receivable turnover ratio is a measure of:

The section on significant accounting policies describes where deviations from GAAP have occurred.

Upon analyzing the financial statements of KER Ltd., you notice that there have been few capital asset acquisitions and that capital assets seem low relative to the type of business the company is in.This observation may mean that KER Ltd.is engaged in a(n):

A statement of accounting policies is required to be clearly enunciated in the notes to the financial statements.

Information from LMN's balance sheet at December 31, 2014, is as follows in millions: Current assets: Current liabilities: What is the quick (acid-test)ratio?

The quick (or acid-test)ratio always will be less than, or equal to, the current ratio.

Which division has the lowest return on sales?

Which of the following ratios is an indicator of liquidity?

Horizontal analysis:

Profit margin on sales is very relevant for purposes of comparison, both between periods and between similar companies.

A clean opinion is another term to describe a company that has received an unqualified audit report.

Disclosure of significant accounting policies results from application of the:

There are certain situations where it is necessary to recast the financial statements in order to analyze them.All of the following are examples of the need to recast except:

What do efficiency ratios measure?

Solvency ratios can be further classified as:

In calculating the book value per common share, total owners equity must be allocated to the respective common and preferred.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Filters

Exam 22: Financial Statement Analysis

A debt-equity ratio in excess of 1 indicates that a majority of the entity's resources was provided by the shareholders' or is reflected in shareholders' equity.

To calculate the book value per common share, total shareholders' equity (including retained earnings)must be allocated to the respective common and preferred equities.

A qualified auditor's opinion means that in the judgment of the auditor:

What do the liquidity ratios focus on? Name two liquidity ratios.

The accounts receivable turnover ratio is a measure of:

The section on significant accounting policies describes where deviations from GAAP have occurred.

Upon analyzing the financial statements of KER Ltd., you notice that there have been few capital asset acquisitions and that capital assets seem low relative to the type of business the company is in.This observation may mean that KER Ltd.is engaged in a(n):

A statement of accounting policies is required to be clearly enunciated in the notes to the financial statements.

Information from LMN's balance sheet at December 31, 2014, is as follows in millions: Current assets: Current liabilities: What is the quick (acid-test)ratio?

The quick (or acid-test)ratio always will be less than, or equal to, the current ratio.

Which division has the lowest return on sales?

Which of the following ratios is an indicator of liquidity?

Horizontal analysis:

Profit margin on sales is very relevant for purposes of comparison, both between periods and between similar companies.

A clean opinion is another term to describe a company that has received an unqualified audit report.

Disclosure of significant accounting policies results from application of the:

There are certain situations where it is necessary to recast the financial statements in order to analyze them.All of the following are examples of the need to recast except:

What do efficiency ratios measure?

Solvency ratios can be further classified as:

In calculating the book value per common share, total owners equity must be allocated to the respective common and preferred.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Post-Employment Benefits

Earnings Per Share

Accounting Changes

Filters