Question 1

A(n)________ is a distinguishable part of a business that is subject to a different set of risks and returns than other parts of the business.

Accepted Answer

A) extraordinary event 
B) business segment 
C) product line 
D) manufacturing line 
A) extraordinary event 
B) business segment 
C) product line 
D) manufacturing line

Question 2

Danio's Diagnostics had a loss from discontinued operations of $130,000. If their corporate tax rate is 40%, at what amount will the loss be shown on the Income Statement?

Accepted Answer

A) $130,000 
B) $78,000 
C) $52,000 
D) Not enough information is given to answer the question. 
A) $130,000 
B) $78,000 
C) $52,000 
D) Not enough information is given to answer the question.

Question 3

Knowing the dollar amount of change from year-to-year in an account is less relevant than knowing the percentage change.

Accepted Answer

A) True 
 B)False

Question 4

Butterfly Tours has a cash balance of $75,000; short-term investments of $19,000; net receivables of $60,000; and inventory of $400,000. Current liabilities total $170,000. The quick ratio is: (Round your final answer to two decimal places.)

Accepted Answer

A) 3.26 to 1. 
B) 2.91 to 1. 
C) 0.91 to 1. 
D) 0.79 to 1. 
A) 3.26 to 1. 
B) 2.91 to 1. 
C) 0.91 to 1. 
D) 0.79 to 1.

Question 5

A business model deals with how a business makes customers want to buy their product.

Accepted Answer

A) True 
 B)False

Question 6

The following is a common-sized Income Statement for Sydney and Caesar Companies.  
Which company has the best cost of goods sold percentage?

Accepted Answer

A) Not enough information is given to assess the question. 
B) Sydney Company 
C) Caesar Company 
D) Too close to make a solid determination. 
A) Not enough information is given to assess the question. 
B) Sydney Company 
C) Caesar Company 
D) Too close to make a solid determination.

Question 7

In a common-size Income Statement, selling expenses are 55%. This means that they are 55% of:

Accepted Answer

A) net income. 
B) net sales. 
C) gross profit. 
D) net profit. 
A) net income. 
B) net sales. 
C) gross profit. 
D) net profit.

Question 8

Coyote Corp. reported the following for 2016:  
What are the earnings per share for Coyote Corp.? (Round your final answer to the nearest cent.)

Accepted Answer

A) $3.35/share 
B) $25.75/share 
C) $0.42/share 
D) $3.76/share 
A) $3.35/share 
B) $25.75/share 
C) $0.42/share 
D) $3.76/share

Question 9

The interest coverage ratio is an indicator of a company's ability to repay interest on its debt.

Accepted Answer

A) True 
 B)False

Question 10

The debt ratio is the relationship between:

Accepted Answer

A) current assets and current liabilities. 
B) current assets and total liabilities. 
C) total assets and total liabilities. 
D) total assets and current liabilities. 
A) current assets and current liabilities. 
B) current assets and total liabilities. 
C) total assets and total liabilities. 
D) total assets and current liabilities.

Question 11

With a beginning Accounts Receivable balance of $76,000; an ending Accounts Receivable balance of $124,000; and Sales of $900,000, the Accounts Receivable turnover is: (Round your final answer to two decimal places.)

Accepted Answer

A) 9.00. 
B) 11.84. 
C) 23.68. 
D) 14.47. 
A) 9.00. 
B) 11.84. 
C) 23.68. 
D) 14.47.

Question 12

A comparison of the amounts for the same item in the financial statements of two or more periods is called:

Accepted Answer

A) vertical analysis. 
B) comparative analysis. 
C) horizontal analysis. 
D) trend analysis. 
A) vertical analysis. 
B) comparative analysis. 
C) horizontal analysis. 
D) trend analysis.

Question 13

Which section of the Income Statement is reported net of income taxes or net of income tax savings?

Accepted Answer

A) All sections are reported net of taxes. 
B) Discontinued operations section 
C) Continuing operations section 
D) Other income (expense)section 
A) All sections are reported net of taxes. 
B) Discontinued operations section 
C) Continuing operations section 
D) Other income (expense)section

Question 14

A business's competitive environment describes:

Accepted Answer

A) how a business competes for critical resources. 
B) how a business is affected by the overall economy. 
C) how a business uses its business model to create a competitive advantage. 
D) how a business makes its product. 
A) how a business competes for critical resources. 
B) how a business is affected by the overall economy. 
C) how a business uses its business model to create a competitive advantage. 
D) how a business makes its product.

Question 15

Why would a high debt ratio be a red flag in a financial statement analysis?

Accepted Answer

A) The company is borrowing more than it is earning. 
B) The company may be unable to pay its debts. 
C) The company is paying too much interest. 
D) Both A and B are reasons why it would be a red flag. 
A) The company is borrowing more than it is earning. 
B) The company may be unable to pay its debts. 
C) The company is paying too much interest. 
D) Both A and B are reasons why it would be a red flag.

Question 16

Wildling Supply Company has net sales of $1,150,000, net income of $90,000, average current assets of $50,000, average fixed assets of $182,000, and average total assets of $232,000. Wildling's total asset turnover ratio is: (Round your final answer to two decimal places.)

Accepted Answer

A) 23.00. 
B) 0.16. 
C) 6.32. 
D) 4.96. 
A) 23.00. 
B) 0.16. 
C) 6.32. 
D) 4.96.

Question 17

The net working capital for a company with current assets of $69,000, quick assets of $32,000 total assets of $130,000, current liabilities of $48,000 and net sales of $82,000 would be:

Accepted Answer

A) $101,000. 
B) $53,000. 
C) $13,000. 
D) $21,000. 
A) $101,000. 
B) $53,000. 
C) $13,000. 
D) $21,000.

Question 18

Which of the following ratios measures the earnings of a company on each dollar of assets invested?

Accepted Answer

A) Return on assets 
B) Return on sales 
C) Return on equity 
D) Current ratio 
A) Return on assets 
B) Return on sales 
C) Return on equity 
D) Current ratio

Question 19

Common-size statements are useful when comparing a company's performance against that of a company of a different size.

Accepted Answer

A) True 
 B)False

Question 20

Illusion Inc.'s operating income for the year was $78,000. The interest expense was $11,400 and the income tax expense was $6,000. Illusion Inc.'s interest coverage ratio for the year is: (Round your final answer to two decimal places.)

Accepted Answer

A) 13.00. 
B) 4.48. 
C) 6.84. 
D) 0.15. 
A) 13.00. 
B) 4.48. 
C) 6.84. 
D) 0.15.

A(n)________ is a distinguishable part of a business that is subject to a different set of risks and returns than other parts of the business.

Danio's Diagnostics had a loss from discontinued operations of $130,000. If their corporate tax rate is 40%, at what amount will the loss be shown on the Income Statement?

Knowing the dollar amount of change from year-to-year in an account is less relevant than knowing the percentage change.

Butterfly Tours has a cash balance of $75,000; short-term investments of $19,000; net receivables of $60,000; and inventory of $400,000. Current liabilities total $170,000. The quick ratio is: (Round your final answer to two decimal places.)

A business model deals with how a business makes customers want to buy their product.

The following is a common-sized Income Statement for Sydney and Caesar Companies. Which company has the best cost of goods sold percentage?

In a common-size Income Statement, selling expenses are 55%. This means that they are 55% of:

Coyote Corp. reported the following for 2016: What are the earnings per share for Coyote Corp.? (Round your final answer to the nearest cent.)

The interest coverage ratio is an indicator of a company's ability to repay interest on its debt.

The debt ratio is the relationship between:

With a beginning Accounts Receivable balance of $76,000; an ending Accounts Receivable balance of $124,000; and Sales of $900,000, the Accounts Receivable turnover is: (Round your final answer to two decimal places.)

A comparison of the amounts for the same item in the financial statements of two or more periods is called:

Which section of the Income Statement is reported net of income taxes or net of income tax savings?

A business's competitive environment describes:

Why would a high debt ratio be a red flag in a financial statement analysis?

Wildling Supply Company has net sales of $1,150,000, net income of $90,000, average current assets of $50,000, average fixed assets of $182,000, and average total assets of $232,000. Wildling's total asset turnover ratio is: (Round your final answer to two decimal places.)

The net working capital for a company with current assets of $69,000, quick assets of $32,000 total assets of $130,000, current liabilities of $48,000 and net sales of $82,000 would be:

Which of the following ratios measures the earnings of a company on each dollar of assets invested?

Common-size statements are useful when comparing a company's performance against that of a company of a different size.

Illusion Inc.'s operating income for the year was $78,000. The interest expense was $11,400 and the income tax expense was $6,000. Illusion Inc.'s interest coverage ratio for the year is: (Round your final answer to two decimal places.)

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Filters

Exam 12: Financial Statement Analysis

A(n)________ is a distinguishable part of a business that is subject to a different set of risks and returns than other parts of the business.

Danio's Diagnostics had a loss from discontinued operations of $130,000. If their corporate tax rate is 40%, at what amount will the loss be shown on the Income Statement?

Knowing the dollar amount of change from year-to-year in an account is less relevant than knowing the percentage change.

Butterfly Tours has a cash balance of $75,000; short-term investments of $19,000; net receivables of $60,000; and inventory of $400,000. Current liabilities total $170,000. The quick ratio is: (Round your final answer to two decimal places.)

A business model deals with how a business makes customers want to buy their product.

The following is a common-sized Income Statement for Sydney and Caesar Companies. Which company has the best cost of goods sold percentage?

In a common-size Income Statement, selling expenses are 55%. This means that they are 55% of:

Coyote Corp. reported the following for 2016: What are the earnings per share for Coyote Corp.? (Round your final answer to the nearest cent.)

The interest coverage ratio is an indicator of a company's ability to repay interest on its debt.

The debt ratio is the relationship between:

With a beginning Accounts Receivable balance of $76,000; an ending Accounts Receivable balance of $124,000; and Sales of $900,000, the Accounts Receivable turnover is: (Round your final answer to two decimal places.)

A comparison of the amounts for the same item in the financial statements of two or more periods is called:

Which section of the Income Statement is reported net of income taxes or net of income tax savings?

A business's competitive environment describes:

Why would a high debt ratio be a red flag in a financial statement analysis?

Wildling Supply Company has net sales of $1,150,000, net income of $90,000, average current assets of $50,000, average fixed assets of $182,000, and average total assets of $232,000. Wildling's total asset turnover ratio is: (Round your final answer to two decimal places.)

The net working capital for a company with current assets of $69,000, quick assets of $32,000 total assets of $130,000, current liabilities of $48,000 and net sales of $82,000 would be:

Which of the following ratios measures the earnings of a company on each dollar of assets invested?

Common-size statements are useful when comparing a company's performance against that of a company of a different size.

Illusion Inc.'s operating income for the year was $78,000. The interest expense was $11,400 and the income tax expense was $6,000. Illusion Inc.'s interest coverage ratio for the year is: (Round your final answer to two decimal places.)

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Filters