Question 1

Which of the following represent situations where financial statements should be recast?

Accepted Answer

A)  Income statement and balance sheet are revised to reflect a different capitalization policy. 
B)  Interest expense is removed from net income. 
C)  Amortization or depreciation is removed yielding earnings before interest taxes and depreciation. 
D)  All of these choices are correct. 
A)  Income statement and balance sheet are revised to reflect a different capitalization policy. 
B)  Interest expense is removed from net income. 
C)  Amortization or depreciation is removed yielding earnings before interest taxes and depreciation. 
D)  All of these choices are correct.

Question 2

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

Accepted Answer

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

Question 3

Selected information from the accounting records of CDE is as follows in 000's:   What was the inventory turnover for 2014?

Accepted Answer

A)  4.61 times 
B)  5.00 times 
C)  5.45 times 
D)  None of these choices are correct 
A)  4.61 times 
B)  5.00 times 
C)  5.45 times 
D)  None of these choices are correct

Question 4

What are the possible decisions that can be made with the use of financial analysis?

Accepted Answer

A clean opinion is another ter

Question 5

Which of the following is not known as a liquidity ratio?

Accepted Answer

A)  Current ratio 
B)  Debt-to-equity 
C)  Quick ratio 
D)  Defensive-interval ratio 
A)  Current ratio 
B)  Debt-to-equity 
C)  Quick ratio 
D)  Defensive-interval ratio

Question 6

Vertical analysis is a(n):

Accepted Answer

A)  Longitudinal comparison. 
B)  Cross-sectional comparison. 
C)  Historical ratio. 
D)  Industrial ratio. 
A)  Longitudinal comparison. 
B)  Cross-sectional comparison. 
C)  Historical ratio. 
D)  Industrial ratio.

Question 7

Horizontal analysis:

Accepted Answer

A)  refers to the development of percentages indicating the proportionate change in the same item over time. 
B)  is exactly the same as "vertical analysis". 
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)  refers to the development of percentages indicating the proportionate change in the same item over time. 
B)  is exactly the same as "vertical analysis". 
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 8

Return on total assets and return on owners' equity are used to compute financial leverage.

Accepted Answer

A) True 
 B)False

Question 9

There is a section in every annual report that detail the accounting policies used by a company.Explain why this is important to users and what some of the limitations are.

Accepted Answer

There are many different but acceptable

Question 10

A company's return on investment is affected by the market price of its shares.

Accepted Answer

A) True 
 B)False

Question 11

Solvency ratios can be further classified as:

Accepted Answer

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

Question 12

The rule of thumb for the quick ratio is 1:1.When would a quick ratio below this threshold not necessarily be a concern for a company?

Accepted Answer

A)  When accounts receivable balances are high 
B)  When cash flows are steady and reliable 
C)  When inventories are high 
D)  None of these choices are correct 
A)  When accounts receivable balances are high 
B)  When cash flows are steady and reliable 
C)  When inventories are high 
D)  None of these choices are correct

Question 13

A company has a current ratio of 2 to 1.This ratio will decrease if the company:

Accepted Answer

A)  borrows cash on a six-month note. 
B)  sells merchandise for more than cost and records the sale using the perpetual inventory method. 
C)  receives a 5 percent stock dividend on one of its marketable securities. 
D)  pays a large account payable which had been a current liability. 
E)  None of these choices are correct. 
A)  borrows cash on a six-month note. 
B)  sells merchandise for more than cost and records the sale using the perpetual inventory method. 
C)  receives a 5 percent stock dividend on one of its marketable securities. 
D)  pays a large account payable which had been a current liability. 
E)  None of these choices are correct.

Question 14

What are multi-industry corporations and what problems,if any are associated with them (i.e.when analyzing their statements)?

Accepted Answer

Multi-industry corporations operate in m

Question 15

You are given the following information about JMR Corp.:   What is JMR's current ratio? (Round final answer to 2 decimal places)

Accepted Answer

A)  1.67:1 
B)  1.23:1 
C)  0.62:1 
D)  0.37:1 
A)  1.67:1 
B)  1.23:1 
C)  0.62:1 
D)  0.37:1

Question 16

GAAP requires the presentation of financial statements for the current year and the two immediately preceding reporting periods.

Accepted Answer

A) True 
 B)False

Question 17

The following data was taken from the 2014 financial statements of WXC:
Income Statement     Based on the above data,compute the following (round to nearest percent):   (a)Profit margin on sales
(b)ROI (on owners equity)
(c)EPS
(d)ROI (on total equities)
(e)Debt to owners equity
(f)Financial leverage

Accepted Answer

The answer of The following data was taken from the...

Question 18

A high working capital ratio is always a favourable situation from the shareholders' viewpoint.

Accepted Answer

A) True 
 B)False

Question 19

The effect of recording a 100 percent stock dividend would be to:

Accepted Answer

A)  leave working capital unaffected, decrease earnings per share, and decrease book value per share. 
B)  leave working capital unaffected, decrease earnings per share, and decrease the debt to equity ratio. 
C)  decrease the current ratio, decrease working capital, and decrease book value per share. 
D)  leave inventory turnover unaffected, decrease working capital, and decrease book value per share. 
E)  None of these choices are correct. 
A)  leave working capital unaffected, decrease earnings per share, and decrease book value per share. 
B)  leave working capital unaffected, decrease earnings per share, and decrease the debt to equity ratio. 
C)  decrease the current ratio, decrease working capital, and decrease book value per share. 
D)  leave inventory turnover unaffected, decrease working capital, and decrease book value per share. 
E)  None of these choices are correct.

Question 20

Return on total assets is generally considered to be a better measure of the overall profit performance of a business than is profit margin on sales.

Accepted Answer

A) True 
 B)False

Which of the following represent situations where financial statements should be recast?

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

Selected information from the accounting records of CDE is as follows in 000's: What was the inventory turnover for 2014?

What are the possible decisions that can be made with the use of financial analysis?

Which of the following is not known as a liquidity ratio?

Vertical analysis is a(n):

Horizontal analysis:

Return on total assets and return on owners' equity are used to compute financial leverage.

There is a section in every annual report that detail the accounting policies used by a company.Explain why this is important to users and what some of the limitations are.

A company's return on investment is affected by the market price of its shares.

Solvency ratios can be further classified as:

The rule of thumb for the quick ratio is 1:1.When would a quick ratio below this threshold not necessarily be a concern for a company?

A company has a current ratio of 2 to 1.This ratio will decrease if the company:

What are multi-industry corporations and what problems,if any are associated with them (i.e.when analyzing their statements)?

You are given the following information about JMR Corp.: What is JMR's current ratio? (Round final answer to 2 decimal places)

GAAP requires the presentation of financial statements for the current year and the two immediately preceding reporting periods.

The following data was taken from the 2014 financial statements of WXC: Income Statement Based on the above data,compute the following (round to nearest percent): (a)Profit margin on sales (b)ROI (on owners equity) (c)EPS (d)ROI (on total equities) (e)Debt to owners equity (f)Financial leverage

A high working capital ratio is always a favourable situation from the shareholders' viewpoint.

The effect of recording a 100 percent stock dividend would be to:

Return on total assets is generally considered to be a better measure of the overall profit performance of a business than is profit margin on sales.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Filters

Exam 11: Financial Instruments: Investments in Bonds and Equity Securities

Which of the following represent situations where financial statements should be recast?

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

Selected information from the accounting records of CDE is as follows in 000's: What was the inventory turnover for 2014?

What are the possible decisions that can be made with the use of financial analysis?

Which of the following is not known as a liquidity ratio?

Vertical analysis is a(n):

Horizontal analysis:

Return on total assets and return on owners' equity are used to compute financial leverage.

There is a section in every annual report that detail the accounting policies used by a company.Explain why this is important to users and what some of the limitations are.

A company's return on investment is affected by the market price of its shares.

Solvency ratios can be further classified as:

The rule of thumb for the quick ratio is 1:1.When would a quick ratio below this threshold not necessarily be a concern for a company?

A company has a current ratio of 2 to 1.This ratio will decrease if the company:

What are multi-industry corporations and what problems,if any are associated with them (i.e.when analyzing their statements)?

You are given the following information about JMR Corp.: What is JMR's current ratio? (Round final answer to 2 decimal places)

GAAP requires the presentation of financial statements for the current year and the two immediately preceding reporting periods.

The following data was taken from the 2014 financial statements of WXC: Income Statement Based on the above data,compute the following (round to nearest percent): (a)Profit margin on sales (b)ROI (on owners equity) (c)EPS (d)ROI (on total equities) (e)Debt to owners equity (f)Financial leverage

A high working capital ratio is always a favourable situation from the shareholders' viewpoint.

The effect of recording a 100 percent stock dividend would be to:

Return on total assets is generally considered to be a better measure of the overall profit performance of a business than is profit margin on sales.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Filters