Question 1

Financial statement analysis is only used to determine whether a company is worth investing in.

Accepted Answer

A) True 
 B)False

Question 2

Liquidity ratios essentially provide information about a company's ability to meet its short term obligations,while solvency ratios evaluate a company's long-term going-concern potential.

Accepted Answer

A) True 
 B)False

Question 3

A primary reason for the analysis of financial statements is identification of major changes and to provide relative relationships among dollar amounts.

Accepted Answer

A) True 
 B)False

Question 4

Selected information for HIJ in 000's is as follows:   HIJ's return on average common shareholders' equity,rounded to the nearest percentage point,for 2014 is: (Round percentage answer to nearest whole percent)

Accepted Answer

A)  17 percent. 
B)  19 percent. 
C)  23 percent. 
D)  15 percent. 
E)  None of these choices are correct. 
A)  17 percent. 
B)  19 percent. 
C)  23 percent. 
D)  15 percent. 
E)  None of these choices are correct.

Question 5

What are some advantages to using ratio analysis? What are some of its limitations?

Accepted Answer

Advantages
Ratios allow the user compare

Question 6

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 7

Upon reading the notes to the financial statements of KAR Ltd.,you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

Accepted Answer

A)  Smoothing strategy. 
B)  Income tax minimization strategy. 
C)  Income tax maximization strategy. 
D)  Profit maximization strategy. 
A)  Smoothing strategy. 
B)  Income tax minimization strategy. 
C)  Income tax maximization strategy. 
D)  Profit maximization strategy.

Question 8

Ratios that measure current position are useful for assessing the ability of a company to pay its short-term obligations.

Accepted Answer

A) True 
 B)False

Question 9

A short accounts receivable turnover ratio may mean all of the following except:

Accepted Answer

A)  That customers are dictating the payment terms. 
B)  That the company is realizing cash from sales in a short time period. 
C)  Fewer old receivables that may prove to be uncollectible. 
D)  All of these choices are correct. 
A)  That customers are dictating the payment terms. 
B)  That the company is realizing cash from sales in a short time period. 
C)  Fewer old receivables that may prove to be uncollectible. 
D)  All of these choices are correct.

Question 10

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

Question 11

DEF wrote off a $300 uncollectible account receivable against the $3,600 balance in its allowance account.Compare the current ratio before the write-off with the current ratio after the write-off.

Accepted Answer

A)  The current ratio before the write-off is greater than the current ratio after the write-off. 
B)  The current ratio before the write-off is equal to the current ratio after the write-off. 
C)  The current ratio before the write-off is less than the current ratio after the write-off. 
D)  The current ratio cannot be determined from information given. 
E)  None of these choices are correct. 
A)  The current ratio before the write-off is greater than the current ratio after the write-off. 
B)  The current ratio before the write-off is equal to the current ratio after the write-off. 
C)  The current ratio before the write-off is less than the current ratio after the write-off. 
D)  The current ratio cannot be determined from information given. 
E)  None of these choices are correct.

Question 12

A statement of accounting policies must be included in the annual financial statements.

Accepted Answer

A) True 
 B)False

Question 13

A qualified auditors' opinion is given when the financial statements present information in conformity with GAAP.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A price-earnings ratio of 10 to 1 implies an earnings rate on market value per share of 10%.

Accepted Answer

A) True 
 B)False

Question 16

Overall management performance is better measured by use of the:

Accepted Answer

A)  return on total assets. 
B)  debt-equity ratio. 
C)  current ratio. 
D)  profit margin on sales. 
E)  None of these choices are correct. 
A)  return on total assets. 
B)  debt-equity ratio. 
C)  current ratio. 
D)  profit margin on sales. 
E)  None of these choices are correct.

Question 17

Upon reading the notes to the financial statements of JMR Ltd.,you notice that the policies they have chosen tend to recognize revenue early in the earnings cycle while deferring costs to later periods.This approach leads you to believe that JMR Ltd.is employing a(n):

Accepted Answer

A)  Smoothing strategy. 
B)  Income tax minimization strategy. 
C)  Income tax maximization strategy. 
D)  Profit maximization strategy. 
A)  Smoothing strategy. 
B)  Income tax minimization strategy. 
C)  Income tax maximization strategy. 
D)  Profit maximization strategy.

Question 18

Efficiency ratios are also known as:

Accepted Answer

A)  Profitability ratios. 
B)  Effectiveness ratios. 
C)  Solvency ratios. 
D)  Turnover ratios. 
A)  Profitability ratios. 
B)  Effectiveness ratios. 
C)  Solvency ratios. 
D)  Turnover ratios.

Question 19

The following information for JG Ltd.is available to you:   Required:
1.Calculate the inventory receivable turnover ratio
2.You determined that the industry average was 3.5 and that JG Ltd.had turnovers in previous years of 2.4,2.6,3.4,and 3.7.Based on this information can you make any conclusions?

Accepted Answer

1.1,000,000/678,000 = 1.47 times
2.It ap

Question 20

Define the debt-to-equity ratio.What is its purpose?

Accepted Answer

Total long-term debt/total owners' equit

Financial statement analysis is only used to determine whether a company is worth investing in.

Liquidity ratios essentially provide information about a company's ability to meet its short term obligations,while solvency ratios evaluate a company's long-term going-concern potential.

A primary reason for the analysis of financial statements is identification of major changes and to provide relative relationships among dollar amounts.

Selected information for HIJ in 000's is as follows: HIJ's return on average common shareholders' equity,rounded to the nearest percentage point,for 2014 is: (Round percentage answer to nearest whole percent)

What are some advantages to using ratio analysis? What are some of its limitations?

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

Upon reading the notes to the financial statements of KAR Ltd.,you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

Ratios that measure current position are useful for assessing the ability of a company to pay its short-term obligations.

A short accounts receivable turnover ratio may mean all of the following except:

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?

DEF wrote off a $300 uncollectible account receivable against the $3,600 balance in its allowance account.Compare the current ratio before the write-off with the current ratio after the write-off.

A statement of accounting policies must be included in the annual financial statements.

A qualified auditors' opinion is given when the financial statements present information in conformity with GAAP.

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

A price-earnings ratio of 10 to 1 implies an earnings rate on market value per share of 10%.

Overall management performance is better measured by use of the:

Upon reading the notes to the financial statements of JMR Ltd.,you notice that the policies they have chosen tend to recognize revenue early in the earnings cycle while deferring costs to later periods.This approach leads you to believe that JMR Ltd.is employing a(n):

Efficiency ratios are also known as:

The following information for JG Ltd.is available to you: Required: 1.Calculate the inventory receivable turnover ratio 2.You determined that the industry average was 3.5 and that JG Ltd.had turnovers in previous years of 2.4,2.6,3.4,and 3.7.Based on this information can you make any conclusions?

Define the debt-to-equity ratio.What is its purpose?

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

Financial statement analysis is only used to determine whether a company is worth investing in.

Liquidity ratios essentially provide information about a company's ability to meet its short term obligations,while solvency ratios evaluate a company's long-term going-concern potential.

A primary reason for the analysis of financial statements is identification of major changes and to provide relative relationships among dollar amounts.

Selected information for HIJ in 000's is as follows: HIJ's return on average common shareholders' equity,rounded to the nearest percentage point,for 2014 is: (Round percentage answer to nearest whole percent)

What are some advantages to using ratio analysis? What are some of its limitations?

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

Upon reading the notes to the financial statements of KAR Ltd.,you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

Ratios that measure current position are useful for assessing the ability of a company to pay its short-term obligations.

A short accounts receivable turnover ratio may mean all of the following except:

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?

DEF wrote off a $300 uncollectible account receivable against the $3,600 balance in its allowance account.Compare the current ratio before the write-off with the current ratio after the write-off.

A statement of accounting policies must be included in the annual financial statements.

A qualified auditors' opinion is given when the financial statements present information in conformity with GAAP.

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

A price-earnings ratio of 10 to 1 implies an earnings rate on market value per share of 10%.

Overall management performance is better measured by use of the:

Upon reading the notes to the financial statements of JMR Ltd.,you notice that the policies they have chosen tend to recognize revenue early in the earnings cycle while deferring costs to later periods.This approach leads you to believe that JMR Ltd.is employing a(n):

Efficiency ratios are also known as:

The following information for JG Ltd.is available to you: Required: 1.Calculate the inventory receivable turnover ratio 2.You determined that the industry average was 3.5 and that JG Ltd.had turnovers in previous years of 2.4,2.6,3.4,and 3.7.Based on this information can you make any conclusions?

Define the debt-to-equity ratio.What is its purpose?

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