Question 1

A review engagement provides more reliance for the users of the financial statements than an audit engagement.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following analytical techniques would best be used to compare a company's performance to that of its competitors over time?

Accepted Answer

A)  Cross-sectional comparison 
B)  Time-series analysis 
C)  Residual analysis 
D)  Statistical multivariate ratio analysis 
A)  Cross-sectional comparison 
B)  Time-series analysis 
C)  Residual analysis 
D)  Statistical multivariate ratio analysis

Question 3

The summarized and partial balance sheet of XYZ showed the following:   (a)Prepare a horizontal analysis.
(b)Prepare a vertical analysis for 20x11:

Accepted Answer

(a)Horizon

Question 4

Assume the following facts for XYZ in 000's:   XYZ's return on owners' equity,return on total assets,and leverage percentages (rounded to the nearest percent)are: (Round percentage answers to nearest whole percent: Do not round intermediate calculations.)

Accepted Answer

A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4 
E)  Choice 5 
A)  Choice 1 
B)  Choice 2 
C)  Choice 3 
D)  Choice 4 
E)  Choice 5

Question 5

GHI Inc.has three subsidiaries,Computers,Magazines and Cable TV.Sales,net income and asset data for the most recent year is shown below by subsidiary:   If the five million dollar investment in the Cable TV division is sold and redeployed in the computer subsidiary at the same rate of return on assets currently achieved in the computer division,What will be the new return on assets for the entire corporation?

Accepted Answer

Return on redeployed

Question 6

Trend analysis is part of 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

Disclosure of significant accounting policies should include all of the following items except:

Accepted Answer

A)  the amortization methods. 
B)  the valuation method used for operational assets. 
C)  the depreciation methods. 
D)  the inventory costing methods. 
A)  the amortization methods. 
B)  the valuation method used for operational assets. 
C)  the depreciation methods. 
D)  the inventory costing methods.

Question 8

If current assets exceed current liabilities,payments to creditors made on the last day of the month will:

Accepted Answer

A)  decrease net working capital. 
B)  increase net working capital. 
C)  decrease current ratio. 
D)  increase current ratio. 
E)  have no effect on either the current ratio or net working capital. 
A)  decrease net working capital. 
B)  increase net working capital. 
C)  decrease current ratio. 
D)  increase current ratio. 
E)  have no effect on either the current ratio or net working capital.

Question 9

When would a qualified audit opinion not necessarily be a concern to a company?

Accepted Answer

When a company chooses policie

Question 10

If a company converted a short-term note payable into a long-term note payable,this transaction would:

Accepted Answer

A)  decrease only working capital. 
B)  decrease both working capital and the current ratio. 
C)  increase only working capital. 
D)  increase both working capital and the current ratio. 
E)  have no effect on either the current ratio or net working capital. 
A)  decrease only working capital. 
B)  decrease both working capital and the current ratio. 
C)  increase only working capital. 
D)  increase both working capital and the current ratio. 
E)  have no effect on either the current ratio or net working capital.

Question 11

An adverse opinion is given if the auditor disagrees with the company on decisions made.This is generally not a serious condition as it relates only to a difference of opinion.

Accepted Answer

A) True 
 B)False

Question 12

The accounts receivable turnover ratio is a measure of:

Accepted Answer

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

Question 13

All of the following represent groups of ratios except:

Accepted Answer

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

Question 14

Examination of comparative financial statements does not enable financial statement users to better identify long-term trends.

Accepted Answer

A) True 
 B)False

Question 15

A prospective investor in common shares is primary interested in the long-run profitability of the company.

Accepted Answer

A) True 
 B)False

Question 16

For both the accounts receivable turnover and the inventory turnover ratios,the numerator of the fraction is credit sales.

Accepted Answer

A) True 
 B)False

Question 17

If business conditions are stable,an increase in the number of accounts receivable turnover from one year to the next (based upon a company's accounts receivable at year-end)might indicate:

Accepted Answer

A)  that a longer discount period and a more distant due date were extended to customers in the second year. 
B)  a significant decrease in the volume of sales of the second year. 
C)  that the second year's sales were made at lower prices than the first year's sales. 
D)  a stiffening of the company's credit policies. 
E)  None of these choices are correct. 
A)  that a longer discount period and a more distant due date were extended to customers in the second year. 
B)  a significant decrease in the volume of sales of the second year. 
C)  that the second year's sales were made at lower prices than the first year's sales. 
D)  a stiffening of the company's credit policies. 
E)  None of these choices are correct.

Question 18

What is the purpose of the times interest earned ratio?

Accepted Answer

The times interest earned rati

Question 19

A company which offers "n/15" credit terms assuming 360 days in year would be expected to have a receivable turnover of about 24 times a year.

Accepted Answer

A) True 
 B)False

Question 20

As an industry analyst comparing a firm to the industry,are you likely to praise or criticize the firm in terms of Debt/Total Asset.

Accepted Answer

Debt/Total Asset @#IMG-DLM& While the co

A review engagement provides more reliance for the users of the financial statements than an audit engagement.

Which of the following analytical techniques would best be used to compare a company's performance to that of its competitors over time?

The summarized and partial balance sheet of XYZ showed the following: (a)Prepare a horizontal analysis. (b)Prepare a vertical analysis for 20x11:

Assume the following facts for XYZ in 000's: XYZ's return on owners' equity,return on total assets,and leverage percentages (rounded to the nearest percent)are: (Round percentage answers to nearest whole percent: Do not round intermediate calculations.)

Trend analysis is part of a(n):

Disclosure of significant accounting policies should include all of the following items except:

If current assets exceed current liabilities,payments to creditors made on the last day of the month will:

When would a qualified audit opinion not necessarily be a concern to a company?

If a company converted a short-term note payable into a long-term note payable,this transaction would:

An adverse opinion is given if the auditor disagrees with the company on decisions made.This is generally not a serious condition as it relates only to a difference of opinion.

The accounts receivable turnover ratio is a measure of:

All of the following represent groups of ratios except:

Examination of comparative financial statements does not enable financial statement users to better identify long-term trends.

A prospective investor in common shares is primary interested in the long-run profitability of the company.

For both the accounts receivable turnover and the inventory turnover ratios,the numerator of the fraction is credit sales.

If business conditions are stable,an increase in the number of accounts receivable turnover from one year to the next (based upon a company's accounts receivable at year-end)might indicate:

What is the purpose of the times interest earned ratio?

A company which offers "n/15" credit terms assuming 360 days in year would be expected to have a receivable turnover of about 24 times a year.

As an industry analyst comparing a firm to the industry,are you likely to praise or criticize the firm in terms of Debt/Total Asset.

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

A review engagement provides more reliance for the users of the financial statements than an audit engagement.

Which of the following analytical techniques would best be used to compare a company's performance to that of its competitors over time?

The summarized and partial balance sheet of XYZ showed the following: (a)Prepare a horizontal analysis. (b)Prepare a vertical analysis for 20x11:

Assume the following facts for XYZ in 000's: XYZ's return on owners' equity,return on total assets,and leverage percentages (rounded to the nearest percent)are: (Round percentage answers to nearest whole percent: Do not round intermediate calculations.)

Trend analysis is part of a(n):

Disclosure of significant accounting policies should include all of the following items except:

If current assets exceed current liabilities,payments to creditors made on the last day of the month will:

When would a qualified audit opinion not necessarily be a concern to a company?

If a company converted a short-term note payable into a long-term note payable,this transaction would:

An adverse opinion is given if the auditor disagrees with the company on decisions made.This is generally not a serious condition as it relates only to a difference of opinion.

The accounts receivable turnover ratio is a measure of:

All of the following represent groups of ratios except:

Examination of comparative financial statements does not enable financial statement users to better identify long-term trends.

A prospective investor in common shares is primary interested in the long-run profitability of the company.

For both the accounts receivable turnover and the inventory turnover ratios,the numerator of the fraction is credit sales.

If business conditions are stable,an increase in the number of accounts receivable turnover from one year to the next (based upon a company's accounts receivable at year-end)might indicate:

What is the purpose of the times interest earned ratio?

A company which offers "n/15" credit terms assuming 360 days in year would be expected to have a receivable turnover of about 24 times a year.

As an industry analyst comparing a firm to the industry,are you likely to praise or criticize the firm in terms of Debt/Total Asset.

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