Question 1

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

Accepted Answer

A) True 
 B)False  True

Question 2

The percentage analysis of the relationship of each component in a financial statement to a total within the statement is referred as vertical analysis.

Accepted Answer

A) True 
 B)False  True

Question 3

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

Accepted Answer

A) vertical analysis. 
B) horizontal analysis. 
C) liquidity analysis. 
D) solvency analysis. 
A) vertical analysis. 
B) horizontal analysis. 
C) liquidity analysis. 
D) solvency analysis. A

Question 4

The ability to convert assets into cash is called .

Accepted Answer

A) Solvency 
B) Profitability 
C) Working capital 
D) Liquidity 
A) Solvency 
B) Profitability 
C) Working capital 
D) Liquidity

Question 5

Which of the following is included in the computation of the quick ratio?

Accepted Answer

A) Prepaid rent 
B) Accounts receivable 
C) Inventory 
D) Supplies 
A) Prepaid rent 
B) Accounts receivable 
C) Inventory 
D) Supplies

Question 6

The relationship of $320,000 to $200,000,expressed as a ratio,is:

Accepted Answer

A) 3.0 to 2. 
B) 3.8 to 2. 
C) 3.2 to 2. 
D) 3.5 to 2. 
A) 3.0 to 2. 
B) 3.8 to 2. 
C) 3.2 to 2. 
D) 3.5 to 2.

Question 7

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

Accepted Answer

A) True 
 B)False

Question 8

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred as:

Accepted Answer

A) leverage. 
B) solvency. 
C) yield. 
D) quick assets. 
A) leverage. 
B) solvency. 
C) yield. 
D) quick assets.

Question 9

Which of the following measures the liquidity position of a corporation?

Accepted Answer

A) Earnings per share 
B) Inventory turnover 
C) Current ratio 
D) Number of times interest charges earned 
A) Earnings per share 
B) Inventory turnover 
C) Current ratio 
D) Number of times interest charges earned

Question 10

Which of the following is an analysis used in assessing solvency?

Accepted Answer

A) Accounts receivable analysis 
B) Fixed assets turnover 
C) Earnings per share 
D) P/E ratio 
A) Accounts receivable analysis 
B) Fixed assets turnover 
C) Earnings per share 
D) P/E ratio

Question 11

The purpose of an audit is to:

Accepted Answer

A) determine whether or not a company is a good investment. 
B) render an opinion on the fairness of the statements. 
C) determine whether or not a company complies with income tax regulations. 
D) determine whether or not a company has a good credit risk. 
A) determine whether or not a company is a good investment. 
B) render an opinion on the fairness of the statements. 
C) determine whether or not a company complies with income tax regulations. 
D) determine whether or not a company has a good credit risk.

Question 12

A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:

Accepted Answer

A) $400,000. 
B) $600,000. 
C) $800,000. 
D) $200,000. 
A) $400,000. 
B) $600,000. 
C) $800,000. 
D) $200,000.

Question 13

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

Accepted Answer

A) decrease. 
B) remain the same. 
C) neither increase nor decrease. 
D) increase. 
A) decrease. 
B) remain the same. 
C) neither increase nor decrease. 
D) increase.

Question 14

The balance sheet and income statement for the year ended 2016 indicate the following:

Accepted Answer

A) 2.6 
B) 3.6 
C) 0.7 
D) 2.9 
A) 2.6 
B) 3.6 
C) 0.7 
D) 2.9

Question 15

What type of analysis is indicated by the following?

Accepted Answer

A) Vertical analysis 
B) Horizontal analysis 
C) Liquidity analysis 
D) Common-size analysis 
A) Vertical analysis 
B) Horizontal analysis 
C) Liquidity analysis 
D) Common-size analysis

Question 16

The current ratio is computed by dividing current assets by .

Accepted Answer

A) fixed assets 
B) inventories 
C) current liabilities 
D) accounts receivable 
A) fixed assets 
B) inventories 
C) current liabilities 
D) accounts receivable

Question 17

If the current credit terms are 2/10,n/30 for Jones Inc.,an accounts receivable turnover of 3 for the current year would be considered normal.

Accepted Answer

A) True 
 B)False

Question 18

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following is not a characteristic generally evaluated in ratio analysis?

Accepted Answer

A) Liquidity 
B) Profitability 
C) Solvency 
D) Marketability 
A) Liquidity 
B) Profitability 
C) Solvency 
D) Marketability

Question 20

Condensed data taken from the ledger of Crawford Company at December 31,2016 and 2015,are as follows:

Accepted Answer

Crawford Company Comparative Balance She

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

The percentage analysis of the relationship of each component in a financial statement to a total within the statement is referred as vertical analysis.

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

The ability to convert assets into cash is called .

Which of the following is included in the computation of the quick ratio?

The relationship of $320,000 to $200,000,expressed as a ratio,is:

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred as:

Which of the following measures the liquidity position of a corporation?

Which of the following is an analysis used in assessing solvency?

The purpose of an audit is to:

A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

The balance sheet and income statement for the year ended 2016 indicate the following:

What type of analysis is indicated by the following?

The current ratio is computed by dividing current assets by .

If the current credit terms are 2/10,n/30 for Jones Inc.,an accounts receivable turnover of 3 for the current year would be considered normal.

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Which one of the following is not a characteristic generally evaluated in ratio analysis?

Condensed data taken from the ledger of Crawford Company at December 31,2016 and 2015,are as follows:

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 9: Financial Statement Analysis

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

The percentage analysis of the relationship of each component in a financial statement to a total within the statement is referred as vertical analysis.

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

The ability to convert assets into cash is called .

Which of the following is included in the computation of the quick ratio?

The relationship of $320,000 to $200,000,expressed as a ratio,is:

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred as:

Which of the following measures the liquidity position of a corporation?

Which of the following is an analysis used in assessing solvency?

The purpose of an audit is to:

A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

The balance sheet and income statement for the year ended 2016 indicate the following:

What type of analysis is indicated by the following?

The current ratio is computed by dividing current assets by .

If the current credit terms are 2/10,n/30 for Jones Inc.,an accounts receivable turnover of 3 for the current year would be considered normal.

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Which one of the following is not a characteristic generally evaluated in ratio analysis?

Condensed data taken from the ledger of Crawford Company at December 31,2016 and 2015,are as follows:

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters