Question 1

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 2

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & & \text { Asset } & & \
& \text { Liquidity } & \text { Management } & \text { Debt } & \text { Profitability } \
\hline \text { Asset turnover } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 3

Net income was $45,000 in Year 1 and $60,000 in Year 2.The percentage increase in net income was:

Accepted Answer

A) 33.33%. 
B) 133.33%. 
C) (25%). 
D) (33.33). 
A) 33.33%. 
B) 133.33%. 
C) (25%). 
D) (33.33).

Question 4

What was the percentage of decrease in the Accounts Receivable account if the receivables were $80,000 in Year 1,and $60,000 in Year 2?

Accepted Answer

A) (25%) 
B) 33.33% 
C) (33.33%) 
D) 25% 
A) (25%) 
B) 33.33% 
C) (33.33%) 
D) 25%

Question 5

The current ratio is:

Accepted Answer

A) quick assets divided by current liabilities. 
B) assets divided by liabilities. 
C) current assets divided by current liabilities. 
D) net sales divided by current liabilities. 
A) quick assets divided by current liabilities. 
B) assets divided by liabilities. 
C) current assets divided by current liabilities. 
D) net sales divided by current liabilities.

Question 6

Complete the horizontal analysis of Soopy's Used Cars.(Round all percentages to the nearest tenth of a percent.)
$\begin{array} { l r r r r } 
& \underline { 2013 } & \underline { 2012 } & \underline { \text { Amount } } & \underline { \text { Percent } } \
&&&\underline {  \text { of Change} } &\underline {  \text { of Change }} \
\text { Current Assets } & \$ 75,000 & \$ 60,000 &\
\text { Plant and Equipment } & \underline { 225,000 } & \underline { 200,000 } & & \
\text { Total Assets } & \underline { \underline { \$ 300,000 } } & \underline { \underline { \$ 260,000 } } & & \
\text { Current Liabilities } & \$ 30,000 & \$ 35,000 & & \
\text { Long-term Liabilities } & 80,000 & 70,000 & & \
\text { Common Stack } & 100,000 & 100,000 & & \
\text { Retained Earnings } & \underline { 90,000 } & \underline { 55,000 } & & \
\text { Tota1 Liabilities and } & & & & \
\text { Stockholders' Equity } & \underline { \$ 300,000 } & \underline { \$ 260,000 } &
\end{array}$

Accepted Answer

The answer of Complete the horizontal analysis of Soopy's Used...

Question 7

If management wishes to measure how effectively the assets were used in generating a profit,they could use the:

Accepted Answer

A) rate of return on total assets. 
B) rate of return on common stockholders' equity. 
C) return on sales. 
D) times interest earned. 
A) rate of return on total assets. 
B) rate of return on common stockholders' equity. 
C) return on sales. 
D) times interest earned.

Question 8

A current ratio of 1.5 times would mean that the business has 1.5 times more liabilities than assets.

Accepted Answer

A) True 
 B)False

Question 9

If the return on common stockholders' equity is less than the industry standard,it means the company is using debt financing successfully.

Accepted Answer

A) True 
 B)False

Question 10

From the following,complete the common-size income statement for Isaiah's Sporting Goods using net sales as the base.(Round to nearest tenth of a percent.)
 $$\begin{array} { l l l } 
 & \text { Amount } & \text { Percent } \
\text { Net 5ales } & \$ 750,000 & ---- \
 \text { Cost of Goods sold }& 650,000 & ---- \
\text { Grom Profit on sales }& 100,000 & ---- \
\text { Operating Expenses }  & 60,000 & ---- \
\text { Net Income }&40,000&----
\end{array}$$

Accepted Answer

The answer of From the following,complete the common-size income statement...

Question 11

If management wishes to know the ability to pay off the upcoming debts of a business,they could use the:

Accepted Answer

A) debt to total assets. 
B) current ratio 
C) inventory turnover ratio. 
D) times interest earned. 
A) debt to total assets. 
B) current ratio 
C) inventory turnover ratio. 
D) times interest earned.

Question 12

What is Jane's rate of return on total assets if total assets are $100,000,net income is $2,000,interest expense is $1,600,and income tax is $2,000?

Accepted Answer

A) 4.6% 
B) 5.2% 
C) 5.6% 
D) 2.3% 
A) 4.6% 
B) 5.2% 
C) 5.6% 
D) 2.3%

Question 13

If Rick's sales increased from $40,000 to $80,000 and its cost of goods sold increased from $30,000 to $50,000,then vertical analysis based on sales would show the following for cost of goods sold for the two periods:

Accepted Answer

A) 75% and 62.5%. 
B) 62.5% and 75% 
C) 133.33% and 160% 
D) 160% and 133.33%. 
A) 75% and 62.5%. 
B) 62.5% and 75% 
C) 133.33% and 160% 
D) 160% and 133.33%.

Question 14

Chuck Company has a beginning Accounts Receivable balance of $65,000 and an ending balance of $60,000.Net credit sales are $250,000.The company's accounts receivable turnover ratio is:

Accepted Answer

A) 3.846. 
B) 4.167. 
C) 4.000. 
D) None of the above. 
A) 3.846. 
B) 4.167. 
C) 4.000. 
D) None of the above.

Question 15

If current assets are $60,000 and current liabilities are $50,000,the current ratio is:

Accepted Answer

A) 0.8:1. 
B) 8.3:1. 
C) 2.1:1. 
D) 1.2:1 
A) 0.8:1. 
B) 8.3:1. 
C) 2.1:1. 
D) 1.2:1

Question 16

If management wishes to determine the average degree of delinquency of the charge customers,they could use the:

Accepted Answer

A) rate of return on total assets. 
B) rate of return on common stockholders' equity. 
C) accounts receivable turnover. 
D) quick (acid test)ratio. 
A) rate of return on total assets. 
B) rate of return on common stockholders' equity. 
C) accounts receivable turnover. 
D) quick (acid test)ratio.

Question 17

If the average collection period has increased and credit terms remain the same,the company should put a greater emphasis on collections.

Accepted Answer

A) True 
 B)False

Question 18

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & & \text { Asset } & & \
& \text { Liquidity } & \text { Management } & \text { Debt } & \text { Profitability } \
\hline \text { Return on sales } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 19

If the average collection period is 35 days,this means:

Accepted Answer

A) from the date of purchase to the date of payment is 35 days. 
B) from the date of sale to the date of receipt of payment is 35 days. 
C) from the date of discount to the date of receipt of payment is 35 days. 
D) None of these answers are correct. 
A) from the date of purchase to the date of payment is 35 days. 
B) from the date of sale to the date of receipt of payment is 35 days. 
C) from the date of discount to the date of receipt of payment is 35 days. 
D) None of these answers are correct.

Question 20

If current assets were $90,000,merchandise inventory was $60,000,and current liabilities were $15,000,the acid test ratio is:

Accepted Answer

A) 6:1. 
B) 4:1. 
C) 2:1. 
D) 1:2. 
A) 6:1. 
B) 4:1. 
C) 2:1. 
D) 1:2.

Exam 22: Analyzing Financial Statements

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

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Asset turnover

Net income was $45,000 in Year 1 and $60,000 in Year 2.The percentage increase in net income was:

What was the percentage of decrease in the Accounts Receivable account if the receivables were $80,000 in Year 1,and $60,000 in Year 2?

The current ratio is:

If management wishes to measure how effectively the assets were used in generating a profit,they could use the:

A current ratio of 1.5 times would mean that the business has 1.5 times more liabilities than assets.

If the return on common stockholders' equity is less than the industry standard,it means the company is using debt financing successfully.

If management wishes to know the ability to pay off the upcoming debts of a business,they could use the:

What is Jane's rate of return on total assets if total assets are $100,000,net income is $2,000,interest expense is $1,600,and income tax is $2,000?

If Rick's sales increased from $40,000 to $80,000 and its cost of goods sold increased from $30,000 to $50,000,then vertical analysis based on sales would show the following for cost of goods sold for the two periods:

Chuck Company has a beginning Accounts Receivable balance of $65,000 and an ending balance of $60,000.Net credit sales are $250,000.The company's accounts receivable turnover ratio is:

If current assets are $60,000 and current liabilities are $50,000,the current ratio is:

If management wishes to determine the average degree of delinquency of the charge customers,they could use the:

If the average collection period has increased and credit terms remain the same,the company should put a greater emphasis on collections.

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Return on sales

If the average collection period is 35 days,this means:

If current assets were $90,000,merchandise inventory was $60,000,and current liabilities were $15,000,the acid test ratio is:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters