Question 1

An example of a guideline (or rule of thumb)for comparison is the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

Accepted Answer

A) True 
 B)False  True

Question 2

One of several ratios that reflects solvency includes the:

Accepted Answer

A) Acid-test ratio. 
B) Current ratio. 
C) Times interest earned ratio. 
D) Total asset turnover. 
E) Days' sales in inventory. 
A) Acid-test ratio. 
B) Current ratio. 
C) Times interest earned ratio. 
D) Total asset turnover. 
E) Days' sales in inventory. C

Question 3

Auditors use financial statements to assess "fair presentation" of financial results.

Accepted Answer

A) True 
 B)False  True

Question 4

Clairmont Industries reported net income of $283,000,average total assets of $637,000,and comprehensive income of $354,172.The return on total assets is:

Accepted Answer

A) 55.6%. 
B) 88.8%. 
C) 61.5%. 
D) 44.4%. 
E) 125.1%. 
A) 55.6%. 
B) 88.8%. 
C) 61.5%. 
D) 44.4%. 
E) 125.1%.

Question 5

Match each of the appropriate formulas with correct term.
-

Accepted Answer

A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio 
A) Days' sales in inventory 
B) Dividend yield 
C) Total asset turnover 
D) Inventory turnover 
E) Return on common stockholders' equity
F)Gross margin ratio
G)Days' sales uncollected
H)Profit margin ratio
I)Times interest earned
J)Debt ratio

Question 6

Efficiency refers to how productive a company is in using its assets,and is usually measured relative to how much revenue is generated from a certain level of assets.

Accepted Answer

A) True 
 B)False

Question 7

The comparative balance sheet for Silverlight Co.is shown below.Express the balance sheet in common-size percentages.

Accepted Answer

The answer of The comparative balance sheet for Silverlight Co.is...

Question 8

Selected current year company information follows:   The return on total assets is:

Accepted Answer

A) 2.24% 
B) 2.81% 
C) 3.64% 
D) 4.67% 
E) 6.28% 
A) 2.24% 
B) 2.81% 
C) 3.64% 
D) 4.67% 
E) 6.28%

Question 9

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Accepted Answer

A) Inventory turnover ratio. 
B) Profit margin. 
C) Days' sales in inventory. 
D) Current ratio. 
E) Total asset turnover. 
A) Inventory turnover ratio. 
B) Profit margin. 
C) Days' sales in inventory. 
D) Current ratio. 
E) Total asset turnover.

Question 10

Profitability is the ability to provide financial rewards sufficient to attract and retain financing.

Accepted Answer

A) True 
 B)False

Question 11

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Accepted Answer

A) True 
 B)False

Question 12

Zhang Company reported Cost of goods sold of $835,000,beginning Inventory of $37,200 and ending Inventory of $46,300.The average Inventory amount is:

Accepted Answer

A) $37,200. 
B) $46,300. 
C) $83,500. 
D) $41,750. 
E) $9,100. 
A) $37,200. 
B) $46,300. 
C) $83,500. 
D) $41,750. 
E) $9,100.

Question 13

External users of accounting information make the strategic and operating decisions of a company.

Accepted Answer

A) True 
 B)False

Question 14

Quick assets (cash,short-term investments,and current receivables)divided by current liabilities is the:

Accepted Answer

A) Acid-test ratio. 
B) Current ratio. 
C) Working capital ratio. 
D) Current liability turnover ratio. 
E) Quick asset turnover ratio. 
A) Acid-test ratio. 
B) Current ratio. 
C) Working capital ratio. 
D) Current liability turnover ratio. 
E) Quick asset turnover ratio.

Question 15

A corporation reported cash of $14,000,total assets of $178,300,and net income of $50,000.Its common-size percent for cash equals 7.85%.

Accepted Answer

A) True 
 B)False

Question 16

A company reported net income of $78,000 and had 15,000 common shares outstanding throughout the current year.At year-end,the price per share of the company's stock was $49.40.What is the company's year-end price-earnings ratio?

Accepted Answer

Earnings per share = $78,000/1

Question 17

Net sales divided by average total assets is the:

Accepted Answer

A) Profit margin. 
B) Total asset turnover. 
C) Current ratio. 
D) Sales return ratio. 
E) Return on total assets. 
A) Profit margin. 
B) Total asset turnover. 
C) Current ratio. 
D) Sales return ratio. 
E) Return on total assets.

Question 18

Use the financial data shown below to calculate the following ratios for the current year:
(a)Current ratio.
(b)Acid-test ratio.
(c)Accounts receivable turnover.
(d)Days' sales uncollected.
(e)Inventory turnover.
(f)Days' sales in inventory.

Accepted Answer

(a)Current ratio:
($19,500 + $65,000 + $

Question 19

A good financial statement analysis report usually includes the following six sections: (1)________,(2)________,(3)________,(4)________ (5)________,and (6)________.

Accepted Answer

executive summary; analysis ov

Question 20

Evaluation of company performance can include comparison and/or assessment of all but which of the following:

Accepted Answer

A) Past performance. 
B) Current performance. 
C) Current financial position. 
D) Future performance and risk. 
E) External user needs and demands. 
A) Past performance. 
B) Current performance. 
C) Current financial position. 
D) Future performance and risk. 
E) External user needs and demands.

Exam 13: Analysis of Financial Statements

An example of a guideline (or rule of thumb)for comparison is the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

One of several ratios that reflects solvency includes the:

Auditors use financial statements to assess "fair presentation" of financial results.

Clairmont Industries reported net income of $283,000,average total assets of $637,000,and comprehensive income of $354,172.The return on total assets is:

Match each of the appropriate formulas with correct term. -

Efficiency refers to how productive a company is in using its assets,and is usually measured relative to how much revenue is generated from a certain level of assets.

The comparative balance sheet for Silverlight Co.is shown below.Express the balance sheet in common-size percentages.

Selected current year company information follows: The return on total assets is:

Dividing ending inventory by cost of goods sold and multiplying the result by 365 is the:

Profitability is the ability to provide financial rewards sufficient to attract and retain financing.

A company with a high inventory turnover requires a smaller investment in inventory than one producing the same sales with a lower turnover.

Zhang Company reported Cost of goods sold of $835,000,beginning Inventory of $37,200 and ending Inventory of $46,300.The average Inventory amount is:

External users of accounting information make the strategic and operating decisions of a company.

Quick assets (cash,short-term investments,and current receivables)divided by current liabilities is the:

A corporation reported cash of $14,000,total assets of $178,300,and net income of $50,000.Its common-size percent for cash equals 7.85%.

A company reported net income of $78,000 and had 15,000 common shares outstanding throughout the current year.At year-end,the price per share of the company's stock was $49.40.What is the company's year-end price-earnings ratio?

Net sales divided by average total assets is the:

Use the financial data shown below to calculate the following ratios for the current year: (a)Current ratio. (b)Acid-test ratio. (c)Accounts receivable turnover. (d)Days' sales uncollected. (e)Inventory turnover. (f)Days' sales in inventory.

A good financial statement analysis report usually includes the following six sections: (1)________,(2)________,(3)________,(4)________ (5)________,and (6)________.

Evaluation of company performance can include comparison and/or assessment of all but which of the following:

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

Filters

A good financial statement analysis report usually includes the following six sections: (1),(2),(3),(4) (5),and (6).