Question 1

In order to be classified as an extraordinary gain or loss,the item must be both (1)________ and (2)________.

Accepted Answer

unusual; i

Question 2

Use the following selected information from Wheeler,LLC to determine the 2017 and 2016 trend percentages for cost of goods sold using 2016 as the base.
$\begin{array}{|l|r|r|}
\hline&2017&2016\
\hline \text { Net sales } & \$ 276,200 & \$ 231,400 \
\hline \text { Cost of goods sold } & 151,900 & 129,590 \
\hline \text { Operating expenses } & 55,240 & 53,240 \
\hline \text { Net earnings } & 27,820 & 19,820\
\hline
\end{array}$

Accepted Answer

A)  36.4% for 2017 and 41.1% for 2016. 
B)  55.0% for 2017 and 56.0% for 2016. 
C)  119.4% for 2017 and 100.0% for 2016. 
D)  117.2% for 2017 and 100.0% for 2016. 
E)  65.1% for 2017 and 64.6% for 2016. 
A)  36.4% for 2017 and 41.1% for 2016. 
B)  55.0% for 2017 and 56.0% for 2016. 
C)  119.4% for 2017 and 100.0% for 2016. 
D)  117.2% for 2017 and 100.0% for 2016. 
E)  65.1% for 2017 and 64.6% for 2016.

Question 3

Explain the purpose of financial statement analysis for both external and internal users.

Accepted Answer

The purpose of financial statement analy

Question 4

A company's calendar-year financial data are shown below.The company had total assets of $339,000 and total equity of $144,400 for the prior year.No additional shares of common stock were issued during the year.The December 31 market price per share is $49.50.Cash dividends of $19,500 were paid during the year.Calculate the following ratios for the company:
(a)debt ratio
(b)equity ratio
(c)debt-to-equity ratio
(d)times interest earned
(e)total asset turnover

Accepted Answer

\[\begin{array} { | l | r | } 
\hline \t

Question 5

Financial statement analysis involves all of the following except:

Accepted Answer

A)  The application of analytical tools to general-purpose financial statements and related data for making business decisions. 
B)  Transforming accounting data into useful information for decision-making. 
C)  Helping users to make better decisions. 
D)  Helping to reduce uncertainty in decision-making. 
E)  Assuring that the company will be more profitable in the future. 
A)  The application of analytical tools to general-purpose financial statements and related data for making business decisions. 
B)  Transforming accounting data into useful information for decision-making. 
C)  Helping users to make better decisions. 
D)  Helping to reduce uncertainty in decision-making. 
E)  Assuring that the company will be more profitable in the future.

Question 6

Match each of the following terms with the appropriate definitions.
-A measure of solvency presented as the ratio of total liabilities to total equity.

Accepted Answer

A) Financial statement analysis 
B) Common-size financial statement 
C) Horizontal analysis 
D) Comparative financial statement 
E) Liquidity and efficiency
F)Market prospects
G)Debt to equity ratio
H)Solvency
I)Vertical analysis
J)Profitability 
A) Financial statement analysis 
B) Common-size financial statement 
C) Horizontal analysis 
D) Comparative financial statement 
E) Liquidity and efficiency
F)Market prospects
G)Debt to equity ratio
H)Solvency
I)Vertical analysis
J)Profitability

Question 7

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

Accepted Answer

A) True 
 B)False

Question 8

Calculate the percent increase or decrease for each of the following financial statement items:
 $$\begin{array} { | l | r | r | } 
\hline & \text { Year } 2 & { \text { Year } 1 } \
\hline \text { Cash } & \$ 37,500 & \$ 30,000 \
\hline \text { Accounts receivable } & 63,000 & 52,500 \
\hline \text { Inventory } & 67,500 & 90,000 \
\hline \text { Accounts payable } & 35,100 & 27,000 \
\hline \text { Sales } & 187,500 & 150,000 \
\hline \text { Equipment } 65,00 & 10 & 125,000 \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | l | } 
\hlin

Question 9

$$\begin{array} { | l | r | r | } 
\hline &{ \text { Year 2 } } &  { \text { Year 1 } } \
\hline \text { Total assets } & \$ 327,800 & \$ 301,000 \
\hline \text { Total liabilities } & 171,400 & 169,300 \
\hline \text { Total equity } & 156,400 & 131,700 \
\hline
\end{array}$$
-Refer to the following selected financial information from Keller Company.Compute the company's debt to equity for Year 2.

Accepted Answer

A)  0.9. 
B)  1.1. 
C)  0.5. 
D)  1.9. 
E)  2.1. 
A)  0.9. 
B)  1.1. 
C)  0.5. 
D)  1.9. 
E)  2.1.

Question 10

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Accepted Answer

A) True 
 B)False

Question 11

Financial reporting refers to:

Accepted Answer

A)  The application of analytical tools to general-purpose financial statements. 
B)  The communication of financial information useful for decision making. 
C)  General-purpose financial statements only. 
D)  Ratio analysis only. 
E)  Profitability. 
A)  The application of analytical tools to general-purpose financial statements. 
B)  The communication of financial information useful for decision making. 
C)  General-purpose financial statements only. 
D)  Ratio analysis only. 
E)  Profitability.

Question 12

Guidelines (rules-of-thumb)are general standards of comparison developed from:

Accepted Answer

A)  Industry statistics from the government. 
B)  Past experience. 
C)  Analysis of competitors. 
D)  Relations between financial items. 
E)  Dun and Bradstreet. 
A)  Industry statistics from the government. 
B)  Past experience. 
C)  Analysis of competitors. 
D)  Relations between financial items. 
E)  Dun and Bradstreet.

Question 13

The common-size percent is computed by:

Accepted Answer

A)  Dividing the analysis amount by the base amount. 
B)  Dividing the base amount by the analysis amount. 
C)  Dividing the analysis amount by the base amount and multiplying the result by 100. 
D)  Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E)  Subtracting the base amount from the analysis amount and multiplying the result by 100. 
A)  Dividing the analysis amount by the base amount. 
B)  Dividing the base amount by the analysis amount. 
C)  Dividing the analysis amount by the base amount and multiplying the result by 100. 
D)  Dividing the base amount by the analysis amount and multiplying the result by 1,000. 
E)  Subtracting the base amount from the analysis amount and multiplying the result by 100.

Question 14

$$\begin{array} { | l | r | r | } 
\hline &  { \text { Year 2 } } &{ \text { Year 1 } } \
\hline \text { Accounts receivable, net } & 86,500 & 82,750 \
\hline \text { Net sales } & 723,000 & 693,000 \
\hline
\end{array}$$
-Refer to the following selected financial information from Marston Company.Compute the company's accounts receivable turnover for Year 2.

Accepted Answer

A)  8.36. 
B)  8.37. 
C)  4.78. 
D)  8.59. 
E)  8.54. 
A)  8.36. 
B)  8.37. 
C)  4.78. 
D)  8.59. 
E)  8.54.

Question 15

Net income divided by average total assets is:

Accepted Answer

A)  Profit margin. 
B)  Total asset turnover. 
C)  Return on total assets. 
D)  Days' income in assets. 
E)  Current ratio. 
A)  Profit margin. 
B)  Total asset turnover. 
C)  Return on total assets. 
D)  Days' income in assets. 
E)  Current ratio.

Question 16

A brief focus on important analysis results and conclusions is usually included in which of the following sections of a financial statement analysis report:

Accepted Answer

A)  Executive summary. 
B)  Analysis overview. 
C)  Evidential conclusions. 
D)  Factor analysis. 
E)  Inferences. 
A)  Executive summary. 
B)  Analysis overview. 
C)  Evidential conclusions. 
D)  Factor analysis. 
E)  Inferences.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

$$\begin{array} { | l | r | r | } 
\hline&{ \text { Year 2 } } & { \text { Year 1 } } \
\hline \text { Cash } & \$ 37,500 & 36,850 \
\hline \text { Short-term investments } & 90,000 & 90,000 \
\hline \text { Accounts receivable, net } & 85,500 & 86,250 \
\hline \text { Merchandise inventory } & 121,000 & 117,000 \
\hline \text { Prepaid expenses } & 12,100& 13,500 \
\hline \text { Plant assets } & 388,000 & 392,000 \
\hline \text { Accounts payable } & 113,400 & 111.750 \
\hline \text { Net sales } & 711,000 & 706,000 \
\hline \text { Cost of goods sold } & 390,000 & 385,500 \
\hline
\end{array}$$
-Refer to the following selected financial information from McCormik,LLC.Compute the company's working capital for Year 2.

Accepted Answer

A)  $232,700. 
B)  $220,600. 
C)  $147,200. 
D)  $111,700. 
E)  $142,700. 
A)  $232,700. 
B)  $220,600. 
C)  $147,200. 
D)  $111,700. 
E)  $142,700.

Question 19

Carducci Corporation reported Net sales of $3.6 million and average Total assets of $1.1 million.The Total asset turnover is:

Accepted Answer

A)  0.31 times. 
B)  3.27 times. 
C)  4.30 times. 
D)  2.27 times. 
E)  0.77 times. 
A)  0.31 times. 
B)  3.27 times. 
C)  4.30 times. 
D)  2.27 times. 
E)  0.77 times.

Question 20

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick)ratio is:

Accepted Answer

A)  1.4:1. 
B)  0.77:1. 
C)  0.54:1. 
D)  1:1. 
E)  0.64:1. 
A)  1.4:1. 
B)  0.77:1. 
C)  0.54:1. 
D)  1:1. 
E)  0.64:1.

In order to be classified as an extraordinary gain or loss,the item must be both (1) and (2).

Use the following selected information from Wheeler,LLC to determine the 2017 and 2016 trend percentages for cost of goods sold using 2016 as the base. 2017 2016 Net sales \ 276,200 \ 231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820

Explain the purpose of financial statement analysis for both external and internal users.

Financial statement analysis involves all of the following except:

Match each of the following terms with the appropriate definitions. -A measure of solvency presented as the ratio of total liabilities to total equity.

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

Calculate the percent increase or decrease for each of the following financial statement items: Year 2 Year 1 Cash \ 37,500 \ 30,000 Accounts receivable 63,000 52,500 Inventory 67,500 90,000 Accounts payable 35,100 27,000 Sales 187,500 150,000 Equipment 65,00 10 125,000

Year 2 Year 1 Total assets \ 327,800 \ 301,000 Total liabilities 171,400 169,300 Total equity 156,400 131,700 -Refer to the following selected financial information from Keller Company.Compute the company's debt to equity for Year 2.

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Financial reporting refers to:

Guidelines (rules-of-thumb)are general standards of comparison developed from:

The common-size percent is computed by:

Year 2 Year 1 Accounts receivable, net 86,500 82,750 Net sales 723,000 693,000 -Refer to the following selected financial information from Marston Company.Compute the company's accounts receivable turnover for Year 2.

Net income divided by average total assets is:

A brief focus on important analysis results and conclusions is usually included in which of the following sections of a financial statement analysis report:

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

Carducci Corporation reported Net sales of $3.6 million and average Total assets of $1.1 million.The Total asset turnover is:

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick)ratio is:

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 13: Analysis of Financial Statements

In order to be classified as an extraordinary gain or loss,the item must be both (1)________ and (2)________.

Use the following selected information from Wheeler,LLC to determine the 2017 and 2016 trend percentages for cost of goods sold using 2016 as the base. 2017 2016 Net sales \ 276,200 \ 231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820

Explain the purpose of financial statement analysis for both external and internal users.

Financial statement analysis involves all of the following except:

Match each of the following terms with the appropriate definitions. -A measure of solvency presented as the ratio of total liabilities to total equity.

Horizontal analysis is the comparison of a company's financial condition and performance to a base amount.

Calculate the percent increase or decrease for each of the following financial statement items: Year 2 Year 1 Cash \ 37,500 \ 30,000 Accounts receivable 63,000 52,500 Inventory 67,500 90,000 Accounts payable 35,100 27,000 Sales 187,500 150,000 Equipment 65,00 10 125,000

Year 2 Year 1 Total assets \ 327,800 \ 301,000 Total liabilities 171,400 169,300 Total equity 156,400 131,700 -Refer to the following selected financial information from Keller Company.Compute the company's debt to equity for Year 2.

Financial statement analysis applies analytical tools to financial statements and related data for making business decisions.

Financial reporting refers to:

Guidelines (rules-of-thumb)are general standards of comparison developed from:

The common-size percent is computed by:

Year 2 Year 1 Accounts receivable, net 86,500 82,750 Net sales 723,000 693,000 -Refer to the following selected financial information from Marston Company.Compute the company's accounts receivable turnover for Year 2.

Net income divided by average total assets is:

A brief focus on important analysis results and conclusions is usually included in which of the following sections of a financial statement analysis report:

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

Carducci Corporation reported Net sales of $3.6 million and average Total assets of $1.1 million.The Total asset turnover is:

Jones Corp.reported current assets of $193,000 and current liabilities of $137,000 on its most recent balance sheet.The current assets consisted of $62,000 Cash; $43,000 Accounts Receivable; and $88,000 of Inventory.The acid-test (quick)ratio is:

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

In order to be classified as an extraordinary gain or loss,the item must be both (1) and (2).