Question 1

Accounts receivable on January 1 was $30,000 and, at the end of the year it was $50,000. Net credit sales were $200,000. Accounts receivable turnover is:

Accepted Answer

A) 2.5 times. 
B) 4 times. 
C) 5 times. 
D) 6.67 times. 
A) 2.5 times. 
B) 4 times. 
C) 5 times. 
D) 6.67 times.

Question 2

An expression of the amount of each item in a statement shown as a percentage of some designated total for purposes of comparison is called:

Accepted Answer

A) horizontal analysis. 
B) earnings per share analysis. 
C) return on total assets. 
D) vertical analysis. 
A) horizontal analysis. 
B) earnings per share analysis. 
C) return on total assets. 
D) vertical analysis.

Question 3

Define two types of comparative income statements and compare the information provided by them.

Accepted Answer

Horizontal analysis compares items in on

Question 4

The inventory turnover ratio calculates:

Accepted Answer

A) how many times the inventory turns over in one period. 
B) number of times inventory is purchased in one period. 
C) the dollar amount of change in inventory in one period. 
D) None of these answers are correct. 
A) how many times the inventory turns over in one period. 
B) number of times inventory is purchased in one period. 
C) the dollar amount of change in inventory in one period. 
D) None of these answers are correct.

Question 5

A low debt to total assets ratio reduces a creditor's risk if liquidation occurs.

Accepted Answer

A) True 
 B)False

Question 6

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Accepted Answer

A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis. 
A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis.

Question 7

Interest expense was $10,000, income tax expense $20,000, and net income after taxes is $60,000. The number of times interest was earned is:

Accepted Answer

A) 9 times. 
B) 8 times. 
C) 7 times. 
D) 6 times. 
A) 9 times. 
B) 8 times. 
C) 7 times. 
D) 6 times.

Question 8

From the following information of Carlson's Restoration Corporation, compute:
a. ________ Asset turnover for Year 2.
b. ________ Inventory turnover for Year 2.
c. ________ Accounts receivable turnover for Year 2.

Accepted Answer

a. 1.25 ti

Question 9

Carla's Fashions has an average collection period of 30 days. You could infer that Carla's Fashions:

Accepted Answer

A) bills her customers monthly. 
B) bills her customers quarterly. 
C) has an accounts receivable turnover of approximately 12. 
D) Both A and C can be inferred. 
A) bills her customers monthly. 
B) bills her customers quarterly. 
C) has an accounts receivable turnover of approximately 12. 
D) Both A and C can be inferred.

Question 10

Which of the following ratios helps evaluate how well a company is earning profit for the common stockholders?

Accepted Answer

A) Times interest earned ratio 
B) Return on sales ratio 
C) Return on total assets 
D) Rate of return on common stockholders' equity 
A) Times interest earned ratio 
B) Return on sales ratio 
C) Return on total assets 
D) Rate of return on common stockholders' equity

Question 11

An accountant is completing a trend analysis for a company by comparing sales for years 2003 through 2013. The base year for the calculations is 2013.

Accepted Answer

A) True 
 B)False

Question 12

Merchandise inventory turnover measures the relationship between

Accepted Answer

A) cost of goods sold and merchandise inventory. 
B) expenses and merchandise inventory. 
C) merchandise inventory and current liabilities. 
D) assets and current liabilities. 
A) cost of goods sold and merchandise inventory. 
B) expenses and merchandise inventory. 
C) merchandise inventory and current liabilities. 
D) assets and current liabilities.

Question 13

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 14

Which statement below best describes the quick (acid test)ratio?

Accepted Answer

A) The acid test ratio considers only the most liquid assets: cash, accounts receivable, and temporary investments. 
B) The current ratio includes only the assets most easily converted into cash. 
C) The acid test adds merchandise inventory and prepaid expenses in the computation of current assets. 
D) None of these answers are correct. 
A) The acid test ratio considers only the most liquid assets: cash, accounts receivable, and temporary investments. 
B) The current ratio includes only the assets most easily converted into cash. 
C) The acid test adds merchandise inventory and prepaid expenses in the computation of current assets. 
D) None of these answers are correct.

Question 15

Which of the following ratios measures the earnings of a company on each sales dollar?

Accepted Answer

A) Return on assets 
B) Return on sales 
C) Return on inventory 
D) Return on stockholders' equity 
A) Return on assets 
B) Return on sales 
C) Return on inventory 
D) Return on stockholders' equity

Question 16

Common-size statements deal with the percentage of change in a certain item over several years.

Accepted Answer

A) True 
 B)False

Question 17

If beginning and ending inventories are $100,000 and 150,000, respectively, and the cost of goods sold is $450,000, what is the inventory turnover ratio?

Accepted Answer

A) 4.50 
B) 3.00 
C) 3.60 
D) 0.28 
A) 4.50 
B) 3.00 
C) 3.60 
D) 0.28

Question 18

For vertical analysis purposes, a base item on a balance sheet is:

Accepted Answer

A) total assets. 
B) total equity. 
C) total liabilities. 
D) net equity. 
A) total assets. 
B) total equity. 
C) total liabilities. 
D) net equity.

Question 19

Complete the horizontal analysis of Soopy's Used Cars. (Round all percentages to the nearest tenth of a percent.)
     Total Liabilities and

Accepted Answer

@#IMG-DLM& @#IMG-DLM& Total Li

Question 20

If management wishes to know how long it takes to collect from a charge customer, they could use the:

Accepted Answer

A) rate of return on total assets. 
B) average collection period. 
C) acid test ratio. 
D) current ratio. 
A) rate of return on total assets. 
B) average collection period. 
C) acid test ratio. 
D) current ratio.

Exam 22: Analyzing Financial Statements

Accounts receivable on January 1 was $30,000 and, at the end of the year it was $50,000. Net credit sales were $200,000. Accounts receivable turnover is:

An expression of the amount of each item in a statement shown as a percentage of some designated total for purposes of comparison is called:

Define two types of comparative income statements and compare the information provided by them.

The inventory turnover ratio calculates:

A low debt to total assets ratio reduces a creditor's risk if liquidation occurs.

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Interest expense was $10,000, income tax expense $20,000, and net income after taxes is $60,000. The number of times interest was earned is:

From the following information of Carlson's Restoration Corporation, compute: a. ________ Asset turnover for Year 2. b. ________ Inventory turnover for Year 2. c. ________ Accounts receivable turnover for Year 2.

Carla's Fashions has an average collection period of 30 days. You could infer that Carla's Fashions:

Which of the following ratios helps evaluate how well a company is earning profit for the common stockholders?

An accountant is completing a trend analysis for a company by comparing sales for years 2003 through 2013. The base year for the calculations is 2013.

Merchandise inventory turnover measures the relationship between

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

Which statement below best describes the quick (acid test)ratio?

Which of the following ratios measures the earnings of a company on each sales dollar?

Common-size statements deal with the percentage of change in a certain item over several years.

If beginning and ending inventories are $100,000 and 150,000, respectively, and the cost of goods sold is $450,000, what is the inventory turnover ratio?

For vertical analysis purposes, a base item on a balance sheet is:

Complete the horizontal analysis of Soopy's Used Cars. (Round all percentages to the nearest tenth of a percent.) Total Liabilities and

If management wishes to know how long it takes to collect from a charge customer, they could use the:

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

From the following information of Carlson's Restoration Corporation, compute: a. Asset turnover for Year 2. b. Inventory turnover for Year 2. c. Accounts receivable turnover for Year 2.