Question 1

The excess of current assets over current liabilities is referred to as working capital.

Accepted Answer

A) True 
 B)False

Question 2

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

Accepted Answer

A) True 
 B)False

Question 3

The following data are taken from the financial statements:
​

Accepted Answer

The answer of The following data are taken from the...

Question 4

Using the balance sheets for Kellman Company,if net income is $150,000 and interest expense is $20,000 for Year 2,what is the return on stockholders' equity for Year 2?

Accepted Answer

A)  6.9% 
B)  14.5% 
C)  16.4% 
D)  13.8% 
A)  6.9% 
B)  14.5% 
C)  16.4% 
D)  13.8%

Question 5

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

Accepted Answer

A)  judge the relative potential of two companies of similar size in different industries 
B)  determine which companies in a single industry are of the same value 
C)  determine which companies in a single industry are of the same size 
D)  make a better comparison of two companies of different sizes in the same industry 
A)  judge the relative potential of two companies of similar size in different industries 
B)  determine which companies in a single industry are of the same value 
C)  determine which companies in a single industry are of the same size 
D)  make a better comparison of two companies of different sizes in the same industry

Question 6

In a common-sized income statement,each item is expressed as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an unusual item?

Accepted Answer

A)  a segment of the business being sold 
B)  corporate income tax being paid 
C)  a change from one accounting method to another acceptable accounting method 
D)  closure of all outlet stores 
A)  a segment of the business being sold 
B)  corporate income tax being paid 
C)  a change from one accounting method to another acceptable accounting method 
D)  closure of all outlet stores

Question 8

The following selected data were taken from the financial statements of the Winter Group for the three most recent years of operations:
​
   The Year 3 net income was $242,000 and the Year 2 net income was $308,000.No dividends on common stock were declared during the 3 years.
​
(a)Determine the return on total assets,the return on stockholders' equity,and the return on
common stockholders' equity for Years 2 and 3.Round to one decimal place.
(b)What conclusion can be drawn from these data as to the company's profitability?

Accepted Answer

The answer of The following selected data were taken from...

Question 9

The following data are taken from the financial statements:
​

Accepted Answer

The answer of The following data are taken from the...

Question 10

Analyzing a company's performance should take into account conditions peculiar to the industry and the general economic conditions.

Accepted Answer

A) True 
 B)False

Question 11

Using the balance sheets for Kellman Company,if net income is $150,000 and interest expense is $20,000 for Year 2,what is the return on total assets for the year?

Accepted Answer

A)  10.4% 
B)  11.9% 
C)  10.5% 
D)  8.4% 
A)  10.4% 
B)  11.9% 
C)  10.5% 
D)  8.4%

Question 12

A loss due to a discontinued operation should be reported on the income statement

Accepted Answer

A)  above income from continuing operations 
B)  without related tax effect 
C)  below income from continuing operations 
D)  as an operating expense 
A)  above income from continuing operations 
B)  without related tax effect 
C)  below income from continuing operations 
D)  as an operating expense

Question 13

Corporate annual reports typically do not contain

Accepted Answer

A)  management discussion and analysis 
B)  an SEC statement expressing an opinion 
C)  accompanying notes 
D)  an auditor's report 
A)  management discussion and analysis 
B)  an SEC statement expressing an opinion 
C)  accompanying notes 
D)  an auditor's report

Question 14

Income statement information for Lucy Company is provided below:
​
   Prepare a vertical analysis of the income statement for Lucy Company.

Accepted Answer

The answer of Income statement information for Lucy Company is...

Question 15

Which of the following is the most useful in analyzing companies of different sizes?

Accepted Answer

A)  comparative statements 
B)  common-sized financial statements 
C)  price-level accounting 
D)  audit report 
A)  comparative statements 
B)  common-sized financial statements 
C)  price-level accounting 
D)  audit report

Question 16

What information is generally included in the Management Discussion and Analysis (MD&A)section of a corporate annual report?

Accepted Answer

The MD&A section typically includes:Mana

Question 17

A change from one acceptable accounting method to another is reported

Accepted Answer

A)  on the statement of retained earnings,as a correction to the beginning balance 
B)  on the income statement,below income from continuing operations 
C)  on the income statement,above income tax expense 
D)  through a retroactive restatement of prior-period earnings 
A)  on the statement of retained earnings,as a correction to the beginning balance 
B)  on the income statement,below income from continuing operations 
C)  on the income statement,above income tax expense 
D)  through a retroactive restatement of prior-period earnings

Question 18

In computing the return on total assets,interest expense is subtracted from net income before dividing by average total assets.

Accepted Answer

A) True 
 B)False

Question 19

Based on the following data for the current year,what is the number of days' sales in inventory?

Accepted Answer

A)  51.2 
B)  44.4 
C)  6.5 
D)  7.5 
A)  51.2 
B)  44.4 
C)  6.5 
D)  7.5

Question 20

The ratio of the sum of cash,receivables,and marketable securities to current liabilities is referred to as the current ratio.

Accepted Answer

A) True 
 B)False

Exam 14: Financial Statement Analysis

The excess of current assets over current liabilities is referred to as working capital.

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

The following data are taken from the financial statements: ​

Using the balance sheets for Kellman Company,if net income is $150,000 and interest expense is $20,000 for Year 2,what is the return on stockholders' equity for Year 2?

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

In a common-sized income statement,each item is expressed as a percentage of net income.

Which of the following is not an unusual item?

The following data are taken from the financial statements: ​

Analyzing a company's performance should take into account conditions peculiar to the industry and the general economic conditions.

Using the balance sheets for Kellman Company,if net income is $150,000 and interest expense is $20,000 for Year 2,what is the return on total assets for the year?

A loss due to a discontinued operation should be reported on the income statement

Corporate annual reports typically do not contain

Income statement information for Lucy Company is provided below: ​ Prepare a vertical analysis of the income statement for Lucy Company.

Which of the following is the most useful in analyzing companies of different sizes?

What information is generally included in the Management Discussion and Analysis (MD&A)section of a corporate annual report?

A change from one acceptable accounting method to another is reported

In computing the return on total assets,interest expense is subtracted from net income before dividing by average total assets.

Based on the following data for the current year,what is the number of days' sales in inventory?

The ratio of the sum of cash,receivables,and marketable securities to current liabilities is referred to as the current ratio.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Filters

The following data are taken from the financial statements:

The following data are taken from the financial statements:

Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.