Question 1

In a common-size financial statement, a designation of 25 percent could not be given to

Accepted Answer

A)  total stockholders' equity. 
B)  net revenues. 
C)  net earnings. 
D)  total current assets. 
A)  total stockholders' equity. 
B)  net revenues. 
C)  net earnings. 
D)  total current assets.

Question 2

Which of the following describes the return on assets ratio?

Accepted Answer

A)  Average total assets divided by net income 
B)  Net income plus income tax expense divided by average total assets 
C)  Average total assets divided by net sales 
D)  Net income divided by average total assets 
A)  Average total assets divided by net income 
B)  Net income plus income tax expense divided by average total assets 
C)  Average total assets divided by net sales 
D)  Net income divided by average total assets

Question 3

Using the following information from an annual report, prepare a vertical analysis of the consolidated balance sheet at June 30, 2009. (Round percentage answers to one decimal place.)

Accepted Answer

The answer of Using the following information from an annual...

Question 4

Prepare a trend analysis of the following data, using 2008 as the base year. Place your answers in the chart provided. Comment on the trend.

Accepted Answer

The answer of Prepare a trend analysis of the following...

Question 5

One of the main parts of an annual report of a publicly held corporation is the five- to ten-year projection.

Accepted Answer

A) True 
 B)False

Question 6

Common-size statements are useful in assessing the changes in the composition of statements over time.

Accepted Answer

A) True 
 B)False

Question 7

The receivable turnover amount is needed to calculate the

Accepted Answer

A)  days' sales uncollected. 
B)  days' inventory on hand. 
C)  inventory turnover. 
D)  interest coverage ratio. 
A)  days' sales uncollected. 
B)  days' inventory on hand. 
C)  inventory turnover. 
D)  interest coverage ratio.

Question 8

Most companies issue interim financial statements to the public on a monthly basis.

Accepted Answer

A) True 
 B)False

Question 9

A high receivable turnover indicates that

Accepted Answer

A)  many customers are defaulting on their debts. 
B)  a large proportion of the company's sales is on credit. 
C)  the company's inventory is moving very quickly. 
D)  customers are making payments very quickly. 
A)  many customers are defaulting on their debts. 
B)  a large proportion of the company's sales is on credit. 
C)  the company's inventory is moving very quickly. 
D)  customers are making payments very quickly.

Question 10

For details about the financial histories of companies, one could consult publications of Moody's and Standard & Poor's.

Accepted Answer

A) True 
 B)False

Question 11

Per the Sarbanes-Oxley Act of 2002, a compensation committee, comprised of a public corporation's top executives, must be established to determine the salaries and wages of its employees.

Accepted Answer

A) True 
 B)False

Question 12

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures.     What is the return on assets for this corporation? Round your answer to one decimal place.

Accepted Answer

A)  75.0 percent 
B)  53.3 percent 
C)  40.0 percent 
D)  30.0 percent 
A)  75.0 percent 
B)  53.3 percent 
C)  40.0 percent 
D)  30.0 percent

Question 13

The length of the operating cycle equals the days' sales uncollected plus the

Accepted Answer

A)  days' payable. 
B)  days' inventory on hand. 
C)  receivable turnover. 
D)  payables turnover. 
A)  days' payable. 
B)  days' inventory on hand. 
C)  receivable turnover. 
D)  payables turnover.

Question 14

The existence of diversified companies makes which of the following very difficult?

Accepted Answer

A)  Comparison with industry norms 
B)  The preparation of interim financial statements 
C)  Use of more than one depreciation or inventory method 
D)  The compilation of segmented information 
A)  Comparison with industry norms 
B)  The preparation of interim financial statements 
C)  Use of more than one depreciation or inventory method 
D)  The compilation of segmented information

Question 15

A change from FIFO to LIFO in a period of rising prices will

Accepted Answer

A)  decrease both the current ratio and the inventory turnover ratio. 
B)  increase both the current ratio and the inventory turnover ratio. 
C)  increase the current ratio and decrease the inventory turnover ratio. 
D)  decrease the current ratio and increase the inventory turnover ratio. 
A)  decrease both the current ratio and the inventory turnover ratio. 
B)  increase both the current ratio and the inventory turnover ratio. 
C)  increase the current ratio and decrease the inventory turnover ratio. 
D)  decrease the current ratio and increase the inventory turnover ratio.

Question 16

Past performance is rarely a good indicator of future performance.

Accepted Answer

A) True 
 B)False

Question 17

A common measure of long-term solvency is the

Accepted Answer

A)  receivable turnover. 
B)  asset turnover. 
C)  debt to equity ratio. 
D)  current ratio. 
A)  receivable turnover. 
B)  asset turnover. 
C)  debt to equity ratio. 
D)  current ratio.

Question 18

Which of the following is the least useful in evaluating a relationship as either favorable or unfavorable?

Accepted Answer

A)  Past and current performances of the company 
B)  Industry averages 
C)  Past performance of the company 
D)  Rule-of-thumb measures 
A)  Past and current performances of the company 
B)  Industry averages 
C)  Past performance of the company 
D)  Rule-of-thumb measures

Question 19

The most complete financial newspaper in the United States is the Financial Times.

Accepted Answer

A) True 
 B)False

Question 20

The operating cycle is equal to days' sales uncollected plus days' inventory on hand.

Accepted Answer

A) True 
 B)False

Exam 16: Financial Performance Measurement

In a common-size financial statement, a designation of 25 percent could not be given to

Which of the following describes the return on assets ratio?

Using the following information from an annual report, prepare a vertical analysis of the consolidated balance sheet at June 30, 2009. (Round percentage answers to one decimal place.)

Prepare a trend analysis of the following data, using 2008 as the base year. Place your answers in the chart provided. Comment on the trend.

One of the main parts of an annual report of a publicly held corporation is the five- to ten-year projection.

Common-size statements are useful in assessing the changes in the composition of statements over time.

The receivable turnover amount is needed to calculate the

Most companies issue interim financial statements to the public on a monthly basis.

A high receivable turnover indicates that

For details about the financial histories of companies, one could consult publications of Moody's and Standard & Poor's.

Per the Sarbanes-Oxley Act of 2002, a compensation committee, comprised of a public corporation's top executives, must be established to determine the salaries and wages of its employees.

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures. What is the return on assets for this corporation? Round your answer to one decimal place.

The length of the operating cycle equals the days' sales uncollected plus the

The existence of diversified companies makes which of the following very difficult?

A change from FIFO to LIFO in a period of rising prices will

Past performance is rarely a good indicator of future performance.

A common measure of long-term solvency is the

Which of the following is the least useful in evaluating a relationship as either favorable or unfavorable?

The most complete financial newspaper in the United States is the Financial Times.

The operating cycle is equal to days' sales uncollected plus days' inventory on hand.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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