Question 1

The purpose of an audit is to

Accepted Answer

A) determine whether or not a company is a good investment. 
B) render an opinion on the fairness of the statements. 
C) determine whether or not a company complies with income tax regulations. 
D) determine whether or not a company is a good credit risk. 
A) determine whether or not a company is a good investment. 
B) render an opinion on the fairness of the statements. 
C) determine whether or not a company complies with income tax regulations. 
D) determine whether or not a company is a good credit risk.

Question 2

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

Accepted Answer

A) True 
 B)False

Question 3

The ability of a business to earn a reasonable amount of income is referred to as the factor of

Accepted Answer

A) leverage. 
B) profitability. 
C) wealth. 
D) solvency. 
A) leverage. 
B) profitability. 
C) wealth. 
D) solvency.

Question 4

A company reports the following:
   
Determine the (a)accounts receivable turnover and (b)number of days' sales in receivables.Round your answers to one decimal place.

Accepted Answer

The answer of A company reports the following:
  ...

Question 5

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.

Accepted Answer

A) True 
 B)False

Question 6

"Working capital" is another term for the current ratio.

Accepted Answer

A) True 
 B)False

Question 7

The number of times interest charges are earned is computed as

Accepted Answer

A) net income plus interest charges,divided by interest charges. 
B) income before income tax plus interest charges,divided by interest charges. 
C) net income divided by interest charges. 
D) income before income tax divided by interest charges. 
A) net income plus interest charges,divided by interest charges. 
B) income before income tax plus interest charges,divided by interest charges. 
C) net income divided by interest charges. 
D) income before income tax divided by interest charges.

Question 8

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Accepted Answer

A) vertical analysis. 
B) horizontal analysis. 
C) liquidity analysis. 
D) common-size analysis. 
A) vertical analysis. 
B) horizontal analysis. 
C) liquidity analysis. 
D) common-size analysis.

Question 9

Washington Corporation has the following financial data for 2011 and 2010.
  
-What is Washington's working capital for 2011?

Accepted Answer

A) $6,000 
B) $19,000 
C) $0 
D) $120,000 
A) $6,000 
B) $19,000 
C) $0 
D) $120,000

Question 10

If a company has current assets totaling $56,000 and current liabilities totaling $40,500,then the company's working capital totals $15,500.

Accepted Answer

A) True 
 B)False

Question 11

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as vertical analysis.

Accepted Answer

A) True 
 B)False

Question 12

Based on the following data for the current year,what is the accounts receivable turnover?

Accepted Answer

A) 13.14 
B) 11.7 
C) 10.35 
D) 8.3 
A) 13.14 
B) 11.7 
C) 10.35 
D) 8.3

Question 13

For most profitable companies,the rate earned on total assets will be less than

Accepted Answer

A) the rate earned on stockholders' equity. 
B) the rate earned on total liabilities and stockholders' equity. 
C) the rate earned on sales. 
D) cannot be determined without more information. 
A) the rate earned on stockholders' equity. 
B) the rate earned on total liabilities and stockholders' equity. 
C) the rate earned on sales. 
D) cannot be determined without more information.

Question 14

Statements in which all items are expressed in relative terms are called common-size statements.

Accepted Answer

A) True 
 B)False

Question 15

The balance sheets at the end of each of the first two years of operations indicate the following:
  
-If net income is $130,000 and interest expense is $40,000 for 2011,what is the rate earned on stockholders' equity for 2011 (rounded to one decimal place)?

Accepted Answer

A) 12.0% 
B) 12.7% 
C) 13.2% 
D) 16.5% 
A) 12.0% 
B) 12.7% 
C) 13.2% 
D) 16.5%

Question 16

Washington Corporation has the following financial data for 2011 and 2010.
  
-What is Washington's current ratio for 2011?

Accepted Answer

A) 1.08 
B) .79 
C) 1.27 
D) 1.50 
A) 1.08 
B) .79 
C) 1.27 
D) 1.50

Question 17

Which of the following is included in the computation of the quick ratio?

Accepted Answer

A) Prepaid rent 
B) Accounts receivable 
C) Inventory 
D) Supplies 
A) Prepaid rent 
B) Accounts receivable 
C) Inventory 
D) Supplies

Question 18

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

Accepted Answer

A) decrease. 
B) remain the same. 
C) either increase or decrease. 
D) increase. 
A) decrease. 
B) remain the same. 
C) either increase or decrease. 
D) increase.

Question 19

What type of analysis is indicated by the following?
Increase (Decrease*)
2011
2010
Amount
Percent
Current assets
$ 380,000
$ 500,000
$(120,000*)
(24%)*
Fixed assets
1,680,000
1,500,000
180,000
12%

Accepted Answer

A) Vertical analysis 
B) Horizontal analysis 
C) Liquidity analysis 
D) Common-size analysis 
A) Vertical analysis 
B) Horizontal analysis 
C) Liquidity analysis 
D) Common-size analysis

Question 20

Which of the following is NOT an analysis used in assessing solvency?

Accepted Answer

A) Inventory analysis 
B) Number of times interest charges are earned 
C) Asset turnover 
D) Accounts receivable analysis 
A) Inventory analysis 
B) Number of times interest charges are earned 
C) Asset turnover 
D) Accounts receivable analysis

The purpose of an audit is to

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

The ability of a business to earn a reasonable amount of income is referred to as the factor of

A company reports the following: Determine the (a)accounts receivable turnover and (b)number of days' sales in receivables.Round your answers to one decimal place.

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.

"Working capital" is another term for the current ratio.

The number of times interest charges are earned is computed as

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Washington Corporation has the following financial data for 2011 and 2010. -What is Washington's working capital for 2011?

If a company has current assets totaling $56,000 and current liabilities totaling $40,500,then the company's working capital totals $15,500.

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as vertical analysis.

Based on the following data for the current year,what is the accounts receivable turnover?

For most profitable companies,the rate earned on total assets will be less than

Statements in which all items are expressed in relative terms are called common-size statements.

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $130,000 and interest expense is $40,000 for 2011,what is the rate earned on stockholders' equity for 2011 (rounded to one decimal place)?

Washington Corporation has the following financial data for 2011 and 2010. -What is Washington's current ratio for 2011?

Which of the following is included in the computation of the quick ratio?

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

What type of analysis is indicated by the following? Increase (Decrease) 2011 2010 Amount Percent Current assets $ 380,000 $ 500,000 $(120,000) (24%)* Fixed assets 1,680,000 1,500,000 180,000 12%

Which of the following is NOT an analysis used in assessing solvency?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 9: Financial Statement Analysis

The purpose of an audit is to

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

The ability of a business to earn a reasonable amount of income is referred to as the factor of

A company reports the following: Determine the (a)accounts receivable turnover and (b)number of days' sales in receivables.Round your answers to one decimal place.

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis.

"Working capital" is another term for the current ratio.

The number of times interest charges are earned is computed as

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called

Washington Corporation has the following financial data for 2011 and 2010. -What is Washington's working capital for 2011?

If a company has current assets totaling $56,000 and current liabilities totaling $40,500,then the company's working capital totals $15,500.

The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as vertical analysis.

Based on the following data for the current year,what is the accounts receivable turnover?

For most profitable companies,the rate earned on total assets will be less than

Statements in which all items are expressed in relative terms are called common-size statements.

The balance sheets at the end of each of the first two years of operations indicate the following: -If net income is $130,000 and interest expense is $40,000 for 2011,what is the rate earned on stockholders' equity for 2011 (rounded to one decimal place)?

Washington Corporation has the following financial data for 2011 and 2010. -What is Washington's current ratio for 2011?

Which of the following is included in the computation of the quick ratio?

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

What type of analysis is indicated by the following? Increase (Decrease*) 2011 2010 Amount Percent Current assets $ 380,000 $ 500,000 $(120,000*) (24%)* Fixed assets 1,680,000 1,500,000 180,000 12%

Which of the following is NOT an analysis used in assessing solvency?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

What type of analysis is indicated by the following? Increase (Decrease) 2011 2010 Amount Percent Current assets $ 380,000 $ 500,000 $(120,000) (24%)* Fixed assets 1,680,000 1,500,000 180,000 12%