Question 1

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Accepted Answer

A) True 
 B)False

Question 2

If a firm has an quick ratio of 1,the subsequent payment of an account payable will cause the ratio to increase.

Accepted Answer

A) True 
 B)False

Question 3

Based on Washington's current ratio,which of the following statements is true regarding the company?

Accepted Answer

A) Washington's current ratio has increased,indicating that the company is in a more favorable position to obtain short-term credit than in 2010. 
B) Washington's current ratio has decreased,indicating that the company is in a less favorable position to obtain short-term credit than in 2010. 
C) Washington's current ratio has increased,indicating that the company is in a less favorable position to obtain short-term credit than in 2010. 
D) Washington's current ratio has decreased,indicating that the company is in a more favorable position to obtain short-term credit than in 2010. 
A) Washington's current ratio has increased,indicating that the company is in a more favorable position to obtain short-term credit than in 2010. 
B) Washington's current ratio has decreased,indicating that the company is in a less favorable position to obtain short-term credit than in 2010. 
C) Washington's current ratio has increased,indicating that the company is in a less favorable position to obtain short-term credit than in 2010. 
D) Washington's current ratio has decreased,indicating that the company is in a more favorable position to obtain short-term credit than in 2010.

Question 4

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

Accepted Answer

A) Number of times interest charges are earned 
B) Current position analysis 
C) Ratio of net sales to assets 
D) Inventory analysis 
A) Number of times interest charges are earned 
B) Current position analysis 
C) Ratio of net sales to assets 
D) Inventory analysis

Question 5

Current position analysis indicates a company's ability to liquidate current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

The independent auditor's report does which of the following?

Accepted Answer

A) Describes which financial statements are covered by the audit 
B) Gives the auditor's opinion regarding the fairness of the financial statements 
C) Summarizes what the auditor did 
D) States that the financial statements are truthful 
A) Describes which financial statements are covered by the audit 
B) Gives the auditor's opinion regarding the fairness of the financial statements 
C) Summarizes what the auditor did 
D) States that the financial statements are truthful

Question 7

Revenue and expense data for Reuters Company are as follows:

Accepted Answer

The answer of Revenue and expense data for Reuters Company...

Question 8

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as

Accepted Answer

A) leverage. 
B) solvency. 
C) yield. 
D) quick assets. 
A) leverage. 
B) solvency. 
C) yield. 
D) quick assets.

Question 9

The relationship of $225,000 to $100,000,expressed as a ratio,is

Accepted Answer

A) 2.0 to 1. 
B) 1.8 to 1. 
C) 1.5 to 1. 
D) 2.25 to 1. 
A) 2.0 to 1. 
B) 1.8 to 1. 
C) 1.5 to 1. 
D) 2.25 to 1.

Question 10

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

Accepted Answer

A) 12.5 
B) 14.3 
C) 11.1 
D) 7.5 
A) 12.5 
B) 14.3 
C) 11.1 
D) 7.5

Question 11

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,and the market price is $40,what is the price-earnings ratio on common stock (rounded to one decimal place)?

Accepted Answer

A) 14.9 
B) 18.4 
C) 17.3 
D) 19.8 
A) 14.9 
B) 18.4 
C) 17.3 
D) 19.8

Question 12

A balance sheet shows cash,$75,000;marketable securities,$110,000;receivables,$90,000;and $225,000 of inventories.Current liabilities are $200,000.The current ratio is 1.375 to 1.

Accepted Answer

A) True 
 B)False

Question 13

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

Accepted Answer

A) True 
 B)False

Question 14

The percentage of change in long-term liabilities between two balance sheet dates is an example of

Accepted Answer

A) vertical analysis. 
B) solvency analysis. 
C) profitability analysis. 
D) horizontal analysis. 
A) vertical analysis. 
B) solvency analysis. 
C) profitability analysis. 
D) horizontal analysis.

Question 15

Which of the following is a measure of the liquid position of a corporation?

Accepted Answer

A) Earnings per share 
B) Inventory turnover 
C) Current ratio 
D) Number of times interest charges earned 
A) Earnings per share 
B) Inventory turnover 
C) Current ratio 
D) Number of times interest charges earned

Question 16

A company with working capital of $500,000 and a current ratio of 2.25 pays a $100,000 short-term liability.The amount of working capital immediately after payment is

Accepted Answer

A) $600,000. 
B) $400,000. 
C) $500,000. 
D) $100,000. 
A) $600,000. 
B) $400,000. 
C) $500,000. 
D) $100,000.

Question 17

Ratios and various other analytical measures are NOT a substitute for sound judgment,nor do they provide definitive guides for action.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

In computing the rate earned on total assets,interest expense is added to net income before dividing by average total assets.

Accepted Answer

A) True 
 B)False

Question 20

An increase in the ratio of stockholders' equity to liabilities indicates an improvement in the margin of safety for creditors.

Accepted Answer

A) True 
 B)False

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

If a firm has an quick ratio of 1,the subsequent payment of an account payable will cause the ratio to increase.

Based on Washington's current ratio,which of the following statements is true regarding the company?

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

Current position analysis indicates a company's ability to liquidate current liabilities.

The independent auditor's report does which of the following?

Revenue and expense data for Reuters Company are as follows:

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as

The relationship of $225,000 to $100,000,expressed as a ratio,is

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

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,and the market price is $40,what is the price-earnings ratio on common stock (rounded to one decimal place)?

A balance sheet shows cash,$75,000;marketable securities,$110,000;receivables,$90,000;and $225,000 of inventories.Current liabilities are $200,000.The current ratio is 1.375 to 1.

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

The percentage of change in long-term liabilities between two balance sheet dates is an example of

Which of the following is a measure of the liquid position of a corporation?

A company with working capital of $500,000 and a current ratio of 2.25 pays a $100,000 short-term liability.The amount of working capital immediately after payment is

Ratios and various other analytical measures are NOT a substitute for sound judgment,nor do they provide definitive guides for action.

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

In computing the rate earned on total assets,interest expense is added to net income before dividing by average total assets.

An increase in the ratio of stockholders' equity to liabilities indicates an improvement in the margin of safety for creditors.

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

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Exam 9: Financial Statement Analysis

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

If a firm has an quick ratio of 1,the subsequent payment of an account payable will cause the ratio to increase.

Based on Washington's current ratio,which of the following statements is true regarding the company?

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

Current position analysis indicates a company's ability to liquidate current liabilities.

The independent auditor's report does which of the following?

Revenue and expense data for Reuters Company are as follows:

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as

The relationship of $225,000 to $100,000,expressed as a ratio,is

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

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,and the market price is $40,what is the price-earnings ratio on common stock (rounded to one decimal place)?

A balance sheet shows cash,$75,000;marketable securities,$110,000;receivables,$90,000;and $225,000 of inventories.Current liabilities are $200,000.The current ratio is 1.375 to 1.

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

The percentage of change in long-term liabilities between two balance sheet dates is an example of

Which of the following is a measure of the liquid position of a corporation?

A company with working capital of $500,000 and a current ratio of 2.25 pays a $100,000 short-term liability.The amount of working capital immediately after payment is

Ratios and various other analytical measures are NOT a substitute for sound judgment,nor do they provide definitive guides for action.

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

In computing the rate earned on total assets,interest expense is added to net income before dividing by average total assets.

An increase in the ratio of stockholders' equity to liabilities indicates an improvement in the margin of safety for creditors.

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