Question 1

One of the best places to look for early signals of change in a company's profitability is the

Accepted Answer

A) Form 10-K. 
B) Form 10-Q. 
C) Form 8-K. 
D) annual report sent to stockholders. 
A) Form 10-K. 
B) Form 10-Q. 
C) Form 8-K. 
D) annual report sent to stockholders.

Question 2

Days' payable is a measure of

Accepted Answer

A) liquidity. 
B) volatility. 
C) long-term solvency. 
D) profitability. 
A) liquidity. 
B) volatility. 
C) long-term solvency. 
D) profitability.

Question 3

Which of the following companies would be required to files its Form 10-K electronically?

Accepted Answer

A) A privately-held corporation with 1,500 shareholders. 
B) A municipality with $20 million in assets. 
C) A public company with 520 shareholders. 
D) All of these choices. 
A) A privately-held corporation with 1,500 shareholders. 
B) A municipality with $20 million in assets. 
C) A public company with 520 shareholders. 
D) All of these choices.

Question 4

The interest coverage ratio and the debt to equity ratio are measures of profitability.

Accepted Answer

A) True 
 B)False

Question 5

Prepare a trend analysis of the following data,using 20x4 as the base year.Place your answers in the chart provided.Comment on the trend.

Accepted Answer

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Comment: Net income in relati

Question 6

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 7

Consistency requires that a company use the same accounting procedures as other companies in the same industry.

Accepted Answer

A) True 
 B)False

Question 8

For an index number,the base year is set at 100 percent.

Accepted Answer

A) True 
 B)False

Question 9

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures.    
-What is the receivable turnover for this corporation? Round your answer to one decimal place.

Accepted Answer

A) 4.0 times 
B) 3.0 times 
C) 2.4 times 
D) 0.9 times 
A) 4.0 times 
B) 3.0 times 
C) 2.4 times 
D) 0.9 times

Question 10

The following information pertains to Patterson Corporation.Assume that all balance sheet amounts represent both average and ending figures.  
 
Patterson Corporation had 6,000 shares of common stock issued and outstanding.The market price of Patterson common stock on December 31,20x5,was $20.Patterson paid dividends of $0.90 per share during 20x5.
-What is the dividend yield of this corporation? Round your answer to two decimal places.

Accepted Answer

A) 12.5 percent 
B) 18.75 percent 
C) 9.90 percent 
D) 6.25 percent 
A) 12.5 percent 
B) 18.75 percent 
C) 9.90 percent 
D) 6.25 percent

Question 11

Which of the following must be reported by diversified companies for each of their operating segments?

Accepted Answer

A) Segment profit or loss,expenses,and earnings per share 
B) Segment profit or loss,certain revenue and expense items,and segment assets 
C) Assets,liabilities,and earnings per share 
D) Segment profit or loss,expenses,and unidentifiable assets 
A) Segment profit or loss,expenses,and earnings per share 
B) Segment profit or loss,certain revenue and expense items,and segment assets 
C) Assets,liabilities,and earnings per share 
D) Segment profit or loss,expenses,and unidentifiable assets

Question 12

In a common-size balance sheet,total liabilities are represented by 100 percent.

Accepted Answer

A) True 
 B)False

Question 13

The following selected amounts were extracted from the financial statements of Alfonso Corporation.
 
a.Prepare a trend analysis for net sales,gross margin,and net income using Year 1 as the base year.
b.For net sales,gross margin,and net income:
1.Calculate the percentage change from Year 1 to Year 2.
2.Calculate the percentage change from Year 2 to Year 3.
c.For each of the four years,compute the percentage relationship of gross margin to net sales and the relationship of net income to net sales.
d.Identify which requirement(s)above involve(s):
1.Horizontal analysis
2.Vertical analysis
Round all answers to the nearest tenth of 1 percent.

Accepted Answer

a.
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b.
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c.  @#IMG-DLM&
d.  1.R

Question 14

In a common-size balance sheet for a retail store,the 100 percent amount is for

Accepted Answer

A) total liabilities. 
B) total property,plant,and equipment. 
C) total assets. 
D) total current assets. 
A) total liabilities. 
B) total property,plant,and equipment. 
C) total assets. 
D) total current assets.

Question 15

Accounting methods may be a source of incomparability among companies.

Accepted Answer

A) True 
 B)False

Question 16

Interim financial statements are not subject to a full audit by an independent auditor.

Accepted Answer

A) True 
 B)False

Question 17

A low receivables turnover indicates that

Accepted Answer

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

Question 18

If dividends declared per share during 20x4 (the base year),20x5,and 20x6 are $4.80,$3.60,and $4.32,respectively,the index numbers assigned to 20x5 and 20x6,respectively,are

Accepted Answer

A) 75 and 90. 
B) 60 and 95. 
C) 180 and 80. 
D) 133.3 and 110. 
A) 75 and 90. 
B) 60 and 95. 
C) 180 and 80. 
D) 133.3 and 110.

Question 19

A company with a current ratio of 2.4 times will see that ratio decrease when the company

Accepted Answer

A) pays a large current liability. 
B) declares a 10 percent stock dividend on its common stock. 
C) borrows cash by issuing a short-term note payable. 
D) converts a short-term liability to a long-term liability. 
A) pays a large current liability. 
B) declares a 10 percent stock dividend on its common stock. 
C) borrows cash by issuing a short-term note payable. 
D) converts a short-term liability to a long-term liability.

Question 20

The inventory turnover measures the relative size of the inventory and the effectiveness of credit policies.

Accepted Answer

A) True 
 B)False

Exam 14: Financial Statement Analysis

One of the best places to look for early signals of change in a company's profitability is the

Days' payable is a measure of

Which of the following companies would be required to files its Form 10-K electronically?

The interest coverage ratio and the debt to equity ratio are measures of profitability.

Prepare a trend analysis of the following data,using 20x4 as the base year.Place your answers in the chart provided.Comment on the trend.

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

Consistency requires that a company use the same accounting procedures as other companies in the same industry.

For an index number,the base year is set at 100 percent.

Following are the financial statements for Flynn Corporation for the year ended December 31,20x5.Assume that all balance sheet amounts represent both average and ending figures. -What is the receivable turnover for this corporation? Round your answer to one decimal place.

Which of the following must be reported by diversified companies for each of their operating segments?

In a common-size balance sheet,total liabilities are represented by 100 percent.

In a common-size balance sheet for a retail store,the 100 percent amount is for

Accounting methods may be a source of incomparability among companies.

Interim financial statements are not subject to a full audit by an independent auditor.

A low receivables turnover indicates that

If dividends declared per share during 20x4 (the base year),20x5,and 20x6 are $4.80,$3.60,and $4.32,respectively,the index numbers assigned to 20x5 and 20x6,respectively,are

A company with a current ratio of 2.4 times will see that ratio decrease when the company

The inventory turnover measures the relative size of the inventory and the effectiveness of credit policies.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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