Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Hsu Company reported the following on its income statement:   An analysis of the income statement revealed that interest expense was $80,000. Hsu Company's times interest earned was

Accepted Answer

A)  8 times. 
B)  6.25 times. 
C)  5.25 times. 
D)  5 times. 
A)  8 times. 
B)  6.25 times. 
C)  5.25 times. 
D)  5 times.

Question 3

In a common size income statement, the 100% figure is:

Accepted Answer

A)  net cost of goods sold. 
B)  net income. 
C)  gross profit. 
D)  net sales. 
A)  net cost of goods sold. 
B)  net income. 
C)  gross profit. 
D)  net sales.

Question 4

An extraordinary item must be either unusual in nature or infrequent in occurrence.

Accepted Answer

A) True 
 B)False

Question 5

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

Accepted Answer

A) True 
 B)False

Question 6

When a company changes from one acceptable accounting method to another, the change is reported

Accepted Answer

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

Question 7

The Cash and Accounts Receivable for a company are provided below:
   Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

Accepted Answer

The answer of The Cash and Accounts Receivable for a...

Question 8

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

Accepted Answer

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

Question 9

Define solvency and profitability. How are they alike?

Accepted Answer

Solvency is the ability of a company to

Question 10

Which of the following is required by the Sarbanes-Oxley Act of 2002?

Accepted Answer

A)  A price-earnings ratio. 
B)  A report on internal control. 
C)  A vertical analysis. 
D)  A common-sized statement. 
A)  A price-earnings ratio. 
B)  A report on internal control. 
C)  A vertical analysis. 
D)  A common-sized statement.

Question 11

An advantage of the current ratio is that it considers the makeup of the current assets.

Accepted Answer

A) True 
 B)False

Question 12

The denominator of the rate of return on total assets ratio is the average total assets.

Accepted Answer

A) True 
 B)False

Question 13

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

A)  for one period of time. 
B)  over a period of time. 
C)  on a certain date. 
D)  as it may appear in the future. 
A)  for one period of time. 
B)  over a period of time. 
C)  on a certain date. 
D)  as it may appear in the future.

Question 14

Which of the following should be classified as an extraordinary item on the income statement?

Accepted Answer

A)  Gain on a sale of a long term investment. 
B)  Loss due to discontinued operations. 
C)  Restructuring charges. 
D)  Loss resulting from an infrequent natural disaster. 
A)  Gain on a sale of a long term investment. 
B)  Loss due to discontinued operations. 
C)  Restructuring charges. 
D)  Loss resulting from an infrequent natural disaster.

Question 15

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

Accepted Answer

A)  a substitute for sound judgment. 
B)  useful analytical measures. 
C)  enough information for analysis, industry information is not needed. 
D)  unnecessary for analysis, but reaction is better. 
A)  a substitute for sound judgment. 
B)  useful analytical measures. 
C)  enough information for analysis, industry information is not needed. 
D)  unnecessary for analysis, but reaction is better.

Question 16

When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard.

Accepted Answer

A) True 
 B)False

Question 17

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.

Accepted Answer

A) True 
 B)False

Question 18

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

Accepted Answer

A) True 
 B)False

Question 19

The following items are reported on a company's balance sheet:
  
 Required:
Determine (1) the current ratio and (2) the quick ratio. Round to one decimal place.

Accepted Answer

The answer of The following items are reported on a...

Question 20

Balance sheet and income statement data indicate the following:   Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?

Accepted Answer

A)  3.7 
B)  4.4 
C)  4.5 
D)  3.5 
A)  3.7 
B)  4.4 
C)  4.5 
D)  3.5

Exam 15: Financial Statement Analysis

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

Hsu Company reported the following on its income statement: An analysis of the income statement revealed that interest expense was $80,000. Hsu Company's times interest earned was

In a common size income statement, the 100% figure is:

An extraordinary item must be either unusual in nature or infrequent in occurrence.

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

When a company changes from one acceptable accounting method to another, the change is reported

The Cash and Accounts Receivable for a company are provided below: Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

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

Define solvency and profitability. How are they alike?

Which of the following is required by the Sarbanes-Oxley Act of 2002?

An advantage of the current ratio is that it considers the makeup of the current assets.

The denominator of the rate of return on total assets ratio is the average total assets.

Horizontal analysis is a technique for evaluating financial statement data

Which of the following should be classified as an extraordinary item on the income statement?

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard.

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

The following items are reported on a company's balance sheet: Required: Determine (1) the current ratio and (2) the quick ratio. Round to one decimal place.

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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