Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The balance sheets at the end of each of the first two years of operations indicate the following:   If net income is $115,000 and interest expense is $30,000 for 2012, what are the earnings per share on common stock for 2012, (round to two decimal places)?

Accepted Answer

A)  $2.07 
B)  $1.92 
C)  $1.77 
D)  $1.64 
A)  $2.07 
B)  $1.92 
C)  $1.77 
D)  $1.64

Question 3

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

Accepted Answer

A)  gain on the retirement of a bond payable 
B)  loss from land condemned for public use 
C)  loss due to an discontinued operation 
D)  selling treasury stock for more than the company paid for it 
A)  gain on the retirement of a bond payable 
B)  loss from land condemned for public use 
C)  loss due to an discontinued operation 
D)  selling treasury stock for more than the company paid for it

Question 4

Based on the above data, what is the amount of working capital?

Accepted Answer

A)  $213,000 
B)  $113,000 
C)  $153,000 
D)  $39,000 
A)  $213,000 
B)  $113,000 
C)  $153,000 
D)  $39,000

Question 5

Match between columns
                        Premises:  Occurs when a company abandons a segment.
 Something that is both unusual and infrequent.
 Useful for comparing one company to another or a company with industry averages
 The percentage analysis of the relationship of each component in a financial statement to a total within the statement.
 Focuses on a company’s ability to generate net income
 An analysis of a company’s ability to pay its current liabilities.
 This requires a restatement of prior period financial statements.
 A percentage analysis of increases and decreases in related items in comparative financial statements.

Accepted Answer

The Answer of Horizontal analysis and Extraordinary Items and Current is...

Question 6

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets
  Liabilities and Stockholders' Equity
  Income Statement
    What is the price earnings ratio for this company? Round your answer to one decimal point.

Accepted Answer

A)  8.0 times 
B)  2.5 times 
C)  4.0 times 
D)  6.0 times 
A)  8.0 times 
B)  2.5 times 
C)  4.0 times 
D)  6.0 times

Question 7

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following below generally is the most useful in analyzing companies of different sizes

Accepted Answer

A)  comparative statements 
B)  common-sized financial statements 
C)  price-level accounting 
D)  audit report 
A)  comparative statements 
B)  common-sized financial statements 
C)  price-level accounting 
D)  audit report

Question 9

From the following data, determine for the current year the (a) rate earned on total assets, (b) rate earned on stockholders' equity, (c) rate earned on common stockholders' equity, (d) earnings per share on common stock, (e) price-earnings ratio on common stock, and (f) dividend yield on common stock. Assume that the current market price per share of common stock is $25. (Present key figures used in your computations.)
Round percentage values to one decimal place, dollar values to two decimal places, and other ratios to one decimal place.

Accepted Answer

(a)
 @#IMG-DLM&_TB2085_00_TB2085_00 (b)

Question 10

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

Accepted Answer

A) True 
 B)False

Question 11

Comparable financial statements are designed to compare the financial statements of two or more corporations.

Accepted Answer

A) True 
 B)False

Question 12

Leveraging implies that a company

Accepted Answer

A)  contains debt financing. 
B)  contains equity financing. 
C)  has a high current ratio. 
D)  has a high earnings per share. 
A)  contains debt financing. 
B)  contains equity financing. 
C)  has a high current ratio. 
D)  has a high earnings per share.

Question 13

A common measure of liquidity is

Accepted Answer

A)  ratio of net sales to assets. 
B)  dividends per share of common stock. 
C)  receivable turnover. 
D)  profit margin. 
A)  ratio of net sales to assets. 
B)  dividends per share of common stock. 
C)  receivable turnover. 
D)  profit margin.

Question 14

Based on the above data, what is the amount of quick assets?

Accepted Answer

A)  $205,000 
B)  $203,000 
C)  $131,000 
D)  $66,000 
A)  $205,000 
B)  $203,000 
C)  $131,000 
D)  $66,000

Question 15

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 16

A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000 and $222,500 of inventories. Current liabilities are $225,000. The current ratio is 2.5 to 1.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is considered an unusual item affecting the prior period's income statement?

Accepted Answer

A)  Change in accounting principles 
B)  Fixed asset impairments 
C)  Extraordinary item 
D)  Discontinued operations 
A)  Change in accounting principles 
B)  Fixed asset impairments 
C)  Extraordinary item 
D)  Discontinued operations

Question 18

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 corporate social responsibility. 
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 corporate social responsibility. 
D)  determine whether or not a company is a good credit risk.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Based on the above data, what is the amount of working capital?

Accepted Answer

A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000 
A)  $238,000 
B)  $128,000 
C)  $168,000 
D)  $203,000

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

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012, what are the earnings per share on common stock for 2012, (round to two decimal places)?

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

Based on the above data, what is the amount of working capital?

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Which of the following below generally is the most useful in analyzing companies of different sizes

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

Comparable financial statements are designed to compare the financial statements of two or more corporations.

Leveraging implies that a company

A common measure of liquidity is

Based on the above data, what is the amount of quick assets?

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

A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000 and $222,500 of inventories. Current liabilities are $225,000. The current ratio is 2.5 to 1.

Which of the following is considered an unusual item affecting the prior period's income statement?

The purpose of an audit is to

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

Based on the above data, what is the amount of working capital?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Filters

Exam 17: Financial Statement Analysis

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

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012, what are the earnings per share on common stock for 2012, (round to two decimal places)?

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

Based on the above data, what is the amount of working capital?

Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities.

Which of the following below generally is the most useful in analyzing companies of different sizes

If a firm has a current ratio of 2, the subsequent receipt of a 60-day note receivable on account will cause the ratio to decrease.

Comparable financial statements are designed to compare the financial statements of two or more corporations.

Leveraging implies that a company

A common measure of liquidity is

Based on the above data, what is the amount of quick assets?

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

A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000 and $222,500 of inventories. Current liabilities are $225,000. The current ratio is 2.5 to 1.

Which of the following is considered an unusual item affecting the prior period's income statement?

The purpose of an audit is to

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

Based on the above data, what is the amount of working capital?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Filters