Question 1

The current ratio is

Accepted Answer

A)  used to evaluate a company's liquidity and short-term debt paying ability. 
B)  is a solvency measure that indicated the margin of safety of a noteholder or bondholder. 
C)  calculated by dividing current liabilities by current assets. 
D)  calculated by subtracting current liabilities from current assets. 
A)  used to evaluate a company's liquidity and short-term debt paying ability. 
B)  is a solvency measure that indicated the margin of safety of a noteholder or bondholder. 
C)  calculated by dividing current liabilities by current assets. 
D)  calculated by subtracting current liabilities from current assets. A

Question 2

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. C

Question 3

Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

Accepted Answer

A)  ratio of fixed assets to long-term liabilities 
B)  ratio of net sales to assets 
C)  number of days' sales in receivables 
D)  rate earned on stockholders' equity 
A)  ratio of fixed assets to long-term liabilities 
B)  ratio of net sales to assets 
C)  number of days' sales in receivables 
D)  rate earned on stockholders' equity A

Question 4

All of the following are typically included in the Management's Discussion and Analysis in annual reports except:

Accepted Answer

A)  explanations of any significant changes between the current and prior years' financial statements. 
B)  management's assessment of liquidity. 
C)  journal entries. 
D)  off-balance-sheet arrangements 
A)  explanations of any significant changes between the current and prior years' financial statements. 
B)  management's assessment of liquidity. 
C)  journal entries. 
D)  off-balance-sheet arrangements

Question 5

A company reports the following income statement and balance sheet information for the current year:
   Determine the rate earned on total assets. Round your answer to one decimal place.

Accepted Answer

Rate earned on total assets = (Net incom

Question 6

A loss on disposal of a segment would be reported in the income statement as a(n)

Accepted Answer

A)  administrative expense 
B)  other expense 
C)  deduction from income from continuing operations 
D)  selling expense 
A)  administrative expense 
B)  other expense 
C)  deduction from income from continuing operations 
D)  selling expense

Question 7

The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.

Accepted Answer

A) True 
 B)False

Question 8

$\begin{array}{ll}
530,000 & \text { Accounts payable } \
65,000 & \text { Accounts receivable } \
7,000 & \text { Accrued liabilities } \
25,000 & \text { Cash } \
40,000 & \text { Intangible assets } \
72,000 & \text { Inventory } \
100,000 & \text { Long-term investments } \
75,000 & \text { Long-term liabilities } \
36,000 & \text { Marketable securities } \
20,000 & \text { Notes payable (short-term) } \
625,000 & \text { Property, plant, and equipment } \
2,000 & \text { Prepaid expenses }
\end{array}$ Based on the above data, what is the quick ratio, rounded to one decimal point?

Accepted Answer

A)  2.2 
B)  3.5 
C)  3.0 
D)  1.6 
A)  2.2 
B)  3.5 
C)  3.0 
D)  1.6

Question 9

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 10

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year, there has been an acceleration in the collection of receivables.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

Accepted Answer

When percentages are utilized rather tha

Question 14

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 15

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, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (round to one decimal point)?

Accepted Answer

A)  16.9 
B)  12.1 
C)  14.4 
D)  13.3 
A)  16.9 
B)  12.1 
C)  14.4 
D)  13.3

Question 16

Unusual items affecting the prior period's income statement consist of errors and change in accounting principles.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 19

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

Accepted Answer

A) True 
 B)False

Question 20

Vertical analysis refers to comparing the financial statements of a single company for several years.

Accepted Answer

A) True 
 B)False

The current ratio is

A common measure of liquidity is

Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

All of the following are typically included in the Management's Discussion and Analysis in annual reports except:

A company reports the following income statement and balance sheet information for the current year: Determine the rate earned on total assets. Round your answer to one decimal place.

A loss on disposal of a segment would be reported in the income statement as a(n)

The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.

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

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year, there has been an acceleration in the collection of receivables.

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

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

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

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)?

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, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (round to one decimal point)?

Unusual items affecting the prior period's income statement consist of errors and change in accounting principles.

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.

Horizontal analysis is a technique for evaluating financial statement data

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

Vertical analysis refers to comparing the financial statements of a single company for several years.

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

Filters

Exam 15: Financial Statement Analysis

The current ratio is

A common measure of liquidity is

Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

All of the following are typically included in the Management's Discussion and Analysis in annual reports except:

A company reports the following income statement and balance sheet information for the current year: Determine the rate earned on total assets. Round your answer to one decimal place.

A loss on disposal of a segment would be reported in the income statement as a(n)

The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.

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

If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year, there has been an acceleration in the collection of receivables.

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

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

What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?

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)?

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, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (round to one decimal point)?

Unusual items affecting the prior period's income statement consist of errors and change in accounting principles.

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.

Horizontal analysis is a technique for evaluating financial statement data

The effects of differences in accounting methods are of little importance when analyzing comparable data from competing businesses.

Vertical analysis refers to comparing the financial statements of a single company for several years.

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

Filters