Question 1

The numerator of the rate earned on total assets ratio is equal to

Accepted Answer

A)  net income 
B)  net income plus tax expense 
C)  net income plus interest expense 
D)  net income minus preferred dividends 
A)  net income 
B)  net income plus tax expense 
C)  net income plus interest expense 
D)  net income minus preferred dividends

Question 2

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

Accepted Answer

A) True 
 B)False

Question 3

The following items were taken from the financial statements of Stanton, Inc., over a three-year period:
   Compute the following for each of the above time periods.
   Round percentage to one decimal place.

Accepted Answer

The answer of The following items were taken from the...

Question 4

From the following data for Norton Company for the year ended December 31, 2012 prepare a multiple-step income statement. Show parenthetically earnings per share for the following: income from continuing operations, loss on discontinued operations (less applicable income tax), income before extraordinary item, extraordinary item (less applicable income tax), and net income.

Accepted Answer

The answer of From the following data for Norton Company...

Question 5

In a company's annual report, the section called management discussion and analysis provides critical information in interpreting the financial statements and assessing the future of the company.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Assume the following sales data for a company:   What is the percentage increase in sales from 2014 to 2015?

Accepted Answer

A)  75% 
B)  66.7% 
C)  25% 
D)  150% 
A)  75% 
B)  66.7% 
C)  25% 
D)  150%

Question 8

A clean audit opinion is the same as a qualified audit opinion.

Accepted Answer

A) True 
 B)False

Question 9

Based on the above data, what is the quick ratio, rounded to one decimal point?

Accepted Answer

A)  2.7 
B)  2.6 
C)  1.7 
D)  0.9 
A)  2.7 
B)  2.6 
C)  1.7 
D)  0.9

Question 10

A company reports the following:   Determine the company's earnings per share on common stock.

Accepted Answer

A)  $7.50 
B)  $7.00 
C)  $8.00 
D)  $35.00 
A)  $7.50 
B)  $7.00 
C)  $8.00 
D)  $35.00

Question 11

Income statement information for Sharif Corporation is provided below:
   Required: Prepare a vertical analysis of the given income statement information for Sharif Corporation.

Accepted Answer

The answer of Income statement information for Sharif Corporation is...

Question 12

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.

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

A company reports the following:
   Determine the ratio of net sales to total assets. Round your answer to one decimal place.

Accepted Answer

Ratio of net sales to total as

Question 15

In a common-sized income statement, each item is expressed as a percentage of net income.

Accepted Answer

A) True 
 B)False

Question 16

Income statement information for Lucy Company is provided below:   Using vertical analysis of the income statement for Lucy Company, determine the gross profit margin.

Accepted Answer

A)  100% 
B)  70% 
C)  40% 
D)  60% 
A)  100% 
B)  70% 
C)  40% 
D)  60%

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

Accepted Answer

A) True 
 B)False

Question 19

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 20

An extraordinary loss of $300,000 that results in income tax savings of $90,000 should be reported as an extraordinary loss (net of tax) of $210,000 on the income statement.

Accepted Answer

A) True 
 B)False

Exam 17: Financial Statement Analysis

The numerator of the rate earned on total assets ratio is equal to

The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.

The following items were taken from the financial statements of Stanton, Inc., over a three-year period: Compute the following for each of the above time periods. Round percentage to one decimal place.

In a company's annual report, the section called management discussion and analysis provides critical information in interpreting the financial statements and assessing the future of the company.

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.

Assume the following sales data for a company: What is the percentage increase in sales from 2014 to 2015?

A clean audit opinion is the same as a qualified audit opinion.

Based on the above data, what is the quick ratio, rounded to one decimal point?

A company reports the following: Determine the company's earnings per share on common stock.

Income statement information for Sharif Corporation is provided below: Required: Prepare a vertical analysis of the given income statement information for Sharif Corporation.

The current ratio is

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

A company reports the following: Determine the ratio of net sales to total assets. Round your answer to one decimal place.

In a common-sized income statement, each item is expressed as a percentage of net income.

Income statement information for Lucy Company is provided below: Using vertical analysis of the income statement for Lucy Company, determine the gross profit margin.

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

The ratio of fixed assets to long-term liabilities provides a measure of a firm's ability to pay dividends.

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

An extraordinary loss of $300,000 that results in income tax savings of $90,000 should be reported as an extraordinary loss (net of tax) of $210,000 on the income statement.

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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