Question 1

If two companies have the same current ratio, their ability to pay short-term debt is the same.

Accepted Answer

A) True 
 B)False

Question 2

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 3

In horizontal analysis, each item is expressed as a percentage of the

Accepted Answer

A)  base year figure. 
B)  retained earnings figure. 
C)  total assets figure. 
D)  net income figure. 
A)  base year figure. 
B)  retained earnings figure. 
C)  total assets figure. 
D)  net income figure.

Question 4

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.  
  What are the dividends per common share for this company?

Accepted Answer

A)  $20.00 
B)  $3.33 
C)  $1.11 
D)  $0.90 
A)  $20.00 
B)  $3.33 
C)  $1.11 
D)  $0.90

Question 5

The independent auditor's report does which of the following?

Accepted Answer

A)  describes which financial statements are covered by the audit 
B)  gives the auditor's opinion regarding the fairness of the financial statements 
C)  summarizes what the auditor did 
D)  states that the financial statements were presented on time 
A)  describes which financial statements are covered by the audit 
B)  gives the auditor's opinion regarding the fairness of the financial statements 
C)  summarizes what the auditor did 
D)  states that the financial statements were presented on time

Question 6

The excess of current assets over current liabilities is referred to as working capital.

Accepted Answer

A) True 
 B)False

Question 7

Revenue and expense data for Martinez Company are as follows:
     Round percentage to one decimal place.

Accepted Answer

(a)
 @#IMG-DLM&_TB20

Question 8

Income statement information for Lucy Company is provided below:
   Prepare a vertical analysis of the income statement for Lucy Company.

Accepted Answer

The answer of Income statement information for Lucy Company is...

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

Accepted Answer

A) True 
 B)False

Question 12

Based on the following data for the current year, what is the number of days' sales in accounts receivable?

Accepted Answer

A)  7.3 
B)  2.5 
C)  14.6 
D)  25 
A)  7.3 
B)  2.5 
C)  14.6 
D)  25

Question 13

Condensed data taken from the ledger of Joplin Company at December 31, 2012 and 2011, are as follows:
   Prepare a comparative balance sheet, with horizontal analysis, for December 31, 2012 and 2011. (Round percents to one decimal point.)

Accepted Answer

The answer of Condensed data taken from the ledger of...

Question 14

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

Accepted Answer

A) True 
 B)False

Question 15

The percent of fixed assets to total assets is an example of

Accepted Answer

A)  vertical analysis 
B)  solvency analysis 
C)  profitability analysis 
D)  horizontal analysis 
A)  vertical analysis 
B)  solvency analysis 
C)  profitability analysis 
D)  horizontal analysis

Question 16

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

Accepted Answer

A) True 
 B)False

Question 19

In horizontal analysis, the current year is the base year.

Accepted Answer

A) True 
 B)False

Question 20

A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors.

Accepted Answer

A) True 
 B)False

Exam 17: Financial Statement Analysis

If two companies have the same current ratio, their ability to pay short-term debt is the same.

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

In horizontal analysis, each item is expressed as a percentage of the

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. What are the dividends per common share for this company?

The independent auditor's report does which of the following?

The excess of current assets over current liabilities is referred to as working capital.

Revenue and expense data for Martinez Company are as follows: Round percentage to one decimal place.

Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.

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

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

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

Based on the following data for the current year, what is the number of days' sales in accounts receivable?

Condensed data taken from the ledger of Joplin Company at December 31, 2012 and 2011, are as follows: Prepare a comparative balance sheet, with horizontal analysis, for December 31, 2012 and 2011. (Round percents to one decimal point.)

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

The percent of fixed assets to total assets is an example of

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

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)?

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

In horizontal analysis, the current year is the base year.

A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors.

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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