Question 1

The ability of a company to pay its debts when due is known as liquidity.

Accepted Answer

A) True 
 B)False

Question 2

If the ratio of total stockholders' equity to total assets was greater in 2013 than in 2012, then

Accepted Answer

A)  total assets increased by a greater amount than did total stockholders' equity. 
B)  the ratio of total liabilities to total assets was smaller in 2013 than in 2012. 
C)  creditors would consider it riskier to lend to this company in 2013 than in 2012. 
D)  the ratio of total liabilities to total assets was larger in 2013 than in 2012. 
A)  total assets increased by a greater amount than did total stockholders' equity. 
B)  the ratio of total liabilities to total assets was smaller in 2013 than in 2012. 
C)  creditors would consider it riskier to lend to this company in 2013 than in 2012. 
D)  the ratio of total liabilities to total assets was larger in 2013 than in 2012.

Question 3

What is the PE ratio? How is it calculated and why is it that the PE ratio for a privately held company often cannot be calculated?

Accepted Answer

The PE ratio is the price-earnings ratio

Question 4

A company had income of $180,000 in 2012 and $240,000 in 2013. The increase in retained earnings from 2012 to 2013 is

Accepted Answer

A)  133 percent. 
B)  33 percent. 
C)  25 percent. 
D)  125 percent. 
A)  133 percent. 
B)  33 percent. 
C)  25 percent. 
D)  125 percent.

Question 5

-Using the information shown, prepare a horizontal analysis. Carry all calculations to two decimal places and then round to one decimal place.

Accepted Answer

The answer of  
-Using the information shown, prepare a...

Question 6

If the cost of goods sold is 65 percent of net sales, then gross profit on sales must be ____________________ percent of net sales.

Accepted Answer

The answer of If the cost of goods sold is...

Question 7

The following financial information was taken from a firm's accounting records on December 31, 2013. Use this information to determine the items below. $\begin{array}{ll}
\text { Cash } & \$ 40,000 \
\text { Accounts Receivable (Net) } & 160,000 \
\text { Merchandise Inventory } & 310,000 \
\text { Property, Plant, and Equipment (Net) } & 400,000 \
\text { Accounts Payable } & 120,000 \
\text { Bonds Payable, 2025 } & 100,000
\end{array}$ (1) Working capital.
(2) Current ratio.
(3) Acid-test ratio

Accepted Answer

1. $390,00

Question 8

-Using the information given, discuss J & S Partnership's outcomes compared to the industry averages.

Accepted Answer

J & S has a higher gross profit than the

Question 9

Percentages of a base amount rather than dollar amounts are given for the items on ____________________ statements.

Accepted Answer

The answer of Percentages of a base amount rather than...

Question 10

The following financial information was taken from a firm's accounting records on December 31, 2013. Use this information to determine the items below. $\begin{array}{lr}
\text { Net Sales } & \$ 800,000 \
\text { Income Tax Expense } & 8,000 \
\text { Net Income After Income Tax } & 40,000 \
\text { Common Stock ( } \$ 25 \text { par value) } & 200,000 \
\text { Retained Earnings } & 220,000
\end{array}$ Cash dividends of $22,000 were paid on the common stock in 2013. Market price of the common stock on December 31 was $50.
(1) Rate of return on common stockholders' equity.
(2) Earnings per share of common stock.
(3) Price-earnings ratio.
(4) Yield on common stock.

Accepted Answer

1. 9.1%; 2

Question 11

When horizontal analysis is performed, no percentage change is computed for a given item if there is no balance for that item in the base year.

Accepted Answer

A) True 
 B)False

Question 12

If the comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from 2012 to 2013, the firm used

Accepted Answer

A)  vertical analysis. 
B)  horizontal analysis. 
C)  common-size analysis. 
D)  trend analysis. 
A)  vertical analysis. 
B)  horizontal analysis. 
C)  common-size analysis. 
D)  trend analysis.

Question 13

A high ratio of stockholders' equity to total liabilities indicates a greater risk for creditors.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not true of vertical analysis?

Accepted Answer

A)  Each item on the balance sheet is expressed as a percentage of total liabilities. 
B)  The percentages can be added and subtracted from top to bottom. 
C)  Each item in the income statement is expressed as a percentage of net sales. 
D)  Each item on the balance sheet is expressed as a percentage of total assets. 
A)  Each item on the balance sheet is expressed as a percentage of total liabilities. 
B)  The percentages can be added and subtracted from top to bottom. 
C)  Each item in the income statement is expressed as a percentage of net sales. 
D)  Each item on the balance sheet is expressed as a percentage of total assets.

Question 15

-Using the information given, discuss Lee Corporation's standing when compared to the industry averages.

Accepted Answer

Lee Corporation has a higher cost of goo

Question 16

In horizontal analysis, the earlier period is called the ____________________ period.

Accepted Answer

The answer of In horizontal analysis, the earlier period is...

Question 17

A horizontal analysis of balance sheet data involves a comparison of a balance sheet amount on a given date with

Accepted Answer

A)  the total of the assets on the balance sheet for that date. 
B)  the net sales from the income statement for the period ending on that date. 
C)  the total stockholders' equity on the balance sheet for that date. 
D)  the amount for the same balance sheet item on a previous date. 
A)  the total of the assets on the balance sheet for that date. 
B)  the net sales from the income statement for the period ending on that date. 
C)  the total stockholders' equity on the balance sheet for that date. 
D)  the amount for the same balance sheet item on a previous date.

Question 18

Selected ratios for Julienne Foods, Inc. and Brut Champagnes, Inc. are given. What do these ratios tell you about the companies regarding whether or not to invest in either of them and what additional information might be helpful in that decision? $$\begin{array} { l c c } 
& \text { Julienne Foods } & \text { Brut Champagnes } \
\text { Working Capital } & 236,000 & 672,000 \
\text { Current Ratio } & 2.3 & 1.9 \
\text { Inventory Turnover } & 3.8 & 5.3 \
\text { Accounts Receivable Turnover } & 3.6 & 4.9 \
\text { Average Collection Period } & 23.9 & 28.7
\end{array}$$

Accepted Answer

Both companies appear to be strong and b

Question 19

The following financial information was taken from a firm's accounting records for 2013. Use this information to determine the items below. $\begin{array}{lrr} 
& \text { Jan. 1 } & \text { Dec. 31 } \
\text { Accounts Receivable } & \$ 208,000 & \$ 218,000 \
\text { Merchandise Inventory } & 245,000 & 255,000 \
\text { Net Credit Sales } & & 2,300,000 \
\text { Cost of Goods Sold } & & 1,200,000
\end{array}$ (1) Inventory turnover.
(2) Accounts receivable turnover.
(3) Average collection period of accounts receivable.

Accepted Answer

1. 4.8 tim

Question 20

In horizontal analysis, the base year is the most recent year.

Accepted Answer

A) True 
 B)False

The ability of a company to pay its debts when due is known as liquidity.

If the ratio of total stockholders' equity to total assets was greater in 2013 than in 2012, then

What is the PE ratio? How is it calculated and why is it that the PE ratio for a privately held company often cannot be calculated?

A company had income of $180,000 in 2012 and $240,000 in 2013. The increase in retained earnings from 2012 to 2013 is

-Using the information shown, prepare a horizontal analysis. Carry all calculations to two decimal places and then round to one decimal place.

If the cost of goods sold is 65 percent of net sales, then gross profit on sales must be ____________________ percent of net sales.

-Using the information given, discuss J & S Partnership's outcomes compared to the industry averages.

Percentages of a base amount rather than dollar amounts are given for the items on ____________________ statements.

When horizontal analysis is performed, no percentage change is computed for a given item if there is no balance for that item in the base year.

If the comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from 2012 to 2013, the firm used

A high ratio of stockholders' equity to total liabilities indicates a greater risk for creditors.

Which of the following is not true of vertical analysis?

-Using the information given, discuss Lee Corporation's standing when compared to the industry averages.

In horizontal analysis, the earlier period is called the ____________________ period.

A horizontal analysis of balance sheet data involves a comparison of a balance sheet amount on a given date with

In horizontal analysis, the base year is the most recent year.

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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Exam 23: Financial Statement Analysis

The ability of a company to pay its debts when due is known as liquidity.

If the ratio of total stockholders' equity to total assets was greater in 2013 than in 2012, then

What is the PE ratio? How is it calculated and why is it that the PE ratio for a privately held company often cannot be calculated?

A company had income of $180,000 in 2012 and $240,000 in 2013. The increase in retained earnings from 2012 to 2013 is

-Using the information shown, prepare a horizontal analysis. Carry all calculations to two decimal places and then round to one decimal place.

If the cost of goods sold is 65 percent of net sales, then gross profit on sales must be ____________________ percent of net sales.

-Using the information given, discuss J & S Partnership's outcomes compared to the industry averages.

Percentages of a base amount rather than dollar amounts are given for the items on ____________________ statements.

When horizontal analysis is performed, no percentage change is computed for a given item if there is no balance for that item in the base year.

If the comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from 2012 to 2013, the firm used

A high ratio of stockholders' equity to total liabilities indicates a greater risk for creditors.

Which of the following is not true of vertical analysis?

-Using the information given, discuss Lee Corporation's standing when compared to the industry averages.

In horizontal analysis, the earlier period is called the ____________________ period.

A horizontal analysis of balance sheet data involves a comparison of a balance sheet amount on a given date with

In horizontal analysis, the base year is the most recent year.

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

Filters