Question 1

Return on investment
Shown below are selected data from a recent annual report of Quality Service.(Dollar amounts are in millions. )
   Compute for the year:

Accepted Answer

The answer of Return on investment
Shown below are selected data...

Question 2

In a single-step income statement,all revenue items are listed,then all expense items are combined and deducted from total revenue.

Accepted Answer

A) True 
 B)False

Question 3

Use and interpretation of financial measurements
Shown below are various financial measurements for two companies that are similar in size and sell similar products:
   Instructions: You are to enter code letters in the spaces provided in the two right-hand columns.
In the first column,indicate which of the following three groups probably would be most interested in the specified financial measurement.Identify one group,using the following code letters: STC = indicating short-term creditors,LTC = indicating long-term creditors,and S = indicating stockholders.
In the second column,enter an × or a Y to indicate whether your "most interested group" would prefer the measurement results reported by Co.× or Co.Y.
Consider each financial measurement independently of the others.

Accepted Answer

The answer of Use and interpretation of financial measurements
Shown below...

Question 4

All of the following are true of operating expenses except:

Accepted Answer

A) Operating expenses are incurred for the purpose of producing revenue. 
B) Operating expenses are subdivided into the classifications of component and trend. 
C) The administrative expenses portion of operating expenses tends to remain constant from period to period. 
D) Subdividing operating expenses into different classifications helps managers and investors evaluate different aspects of the company's operations. 
A) Operating expenses are incurred for the purpose of producing revenue. 
B) Operating expenses are subdivided into the classifications of component and trend. 
C) The administrative expenses portion of operating expenses tends to remain constant from period to period. 
D) Subdividing operating expenses into different classifications helps managers and investors evaluate different aspects of the company's operations.

Question 5

Assume that net sales are increasing faster than the rate of inflation,and that the company's gross profit rate is rising.Of the following,the most logical conclusion is that:

Accepted Answer

A) The company's cost of purchasing merchandise is rising rapidly. 
B) Operating expenses are falling. 
C) Demand for the company's products is very strong. 
D) The company has achieved an increase in sales volume by reducing its sales prices. 
A) The company's cost of purchasing merchandise is rising rapidly. 
B) Operating expenses are falling. 
C) Demand for the company's products is very strong. 
D) The company has achieved an increase in sales volume by reducing its sales prices.

Question 6

Accounting terminology
Listed below are eight technical accounting terms introduced in this chapter:
   Each of the following statements may (or may not)describe one of these technical terms.For each statement,indicate the term described,or answer "None" if the statement does not correctly describe any of the terms.
________ (a)The percentage of total assets financed by creditors.
________ (b)A measure of the effectiveness with which management utilizes a company's resources,regardless of how those resources are financed.
________ (c)A company's percentage share of total dollar sales within its industry.
________ (d)Current assets less current liabilities.
________ (e)A measure reflecting investors' expectations of future profitability.
________ (f)A measure of short-term solvency often used when a company has large inventories that cannot be quickly converted into cash.
________ (g)A ratio that helps individual stockholders relate the net income of a large corporation to their equity investment.

Accepted Answer

(a)Debt ratio, (b)Return on as

Question 7

[The following information applies to the questions displayed below.]
Shown below are selected data from the balance sheet of Bill's Auto Parts,a retail store (dollar amounts are in thousands):
  
-200 What is the current ratio?

Accepted Answer

A) 1.2 to 1 
B) Less than 2 to 1,but not 1.2 to 1 
C) 2.6 to 1 
D) More than 2 to 1,but not 2.6 to 1 
A) 1.2 to 1 
B) Less than 2 to 1,but not 1.2 to 1 
C) 2.6 to 1 
D) More than 2 to 1,but not 2.6 to 1

Question 8

In calculating earnings per share,the denominator of the equation includes:

Accepted Answer

A) Only common stock outstanding. 
B) Common stock plus preferred stock. 
C) Common stock less preferred stock. 
D) The total shares of authorized common stock. 
A) Only common stock outstanding. 
B) Common stock plus preferred stock. 
C) Common stock less preferred stock. 
D) The total shares of authorized common stock.

Question 9

Measures of solvency and credit risk
Shown below are selected items appearing in a recent balance sheet of Grant Products.(Dollar amounts are in thousands. )
   (a)Compute the following:
(1)Total quick assets $________
(2)Total current assets $________
(3)Total current liabilities $________
(4)Quick ratio ________ to 1
(5)Current ratio ________ to 1
(b)Research indicates an industry average quick ratio is 1.3 to 1,and a current ratio of 2.3 to 1.Based upon this information,does Grant Products appear more or less solvent than the average company in its industry? Explain briefly.

Accepted Answer

@#IMG-DLM& (b)Grant Products' current ratio and qu

Question 10

During the years 2016 through 2018,Powers,Inc. ,reported the following amounts of net income (dollars in thousands):   Relative to the prior year,the percentage change in net income:

Accepted Answer

A) Was the same in 2017 and 2018. 
B) Was larger in 2018 than in 2017. 
C) Was smaller in 2018 than in 2017. 
D) Cannot be determined without knowing how many shares of stock were outstanding. 
A) Was the same in 2017 and 2018. 
B) Was larger in 2018 than in 2017. 
C) Was smaller in 2018 than in 2017. 
D) Cannot be determined without knowing how many shares of stock were outstanding.

Question 11

The quick ratio is especially useful in evaluating the liquidity of a company with fast moving inventories.

Accepted Answer

A) True 
 B)False

Question 12

The measures most often used in evaluating solvency-the current ratio,quick ratio,and amount of working capital-are developed from amounts appearing in the:

Accepted Answer

A) Balance sheet. 
B) Income statement. 
C) Statement of retained earnings. 
D) Statement of cash flows. 
A) Balance sheet. 
B) Income statement. 
C) Statement of retained earnings. 
D) Statement of cash flows.

Question 13

A company's liquidity refers to its ability to remain profitable.

Accepted Answer

A) True 
 B)False

Question 14

[The following information applies to the questions displayed below.]
Shown below are selected data from the financial statements of Noble Computers.(Dollar amounts are in millions,except for the per share data. )
   Noble reported earnings per share for the year of $6 and paid cash dividends of $2.00 per share.At year-end,the Wall Street Journal listed Noble's capital stock as trading at $81 per share.
-200 Noble's price-earnings ratio at year end was:

Accepted Answer

A) 0.07 
B) 13.5 
C) 17 
D) 1.42 
A) 0.07 
B) 13.5 
C) 17 
D) 1.42

Question 15

The price-earnings ratio is measured by dividing:

Accepted Answer

A) Book value by earnings per share. 
B) Par value by earnings per share. 
C) Market value by earnings per share. 
D) Market value by total net income. 
A) Book value by earnings per share. 
B) Par value by earnings per share. 
C) Market value by earnings per share. 
D) Market value by total net income.

Question 16

The trend in ratios is usually more useful than looking at a single year's ratio.

Accepted Answer

A) True 
 B)False

Question 17

A high quality of earnings is indicated by:

Accepted Answer

A) Earnings derived largely from newly introduced products. 
B) Declaration of both cash and stock dividends. 
C) Use of the FIFO method of inventory during sustained inflation. 
D) A history of increasing earnings and conservative accounting methods. 
A) Earnings derived largely from newly introduced products. 
B) Declaration of both cash and stock dividends. 
C) Use of the FIFO method of inventory during sustained inflation. 
D) A history of increasing earnings and conservative accounting methods.

Question 18

The gross profit rate is gross profit expressed as a percentage of net sales.

Accepted Answer

A) True 
 B)False

Question 19

All of the following captions or subtotals are typical of a multiple-step income statement,except:

Accepted Answer

A) Net sales. 
B) Gross profit. 
C) Total costs and expenses. 
D) Operating income. 
A) Net sales. 
B) Gross profit. 
C) Total costs and expenses. 
D) Operating income.

Question 20

[The following information applies to the questions displayed below.]
Shown below are selected data from the financial statements of Supreme Co.Dollar amounts are in millions (except for the per share data).
   Supreme reported earnings per share for the year of $4 and paid cash dividends of $1 per share.At year-end,the Wall Street Journal listed Supreme's capital stock as trading at $88 per share.
-200 Supreme's gross profit rate was:

Accepted Answer

A) 42.9%. 
B) 57.7%. 
C) 20.0%. 
D) 31.7%. 
A) 42.9%. 
B) 57.7%. 
C) 20.0%. 
D) 31.7%.

Exam 14: Financial Statement Analysis

Return on investment Shown below are selected data from a recent annual report of Quality Service.(Dollar amounts are in millions. ) Compute for the year:

In a single-step income statement,all revenue items are listed,then all expense items are combined and deducted from total revenue.

All of the following are true of operating expenses except:

Assume that net sales are increasing faster than the rate of inflation,and that the company's gross profit rate is rising.Of the following,the most logical conclusion is that:

[The following information applies to the questions displayed below.] Shown below are selected data from the balance sheet of Bill's Auto Parts,a retail store (dollar amounts are in thousands): -200 What is the current ratio?

In calculating earnings per share,the denominator of the equation includes:

During the years 2016 through 2018,Powers,Inc. ,reported the following amounts of net income (dollars in thousands): Relative to the prior year,the percentage change in net income:

The quick ratio is especially useful in evaluating the liquidity of a company with fast moving inventories.

The measures most often used in evaluating solvency-the current ratio,quick ratio,and amount of working capital-are developed from amounts appearing in the:

A company's liquidity refers to its ability to remain profitable.

The price-earnings ratio is measured by dividing:

The trend in ratios is usually more useful than looking at a single year's ratio.

A high quality of earnings is indicated by:

The gross profit rate is gross profit expressed as a percentage of net sales.

All of the following captions or subtotals are typical of a multiple-step income statement,except:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters