Question 1

Which of the following measures would assist in assessing the profitability of a company?

Accepted Answer

A) Debt-to-assets ratio. 
B) Fixed asset turnover ratio. 
C) Receivables turnover ratio. 
D) Current ratio. 
A) Debt-to-assets ratio. 
B) Fixed asset turnover ratio. 
C) Receivables turnover ratio. 
D) Current ratio.

Question 2

If cost of goods sold remains unchanged,an increase in the inventory turnover rate is indicative of:

Accepted Answer

A) a reduction in the cost of goods sold. 
B) a decrease in inventory. 
C) an increase in inventory. 
D) an increase in sales revenue. 
A) a reduction in the cost of goods sold. 
B) a decrease in inventory. 
C) an increase in inventory. 
D) an increase in sales revenue.

Question 3

Which of the following is not a similarity of GAAP and IFRS?

Accepted Answer

A) They both generally require that an exchange take place before a transaction is recorded. 
B) They both promote information that is relevant and that faithfully represents the underlying transactions. 
C) They both include rules regarding recognition,classification,and measurement of transactions. 
D) They both allow fixed assets to be reported at fair values. 
A) They both generally require that an exchange take place before a transaction is recorded. 
B) They both promote information that is relevant and that faithfully represents the underlying transactions. 
C) They both include rules regarding recognition,classification,and measurement of transactions. 
D) They both allow fixed assets to be reported at fair values.

Question 4

A company's comparative balance sheet show total assets for 2015 and 2014 as $990,000 and $900,000,respectively.What is the percentage change to be reported in the horizontal analysis?

Accepted Answer

A) Increase of 10% 
B) Increase of 9% 
C) Increase of 5% 
D) Increase of 4% 
A) Increase of 10% 
B) Increase of 9% 
C) Increase of 5% 
D) Increase of 4%

Question 5

Use the information above to answer the following question.Which of the following is closest to the company's debt to assets ratio for the current year?

Accepted Answer

A) 0.20 
B) 0.67 
C) 0.17 
D) 0.33 
A) 0.20 
B) 0.67 
C) 0.17 
D) 0.33

Question 6

Which of the following is generally the most useful in analyzing companies of different size?

Accepted Answer

A) Comparative financial statements. 
B) Horizontal analysis. 
C) Common size financial statements. 
D) Trend analysis. 
A) Comparative financial statements. 
B) Horizontal analysis. 
C) Common size financial statements. 
D) Trend analysis.

Question 7

Special items such as gains or losses relating to changes in the value of certain balance sheet accounts are reported below the net income line on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

Net income was $418,600 in 2014 and $364,000 in 2013.The year-to-year percentage change in net income is closest to:

Accepted Answer

A) 15%. 
B) 55%. 
C) 87%. 
D) 13%. 
A) 15%. 
B) 55%. 
C) 87%. 
D) 13%.

Question 9

A trend analysis to determine a year-to-year dollar amount change is calculated by:

Accepted Answer

A) subtracting the previous period amount from the current amount. 
B) subtracting the current period amount from the previous period amount. 
C) subtracting the current period amount from the previous period amount and then dividing the result by the previous period amount. 
D) subtracting the previous period amount from the current period amount and then dividing the result by the current period amount. 
A) subtracting the previous period amount from the current amount. 
B) subtracting the current period amount from the previous period amount. 
C) subtracting the current period amount from the previous period amount and then dividing the result by the previous period amount. 
D) subtracting the previous period amount from the current period amount and then dividing the result by the current period amount.

Question 10

Use the information above to answer the following question.Which of the following is closest to the fixed asset turnover ratio?

Accepted Answer

A) 2.65 
B) 1.72 
C) 4.25 
D) 3.80 
A) 2.65 
B) 1.72 
C) 4.25 
D) 3.80

Question 11

Net sales divided by average total assets is the calculation for which of the following ratios?

Accepted Answer

A) Net profit margin 
B) Asset turnover 
C) Current ratio 
D) Return on assets 
A) Net profit margin 
B) Asset turnover 
C) Current ratio 
D) Return on assets

Question 12

Company X has net sales revenue of $1,250,000,cost of goods sold of $760,000,and all other expenses of $290,000.The beginning balance of stockholders' equity is $400,000 and the beginning balance of fixed assets is $361,000.The ending balance of stockholders' equity is $600,000 and the ending balance of fixed assets is $389,000.The return on equity (ROE)ratio is closest to:

Accepted Answer

A) 0.53. 
B) 2.50. 
C) 3.33. 
D) 0.40. 
A) 0.53. 
B) 2.50. 
C) 3.33. 
D) 0.40.

Question 13

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

Accepted Answer

A) large percentage of assets and inventory costs are stable. 
B) large percentage of assets and inventory costs are not stable. 
C) small percentage of assets and inventory costs are not stable. 
D) small percentage of assets and inventory costs are stable. 
A) large percentage of assets and inventory costs are stable. 
B) large percentage of assets and inventory costs are not stable. 
C) small percentage of assets and inventory costs are not stable. 
D) small percentage of assets and inventory costs are stable.

Question 14

Which of the following statements is true regarding the relationship of the debt-to-assets ratio and the debt-to-equity ratio?

Accepted Answer

A) Debt to assets is usually greater than debt to equity. 
B) Debt to assets is usually less than debt to equity 
C) Debt to assets is usually equal to debt to equity. 
D) There is no constant relationship between these two ratios. 
A) Debt to assets is usually greater than debt to equity. 
B) Debt to assets is usually less than debt to equity 
C) Debt to assets is usually equal to debt to equity. 
D) There is no constant relationship between these two ratios.

Question 15

If you wish to examine how one aspect of a business is doing relative to other aspects of the business at the current time,you are most likely to use:

Accepted Answer

A) time-series analysis. 
B) ratio analysis. 
C) horizontal analysis. 
D) cross-sectional analysis. 
A) time-series analysis. 
B) ratio analysis. 
C) horizontal analysis. 
D) cross-sectional analysis.

Question 16

Trend data can be measured in dollar amounts or percentages.

Accepted Answer

A) True 
 B)False

Question 17

When evaluating its net profit margin for 2015,Coca Cola would most likely use all of the following benchmarks except:

Accepted Answer

A) Anheuser Busch's net profit margin for 2015. 
B) Coca Cola's net profit margin for 2014. 
C) Pepsico's net profit margin for 2015. 
D) The average net profit margin for the soft drink manufacturing industry for 2015. 
A) Anheuser Busch's net profit margin for 2015. 
B) Coca Cola's net profit margin for 2014. 
C) Pepsico's net profit margin for 2015. 
D) The average net profit margin for the soft drink manufacturing industry for 2015.

Question 18

A company provided the following information:   There was no change in contributed capital this year and there were no dividends declared in the current year.The return on equity ratio for the current year is closest to:

Accepted Answer

A) 20.7%. 
B) 75%. 
C) 3.8%. 
D) 1.33%. 
A) 20.7%. 
B) 75%. 
C) 3.8%. 
D) 1.33%.

Question 19

The primary objective of external financial reporting is:

Accepted Answer

A) to enhance the ability of the company to acquire financial capital from external sources. 
B) to accurately provide financial results for tax purposes. 
C) to comply with external regulations and requirements of government and professional associations. 
D) to provide useful information to decision makers,especially investors and creditors. 
A) to enhance the ability of the company to acquire financial capital from external sources. 
B) to accurately provide financial results for tax purposes. 
C) to comply with external regulations and requirements of government and professional associations. 
D) to provide useful information to decision makers,especially investors and creditors.

Question 20

The income statements for 2014 and 2013 for Purrfect Pets,Inc.are presented below:
Purrfect Pets,Inc.
Income Statements
Year Ended December 31   
A.Prepare a horizontal analysis of the income statement above.Round to the nearest whole percent.
B.Interpret your analysis.Comment on significant changes.

Accepted Answer

Purrfect Pets,Inc.
Income Statements
Yea

Which of the following measures would assist in assessing the profitability of a company?

If cost of goods sold remains unchanged,an increase in the inventory turnover rate is indicative of:

Which of the following is not a similarity of GAAP and IFRS?

A company's comparative balance sheet show total assets for 2015 and 2014 as $990,000 and $900,000,respectively.What is the percentage change to be reported in the horizontal analysis?

Use the information above to answer the following question.Which of the following is closest to the company's debt to assets ratio for the current year?

Which of the following is generally the most useful in analyzing companies of different size?

Special items such as gains or losses relating to changes in the value of certain balance sheet accounts are reported below the net income line on the income statement.

Net income was $418,600 in 2014 and $364,000 in 2013.The year-to-year percentage change in net income is closest to:

A trend analysis to determine a year-to-year dollar amount change is calculated by:

Use the information above to answer the following question.Which of the following is closest to the fixed asset turnover ratio?

Net sales divided by average total assets is the calculation for which of the following ratios?

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

Which of the following statements is true regarding the relationship of the debt-to-assets ratio and the debt-to-equity ratio?

If you wish to examine how one aspect of a business is doing relative to other aspects of the business at the current time,you are most likely to use:

Trend data can be measured in dollar amounts or percentages.

When evaluating its net profit margin for 2015,Coca Cola would most likely use all of the following benchmarks except:

A company provided the following information: There was no change in contributed capital this year and there were no dividends declared in the current year.The return on equity ratio for the current year is closest to:

The primary objective of external financial reporting is:

The income statements for 2014 and 2013 for Purrfect Pets,Inc.are presented below: Purrfect Pets,Inc. Income Statements Year Ended December 31 A.Prepare a horizontal analysis of the income statement above.Round to the nearest whole percent. B.Interpret your analysis.Comment on significant changes.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Inventories and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Filters

Exam 13: Measuring and Evaluating Financial Performance

Which of the following measures would assist in assessing the profitability of a company?

If cost of goods sold remains unchanged,an increase in the inventory turnover rate is indicative of:

Which of the following is not a similarity of GAAP and IFRS?

A company's comparative balance sheet show total assets for 2015 and 2014 as $990,000 and $900,000,respectively.What is the percentage change to be reported in the horizontal analysis?

Use the information above to answer the following question.Which of the following is closest to the company's debt to assets ratio for the current year?

Which of the following is generally the most useful in analyzing companies of different size?

Special items such as gains or losses relating to changes in the value of certain balance sheet accounts are reported below the net income line on the income statement.

Net income was $418,600 in 2014 and $364,000 in 2013.The year-to-year percentage change in net income is closest to:

A trend analysis to determine a year-to-year dollar amount change is calculated by:

Use the information above to answer the following question.Which of the following is closest to the fixed asset turnover ratio?

Net sales divided by average total assets is the calculation for which of the following ratios?

How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:

Which of the following statements is true regarding the relationship of the debt-to-assets ratio and the debt-to-equity ratio?

If you wish to examine how one aspect of a business is doing relative to other aspects of the business at the current time,you are most likely to use:

Trend data can be measured in dollar amounts or percentages.

When evaluating its net profit margin for 2015,Coca Cola would most likely use all of the following benchmarks except:

A company provided the following information: There was no change in contributed capital this year and there were no dividends declared in the current year.The return on equity ratio for the current year is closest to:

The primary objective of external financial reporting is:

The income statements for 2014 and 2013 for Purrfect Pets,Inc.are presented below: Purrfect Pets,Inc. Income Statements Year Ended December 31 A.Prepare a horizontal analysis of the income statement above.Round to the nearest whole percent. B.Interpret your analysis.Comment on significant changes.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Inventories and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Filters