Question 1

A balance sheet shows the financial condition of a business at a particular date.

Accepted Answer

A) True 
 B)False

Question 2

Complete:

Accepted Answer

A. $51,000; 
B. 52.9

Question 3

The asset turnover from the following is (round to nearest tenth):

Accepted Answer

A) 1.7 
B) 1.5 
C) 1.9 
D) 1.6 
E) None of these 
A) 1.7 
B) 1.5 
C) 1.9 
D) 1.6 
E) None of these

Question 4

Retained earnings is the same as cash.

Accepted Answer

A) True 
 B)False

Question 5

In analyzing the income statement of Bob Company, cost of goods sold decreased from 2013 to 2014 by 8.2%. The cost of goods sold was $19,000 in 2014. The cost of goods sold to the nearest cent in 2013 was:

Accepted Answer

A) $20,697.17 
B) $20,679.71 
C) $20,769.71 
D) $20,796.71 
E) None of these 
A) $20,697.17 
B) $20,679.71 
C) $20,769.71 
D) $20,796.71 
E) None of these

Question 6

Assets, liabilities, capital, and revenues are listed on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

Complete the horizontal analysis below:

Accepted Answer

A) ($3,809), 4.1% 
B) $3809, 4.1% 
C) $180,485, 51.1% 
D) $8,300, 15% 
E) None of these 
A) ($3,809), 4.1% 
B) $3809, 4.1% 
C) $180,485, 51.1% 
D) $8,300, 15% 
E) None of these

Question 8

A current ratio is calculated by current assets times current liabilities.

Accepted Answer

A) True 
 B)False

Question 9

Cash is recorded on the income statement.

Accepted Answer

A) True 
 B)False

Question 10

The acid test ratio does not include:

Accepted Answer

A) Cash 
B) Accounts receivable 
C) Supplies 
D) Inventory 
E) None of these 
A) Cash 
B) Accounts receivable 
C) Supplies 
D) Inventory 
E) None of these

Question 11

From the following, prepare a balance sheet for Roe Co. as of December 31, 2015.

Accepted Answer

The answer of From the following, prepare a balance sheet...

Question 12

Which of the following is not a current asset?

Accepted Answer

A) Cash 
B) Building 
C) Prepaid expense 
D) Accounts receivable 
E) None of these 
A) Cash 
B) Building 
C) Prepaid expense 
D) Accounts receivable 
E) None of these

Question 13

Trend analysis expresses each number as a percent of the base year.

Accepted Answer

A) True 
 B)False

Question 14

Solve for (A) current ratio, (B) acid test (quick), (C) average day's collection, (D) asset turnover, and (E) profit margin on sales. Round to nearest hundredth or hundredth percent as needed.

Accepted Answer

A. 1.41; 
B. 1.18;

Question 15

Al Ring received a memo requesting that he complete a trend analysis of the following, using 2010 as the base year. (Round each percent to nearest whole percent.) Can you help Al with this request?
  *For simplicity, operating expenses have been omitted.

Accepted Answer

A. 44%; 
B. 35%; 
C. 60%; 
D. 63%; 
E. 4

Question 16

A ratio of 4:5:2 means that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

Accepted Answer

A) True 
 B)False

Question 17

Cost of merchandise sold equals beginning inventory:

Accepted Answer

A) Plus net purchases plus ending inventory 
B) Plus net purchases minus ending inventory 
C) Minus net purchases minus ending inventory 
D) Minus net purchases plus ending inventory 
E) None of these 
A) Plus net purchases plus ending inventory 
B) Plus net purchases minus ending inventory 
C) Minus net purchases minus ending inventory 
D) Minus net purchases plus ending inventory 
E) None of these

Question 18

Mel King has asked you to prepare a classified balance sheet for Pad Co. as of December 31, 2014. Ending merchandise inventory was $1,800:

Accepted Answer

The answer of Mel King has asked you to prepare...

Question 19

The income statement shows the financial condition of a business over a period of time.

Accepted Answer

A) True 
 B)False

Question 20

Net income is equal to gross profit minus operating expenses.

Accepted Answer

A) True 
 B)False

Exam 16: How to Read, Analyze, and Interpret Financial Reports

A balance sheet shows the financial condition of a business at a particular date.

Complete:

The asset turnover from the following is (round to nearest tenth):

Retained earnings is the same as cash.

In analyzing the income statement of Bob Company, cost of goods sold decreased from 2013 to 2014 by 8.2%. The cost of goods sold was $19,000 in 2014. The cost of goods sold to the nearest cent in 2013 was:

Assets, liabilities, capital, and revenues are listed on the balance sheet.

Complete the horizontal analysis below:

A current ratio is calculated by current assets times current liabilities.

Cash is recorded on the income statement.

The acid test ratio does not include:

From the following, prepare a balance sheet for Roe Co. as of December 31, 2015.

Which of the following is not a current asset?

Trend analysis expresses each number as a percent of the base year.

Solve for (A) current ratio, (B) acid test (quick), (C) average day's collection, (D) asset turnover, and (E) profit margin on sales. Round to nearest hundredth or hundredth percent as needed.

Al Ring received a memo requesting that he complete a trend analysis of the following, using 2010 as the base year. (Round each percent to nearest whole percent.) Can you help Al with this request? *For simplicity, operating expenses have been omitted.

A ratio of 4:5:2 means that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

Cost of merchandise sold equals beginning inventory:

Mel King has asked you to prepare a classified balance sheet for Pad Co. as of December 31, 2014. Ending merchandise inventory was $1,800:

The income statement shows the financial condition of a business over a period of time.

Net income is equal to gross profit minus operating expenses.

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