Question 1

One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

Accepted Answer

A) True 
 B)False

Question 2

A common measure of liquidity is

Accepted Answer

A) return on assets. 
B) receivables turnover. 
C) profit margin. 
D) debt to total assets. 
A) return on assets. 
B) receivables turnover. 
C) profit margin. 
D) debt to total assets.

Question 3

In the vertical analysis of a statement of financial position, the base for current liabilities is total liabilities.

Accepted Answer

A) True 
 B)False

Question 4

The inventory turnover ratio is calculated by dividing

Accepted Answer

A) cost of goods sold by ending inventory. 
B) cost of goods sold by beginning inventory. 
C) cost of goods sold by average inventory. 
D) average inventory by cost of goods sold. 
A) cost of goods sold by ending inventory. 
B) cost of goods sold by beginning inventory. 
C) cost of goods sold by average inventory. 
D) average inventory by cost of goods sold.

Question 5

Sustainable income differs from actual profit by the amount of

Accepted Answer

A) irregular revenues, expenses, gains and losses. 
B) dividends declared. 
C) changes in accounting policies. 
D) comprehensive income. 
A) irregular revenues, expenses, gains and losses. 
B) dividends declared. 
C) changes in accounting policies. 
D) comprehensive income.

Question 6

Even if a company has a low debt to total assets ratio, it may have difficulty paying interest on debt if it also has a low times interest earned ratio.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following would not be considered a liquidity ratio?

Accepted Answer

A) Current ratio 
B) Inventory turnover ratio 
C) Cash current debt coverage ratio 
D) Return on assets ratio 
A) Current ratio 
B) Inventory turnover ratio 
C) Cash current debt coverage ratio 
D) Return on assets ratio

Question 8

An accrual-based equivalent to the debt to total assets ratio is the cash total debt coverage ratio.

Accepted Answer

A) True 
 B)False

Question 9

In performing a vertical analysis, the base for prepaid expenses is

Accepted Answer

A) total current assets. 
B) total assets. 
C) total liabilities. 
D) prepaid expenses in a previous year. 
A) total current assets. 
B) total assets. 
C) total liabilities. 
D) prepaid expenses in a previous year.

Question 10

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Accepted Answer

A) Total revenues 
B) Gross profit 
C) Profit 
D) Profit from continuing operations 
A) Total revenues 
B) Gross profit 
C) Profit 
D) Profit from continuing operations

Question 11

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

A) within a period of time. 
B) over a period of time. 
C) on a certain date. 
D) as it may appear in the future. 
A) within a period of time. 
B) over a period of time. 
C) on a certain date. 
D) as it may appear in the future.

Question 12

Short-term creditors are usually most interested in assessing

Accepted Answer

A) solvency. 
B) liquidity. 
C) marketability. 
D) profitability. 
A) solvency. 
B) liquidity. 
C) marketability. 
D) profitability.

Question 13

The receivables turnover ratio is useful in assessing the profitability of receivables.

Accepted Answer

A) True 
 B)False

Question 14

Vertical analysis expresses each item in a financial statement as a percent of a base amount.

Accepted Answer

A) True 
 B)False

Question 15

Horizontal analysis is also called

Accepted Answer

A) Percentage analysis. 
B) Trend analysis. 
C) Vertical analysis. 
D) Economic analysis. 
A) Percentage analysis. 
B) Trend analysis. 
C) Vertical analysis. 
D) Economic analysis.

Question 16

Horizontal analysis is also called trend analysis.

Accepted Answer

A) True 
 B)False

Question 17

Under which of the following cases would a percentage change not be calculated?

Accepted Answer

A) The trend of the amounts is decreasing but all amounts are positive. 
B) There is no amount in the base year. 
C) The trend of the amounts is decreasing but all amounts are negative. 
D) The trend of the amounts is increasing but all amounts are negative. 
A) The trend of the amounts is decreasing but all amounts are positive. 
B) There is no amount in the base year. 
C) The trend of the amounts is decreasing but all amounts are negative. 
D) The trend of the amounts is increasing but all amounts are negative.

Question 18

Earnings before interest and tax (EBIT) is a proxy for the amount available to cover interest payments.

Accepted Answer

A) True 
 B)False

Question 19

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2012 and 2013.  
-What are the earnings per share for 2013?

Accepted Answer

A) $15.83 
B) $ 5.00 
C) $ 2.50 
D) $ 0.90 
A) $15.83 
B) $ 5.00 
C) $ 2.50 
D) $ 0.90

Question 20

In vertical analysis of an income statement, the 100% figure is

Accepted Answer

A) profit. 
B) cost of goods sold. 
C) gross profit. 
D) net sales. 
A) profit. 
B) cost of goods sold. 
C) gross profit. 
D) net sales.

One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

A common measure of liquidity is

In the vertical analysis of a statement of financial position, the base for current liabilities is total liabilities.

The inventory turnover ratio is calculated by dividing

Sustainable income differs from actual profit by the amount of

Even if a company has a low debt to total assets ratio, it may have difficulty paying interest on debt if it also has a low times interest earned ratio.

Which one of the following would not be considered a liquidity ratio?

An accrual-based equivalent to the debt to total assets ratio is the cash total debt coverage ratio.

In performing a vertical analysis, the base for prepaid expenses is

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Horizontal analysis is a technique for evaluating financial statement data

Short-term creditors are usually most interested in assessing

The receivables turnover ratio is useful in assessing the profitability of receivables.

Vertical analysis expresses each item in a financial statement as a percent of a base amount.

Horizontal analysis is also called

Horizontal analysis is also called trend analysis.

Under which of the following cases would a percentage change not be calculated?

Earnings before interest and tax (EBIT) is a proxy for the amount available to cover interest payments.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2012 and 2013. -What are the earnings per share for 2013?

In vertical analysis of an income statement, the 100% figure is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Filters

Exam 14: Performance Measurement

One objective of the income statement is to separate the results of continuing operations from those of discontinued operations.

A common measure of liquidity is

In the vertical analysis of a statement of financial position, the base for current liabilities is total liabilities.

The inventory turnover ratio is calculated by dividing

Sustainable income differs from actual profit by the amount of

Even if a company has a low debt to total assets ratio, it may have difficulty paying interest on debt if it also has a low times interest earned ratio.

Which one of the following would not be considered a liquidity ratio?

An accrual-based equivalent to the debt to total assets ratio is the cash total debt coverage ratio.

In performing a vertical analysis, the base for prepaid expenses is

Which of the following income statement figures would probably be the best indicator of a company's future performance?

Horizontal analysis is a technique for evaluating financial statement data

Short-term creditors are usually most interested in assessing

The receivables turnover ratio is useful in assessing the profitability of receivables.

Vertical analysis expresses each item in a financial statement as a percent of a base amount.

Horizontal analysis is also called

Horizontal analysis is also called trend analysis.

Under which of the following cases would a percentage change not be calculated?

Earnings before interest and tax (EBIT) is a proxy for the amount available to cover interest payments.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2012 and 2013. -What are the earnings per share for 2013?

In vertical analysis of an income statement, the 100% figure is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Filters