Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

Accepted Answer

A) True 
 B)False

Question 3

Horizontal analysis showed a 25% increase in accounts receivable in 2022 over 2021.Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period.Given this information, what conclusion(s) may be reached?

Accepted Answer

A) The dollar amount of accounts receivable increased. 
B) The dollar amount of accounts receivable decreased. 
C) It cannot be determined if the dollar amount of accounts receivable increased or decreased. 
D) This result is impossible.An error has been made in the calculations. 
A) The dollar amount of accounts receivable increased. 
B) The dollar amount of accounts receivable decreased. 
C) It cannot be determined if the dollar amount of accounts receivable increased or decreased. 
D) This result is impossible.An error has been made in the calculations.

Question 4

Users of financial statements consider a lower debt to total assets ratio to be

Accepted Answer

A) worse because it indicates higher risk of defaulting on debt payments. 
B) better because it indicates that a company has lower leverage. 
C) worse because it indicates reduced risk of defaulting on debt payments. 
D) better because it indicates that a company has higher leverage. 
A) worse because it indicates higher risk of defaulting on debt payments. 
B) better because it indicates that a company has lower leverage. 
C) worse because it indicates reduced risk of defaulting on debt payments. 
D) better because it indicates that a company has higher leverage.

Question 5

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 6

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2021 and 2022:
  
-What is the return on assets for 2022?

Accepted Answer

A) 27.1% 
B) 10.0% 
C) 9.2% 
D) 8.6% 
A) 27.1% 
B) 10.0% 
C) 9.2% 
D) 8.6%

Question 7

Use the following information for questions 
During 2022, Amazing Corp.reported after-tax net income of $900,000 and paid $175,000 in common dividends.The weighted average number of common shares issued in 2022 was 200,000.There are no preferred shares issued.At year end, Amazing's common shares are selling for $81 per share on the Toronto Stock Exchange.
-Amazing's payout ratio for 2022 is

Accepted Answer

A) $1.00. 
B) 5.6%. 
C) 22.2%. 
D) 19.4%. 
A) $1.00. 
B) 5.6%. 
C) 22.2%. 
D) 19.4%.

Question 8

Factors than can limit the usefulness of financial analysis do not include

Accepted Answer

A) professional judgement. 
B) alternative accounting policies. 
C) diversification. 
D) accrual accounting. 
A) professional judgement. 
B) alternative accounting policies. 
C) diversification. 
D) accrual accounting.

Question 9

Identifying discontinued items is important if a potential investor is going to use reported net income to estimate a company's value.

Accepted Answer

A) True 
 B)False

Question 10

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2021 and 2022:
  
-What is the return on common shareholders' equity for 2022?

Accepted Answer

A) 4.5% 
B) 17.1% 
C) 18.5% 
D) 20.0% 
A) 4.5% 
B) 17.1% 
C) 18.5% 
D) 20.0%

Question 11

Best Baskets Limited (BBL) had a current ratio of 0.8:1 before borrowing $50,000 from the bank with a short-term note payable.What effect did the borrowing transaction have on BBL's current ratio?

Accepted Answer

A) The ratio remained unchanged. 
B) The ratio decreased. 
C) The ratio increased. 
D) Cannot be determined. 
A) The ratio remained unchanged. 
B) The ratio decreased. 
C) The ratio increased. 
D) Cannot be determined.

Question 12

Use the following information for questions 
During 2022, Amazing Corp.reported after-tax net income of $900,000 and paid $175,000 in common dividends.The weighted average number of common shares issued in 2022 was 200,000.There are no preferred shares issued.At year end, Amazing's common shares are selling for $81 per share on the Toronto Stock Exchange.
-Amazing's dividend yield for 2022 is

Accepted Answer

A) $0.875. 
B) 1.1%. 
C) 6.0%. 
D) 16.7%. 
A) $0.875. 
B) 1.1%. 
C) 6.0%. 
D) 16.7%.

Question 13

If a company has sales of $220 in 2021 and $560 in 2022, the percentage increase in sales from 2021 to 2022 is 155%.

Accepted Answer

A) True 
 B)False

Question 14

In horizontal analysis, if an item has a negative amount in the base year, and a positive amount in the following year, the percentage change will exceed 100%.

Accepted Answer

A) True 
 B)False

Question 15

A successful grocery store would probably have

Accepted Answer

A) a low inventory turnover. 
B) a high inventory turnover. 
C) zero profit margin. 
D) low volume. 
A) a low inventory turnover. 
B) a high inventory turnover. 
C) zero profit margin. 
D) low volume.

Question 16

A common measure of solvency is

Accepted Answer

A) free cash flow. 
B) current ratio. 
C) asset turnover ratio. 
D) inventory turnover ratio. 
A) free cash flow. 
B) current ratio. 
C) asset turnover ratio. 
D) inventory turnover ratio.

Question 17

If, over a three-year period, sales increased by 30%, and cost of goods sold increased by 45%,

Accepted Answer

A) the sales trend is unfavourable, but the cost of goods sold trend is favourable. 
B) the sales trend is favourable, but the cost of goods sold trend is unfavourable. 
C) both trends are favourable. 
D) both trends are unfavourable. 
A) the sales trend is unfavourable, but the cost of goods sold trend is favourable. 
B) the sales trend is favourable, but the cost of goods sold trend is unfavourable. 
C) both trends are favourable. 
D) both trends are unfavourable.

Question 18

An investor interested in purchasing a company's shares for their income potential would be more interested in the company's dividend yield and payout ratios than its price-earnings ratio.

Accepted Answer

A) True 
 B)False

Question 19

If a company is very diversified

Accepted Answer

A) it makes it easier to classify the company by industry. 
B) it would not be necessary to provide any segmented information. 
C) it can limit the usefulness of financial analysis. 
D) any problems with a subsidiary would be apparent when examining the consolidated statements. 
A) it makes it easier to classify the company by industry. 
B) it would not be necessary to provide any segmented information. 
C) it can limit the usefulness of financial analysis. 
D) any problems with a subsidiary would be apparent when examining the consolidated statements.

Question 20

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2021 and 2022.
  
-What is the receivables turnover ratio for 2022?

Accepted Answer

A) 2.7 times 
B) 2.0 times 
C) 3.2 times 
D) 3.8 times 
A) 2.7 times 
B) 2.0 times 
C) 3.2 times 
D) 3.8 times

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

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

Horizontal analysis showed a 25% increase in accounts receivable in 2022 over 2021.Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period.Given this information, what conclusion(s) may be reached?

Users of financial statements consider a lower debt to total assets ratio to be

The inventory turnover ratio is calculated by dividing

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What is the return on assets for 2022?

Factors than can limit the usefulness of financial analysis do not include

Identifying discontinued items is important if a potential investor is going to use reported net income to estimate a company's value.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What is the return on common shareholders' equity for 2022?

Best Baskets Limited (BBL) had a current ratio of 0.8:1 before borrowing $50,000 from the bank with a short-term note payable.What effect did the borrowing transaction have on BBL's current ratio?

If a company has sales of $220 in 2021 and $560 in 2022, the percentage increase in sales from 2021 to 2022 is 155%.

In horizontal analysis, if an item has a negative amount in the base year, and a positive amount in the following year, the percentage change will exceed 100%.

A successful grocery store would probably have

A common measure of solvency is

If, over a three-year period, sales increased by 30%, and cost of goods sold increased by 45%,

An investor interested in purchasing a company's shares for their income potential would be more interested in the company's dividend yield and payout ratios than its price-earnings ratio.

If a company is very diversified

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022. -What is the receivables turnover ratio for 2022?

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

The current ratio should not be interpreted on its own without also looking at the receivables turnover and inventory turnover ratios.

Horizontal analysis showed a 25% increase in accounts receivable in 2022 over 2021.Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period.Given this information, what conclusion(s) may be reached?

Users of financial statements consider a lower debt to total assets ratio to be

The inventory turnover ratio is calculated by dividing

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What is the return on assets for 2022?

Factors than can limit the usefulness of financial analysis do not include

Identifying discontinued items is important if a potential investor is going to use reported net income to estimate a company's value.

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022: -What is the return on common shareholders' equity for 2022?

Best Baskets Limited (BBL) had a current ratio of 0.8:1 before borrowing $50,000 from the bank with a short-term note payable.What effect did the borrowing transaction have on BBL's current ratio?

If a company has sales of $220 in 2021 and $560 in 2022, the percentage increase in sales from 2021 to 2022 is 155%.

In horizontal analysis, if an item has a negative amount in the base year, and a positive amount in the following year, the percentage change will exceed 100%.

A successful grocery store would probably have

A common measure of solvency is

If, over a three-year period, sales increased by 30%, and cost of goods sold increased by 45%,

An investor interested in purchasing a company's shares for their income potential would be more interested in the company's dividend yield and payout ratios than its price-earnings ratio.

If a company is very diversified

Use the following information to answer questions Green Thumb Garden Supplies reported the following information for 2021 and 2022. -What is the receivables turnover ratio for 2022?

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