Question 1

Horizontal analysis is also known as

Accepted Answer

A)  linear analysis. 
B)  vertical analysis. 
C)  trend analysis. 
D)  common size analysis. 
A)  linear analysis. 
B)  vertical analysis. 
C)  trend analysis. 
D)  common size analysis.

Question 2

Leverage and return on equity are closely related.

Accepted Answer

A) True 
 B)False

Question 3

The following schedule is a display of what type of analysis?

Accepted Answer

A)  Horizontal analysis 
B)  Differential analysis 
C)  Vertical analysis 
D)  Ratio analysis 
A)  Horizontal analysis 
B)  Differential analysis 
C)  Vertical analysis 
D)  Ratio analysis

Question 4

Selected data for Buechner Corporation appear below.   
Instructions
Compute the following for 2017:
(a) Gross profit percentage
(b) Inventory turnover
(c) Accounts receivable turnover

Accepted Answer

(a) Gross profit = Net Sales - Cost of g

Question 5

Which of the following is the best definition of sustainable income?

Accepted Answer

A)  Sustainable income is a measure of solvency that does not include capital expenditure. 
B)  Sustainable income is the same as net income. 
C)  Sustainable income is income that is unusual in nature and infrequent in occurrence. 
D)  Sustainable income is the most likely level of income to be obtained in the future. 
A)  Sustainable income is a measure of solvency that does not include capital expenditure. 
B)  Sustainable income is the same as net income. 
C)  Sustainable income is income that is unusual in nature and infrequent in occurrence. 
D)  Sustainable income is the most likely level of income to be obtained in the future.

Question 6

Selected data taken from the 2017 financial statements of Phillips Card Company, Inc. are as follows (in millions).   
Instructions
Compute the free cash flow February 28, 2017; and briefly discuss your results.

Accepted Answer

Free cash flow = Cash provided by operat

Question 7

Comparisons of financial data made within a company are called

Accepted Answer

A)  intracompany comparisons. 
B)  interior comparisons. 
C)  intercompany comparisons. 
D)  industry comparisons. 
A)  intracompany comparisons. 
B)  interior comparisons. 
C)  intercompany comparisons. 
D)  industry comparisons.

Question 8

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

Accepted Answer

A)  that has been arranged from the highest number to the lowest number. 
B)  that has been arranged from the lowest number to the highest number. 
C)  to determine which items are in error. 
D)  to determine the amount and/or percentage increase or decrease that has taken place. 
A)  that has been arranged from the highest number to the lowest number. 
B)  that has been arranged from the lowest number to the highest number. 
C)  to determine which items are in error. 
D)  to determine the amount and/or percentage increase or decrease that has taken place.

Question 9

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 10

Comprehensive income would not include

Accepted Answer

A)  dividends declared. 
B)  unrealized gains on available-for-sale securities. 
C)  discontinued operations. 
D)  other expenses and losses. 
A)  dividends declared. 
B)  unrealized gains on available-for-sale securities. 
C)  discontinued operations. 
D)  other expenses and losses.

Question 11

Which measure(s) is(are) an evaluation of a company's ability to pay current liabilities?
1) Current ratio.
2) Free cash flow

Accepted Answer

A)  Both 1 and 2. 
B)  Neither 1 nor 2. 
C)  1 only. 
D)  2 only 
A)  Both 1 and 2. 
B)  Neither 1 nor 2. 
C)  1 only. 
D)  2 only

Question 12

A change in inventory methods during the year would be classified as a change in ____________________.

Accepted Answer

accounting

Question 13

Given the following data for the King Company:   How would common stock appear on a common size balance sheet?

Accepted Answer

A)  20% 
B)  70% 
C)  28% 
D)  30% 
A)  20% 
B)  70% 
C)  28% 
D)  30%

Question 14

The comparative balance sheet of Delta Company appears below:
Instructions
(a) Using horizontal analysis, show the percentage change for each balance sheet item using 2016 as a base year.
(b) Using vertical analysis, prepare a common size comparative balance sheet.

Accepted Answer

The answer of The comparative balance sheet of Delta Company...

Question 15

The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.   What is the price earnings ratio for this company?

Accepted Answer

A)  6.0 times 
B)  2.5 times 
C)  8.0 times 
D)  4.0 times 
A)  6.0 times 
B)  2.5 times 
C)  8.0 times 
D)  4.0 times

Question 16

Winsor Clothing Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The average collection period of the accounts receivable in terms of days was

Accepted Answer

A)  30 days. 
B)  81.1 days. 
C)  42.4 days. 
D)  40.6 days. 
A)  30 days. 
B)  81.1 days. 
C)  42.4 days. 
D)  40.6 days.

Question 17

The current ratio is one of the most utilized measures of profitability.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not reported net of tax on the statement of comprehensive income?

Accepted Answer

A)  Discontinued operations 
B)  Other comprehensive income 
C)  Other revenues and expenses 
D)  Income from continuing operations 
A)  Discontinued operations 
B)  Other comprehensive income 
C)  Other revenues and expenses 
D)  Income from continuing operations

Question 19

Both profit margin and asset turnover affect a company's return on assets.

Accepted Answer

A) True 
 B)False

Question 20

The following amounts were taken from the financial statements of Ando Company:   The return on assets for 2017 is

Accepted Answer

A)  14%. 
B)  12%. 
C)  11%. 
D)  6%. 
A)  14%. 
B)  12%. 
C)  11%. 
D)  6%.

Exam 13: Financial Statement Analysis

Horizontal analysis is also known as

Leverage and return on equity are closely related.

The following schedule is a display of what type of analysis?

Selected data for Buechner Corporation appear below. Instructions Compute the following for 2017: (a) Gross profit percentage (b) Inventory turnover (c) Accounts receivable turnover

Which of the following is the best definition of sustainable income?

Selected data taken from the 2017 financial statements of Phillips Card Company, Inc. are as follows (in millions). Instructions Compute the free cash flow February 28, 2017; and briefly discuss your results.

Comparisons of financial data made within a company are called

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

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

Comprehensive income would not include

Which measure(s) is(are) an evaluation of a company's ability to pay current liabilities? 1) Current ratio. 2) Free cash flow

A change in inventory methods during the year would be classified as a change in ____________________.

Given the following data for the King Company: How would common stock appear on a common size balance sheet?

The comparative balance sheet of Delta Company appears below: Instructions (a) Using horizontal analysis, show the percentage change for each balance sheet item using 2016 as a base year. (b) Using vertical analysis, prepare a common size comparative balance sheet.

The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the price earnings ratio for this company?

Winsor Clothing Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The average collection period of the accounts receivable in terms of days was

The current ratio is one of the most utilized measures of profitability.

Which of the following is not reported net of tax on the statement of comprehensive income?

Both profit margin and asset turnover affect a company's return on assets.

The following amounts were taken from the financial statements of Ando Company: The return on assets for 2017 is

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

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