Question 1

All of the following are ways that a company's current ratio would decrease except

Accepted Answer

A)  purchasing inventory on account. 
B)  adding equal amounts to the numerator and denominator. 
C)  paying off one-third of its accounts payable. 
D)  paying cash for new equipment. 
A)  purchasing inventory on account. 
B)  adding equal amounts to the numerator and denominator. 
C)  paying off one-third of its accounts payable. 
D)  paying cash for new equipment.

Question 2

Assume the following sales data for a company:   If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Accepted Answer

A)  140% 
B)  125% 
C)  40% 
D)  25% 
A)  140% 
B)  125% 
C)  40% 
D)  25%

Question 3

In a common size balance sheet, total assets are represented by 100%.

Accepted Answer

A) True 
 B)False

Question 4

Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year. The average inventory for the year amounted to $1,250,000. The average days in inventory during the year was approximately

Accepted Answer

A)  261 days. 
B)  122 days. 
C)  49 days. 
D)  35 days. 
A)  261 days. 
B)  122 days. 
C)  49 days. 
D)  35 days.

Question 5

If Year 1 equals $780, Year 2 equals $819, and Year 3 equals $896, the percentage to be assigned for Year 2 in a trend analysis, assuming that Year 1 is the base year, is

Accepted Answer

A)  95%. 
B)  115%. 
C)  105%. 
D)  109%. 
A)  95%. 
B)  115%. 
C)  105%. 
D)  109%.

Question 6

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 accounts receivable turnover for this company?

Accepted Answer

A)  2.8 times 
B)  2 times 
C)  3.4 times 
D)  3 times 
A)  2.8 times 
B)  2 times 
C)  3.4 times 
D)  3 times

Question 7

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 return on assets for this company?

Accepted Answer

A)  6.8% 
B)  10.0% 
C)  11.7% 
D)  26.7% 
A)  6.8% 
B)  10.0% 
C)  11.7% 
D)  26.7%

Question 8

A balance sheet that displays only component percentages is called a ________ balance sheet.

Accepted Answer

A)  condensed 
B)  common size 
C)  comparative 
D)  trendy 
A)  condensed 
B)  common size 
C)  comparative 
D)  trendy

Question 9

Hickory Hills Pro Shop had a balance in the Accounts Receivable account of $800,000 at the beginning of the year and a balance of $900,000 at the end of the year. Net credit sales during the year amounted to $8,040,000. The accounts receivable turnover was

Accepted Answer

A)  9.5 times. 
B)  10.1 times. 
C)  8.9 times. 
D)  9.8 times. 
A)  9.5 times. 
B)  10.1 times. 
C)  8.9 times. 
D)  9.8 times.

Question 10

In analyzing financial statements, horizontal analysis is a

Accepted Answer

A)  requirement. 
B)  tool. 
C)  principle. 
D)  theory. 
A)  requirement. 
B)  tool. 
C)  principle. 
D)  theory.

Question 11

All of the following are reported on the income statement net of tax except

Accepted Answer

A)  loss on operations from a discontinued division. 
B)  other comprehensive income items. 
C)  income from operations. 
D)  loss on disposal of a division. 
A)  loss on operations from a discontinued division. 
B)  other comprehensive income items. 
C)  income from operations. 
D)  loss on disposal of a division.

Question 12

If Year 1 equals $750, Year 2 equals $840, and Year 3 equals $900, the percentage to be assigned for Year 3 in a trend analysis, assuming that Year 1 is the base year, is

Accepted Answer

A)  120%. 
B)  112%. 
C)  83%. 
D)  107%. 
A)  120%. 
B)  112%. 
C)  83%. 
D)  107%.

Question 13

Cochran Corporation, Inc. has the following income statement (in millions):   Using vertical analysis, what percentage is assigned to net income?

Accepted Answer

A)  100% 
B)  90% 
C)  10% 
D)  17% 
A)  100% 
B)  90% 
C)  10% 
D)  17%

Question 14

An inexperienced accountant for CJS Transport Corporation showed the following in CJS Transport's 2017 income statement: income before income taxes $420,000; and unrealized loss on available-for-sale securities (before taxes) $60,000. The unrealized loss and income before income taxes are both subject to a 30% tax rate.
Instructions
Prepare a corrected statement of income.

Accepted Answer

@#IMG-DLM& *(Inc. be

Question 15

Trading on the equity (leverage) refers to the

Accepted Answer

A)  amount of working capital. 
B)  amount of capital provided by owners. 
C)  use of borrowed money to increase the return to owners. 
D)  number of times interest is earned. 
A)  amount of working capital. 
B)  amount of capital provided by owners. 
C)  use of borrowed money to increase the return to owners. 
D)  number of times interest is earned.

Question 16

The following amounts were taken from the financial statements of R.Dodd Company:   The times interest earned for 2017 is

Accepted Answer

A)  3.0 times. 
B)  3.5 times. 
C)  4.0 times. 
D)  4.5 times. 
A)  3.0 times. 
B)  3.5 times. 
C)  4.0 times. 
D)  4.5 times.

Question 17

Because pro forma earnings are based on specific rules, these amounts are highly reliable.

Accepted Answer

A) True 
 B)False

Question 18

Aps Company reported the following on its income statement:   An analysis of the income statement revealed that interest expense was $60,000. Aps Company's times interest earned was

Accepted Answer

A)  6 times. 
B)  9 times. 
C)  8 times. 
D)  5 times. 
A)  6 times. 
B)  9 times. 
C)  8 times. 
D)  5 times.

Question 19

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.   What is the profit margin for this company?

Accepted Answer

A)  34.5% 
B)  43.1% 
C)  25.8% 
D)  17.2% 
A)  34.5% 
B)  43.1% 
C)  25.8% 
D)  17.2%

Question 20

If a company has sales of $130 in 2017 and $182 in 2016, the percentage decrease in sales from 2016 to 2017 is 40%.

Accepted Answer

A) True 
 B)False

Exam 13: Financial Statement Analysis

All of the following are ways that a company's current ratio would decrease except

Assume the following sales data for a company: If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

In a common size balance sheet, total assets are represented by 100%.

Chodron Corporation had net credit sales of $13,000,000 and cost of goods sold of $9,250,000 for the year. The average inventory for the year amounted to $1,250,000. The average days in inventory during the year was approximately

If Year 1 equals $780, Year 2 equals $819, and Year 3 equals $896, the percentage to be assigned for Year 2 in a trend analysis, assuming that Year 1 is the base year, is

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 accounts receivable turnover for this company?

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 return on assets for this company?

A balance sheet that displays only component percentages is called a ________ balance sheet.

Hickory Hills Pro Shop had a balance in the Accounts Receivable account of $800,000 at the beginning of the year and a balance of $900,000 at the end of the year. Net credit sales during the year amounted to $8,040,000. The accounts receivable turnover was

In analyzing financial statements, horizontal analysis is a

All of the following are reported on the income statement net of tax except

If Year 1 equals $750, Year 2 equals $840, and Year 3 equals $900, the percentage to be assigned for Year 3 in a trend analysis, assuming that Year 1 is the base year, is

Cochran Corporation, Inc. has the following income statement (in millions): Using vertical analysis, what percentage is assigned to net income?

Trading on the equity (leverage) refers to the

The following amounts were taken from the financial statements of R.Dodd Company: The times interest earned for 2017 is

Because pro forma earnings are based on specific rules, these amounts are highly reliable.

Aps Company reported the following on its income statement: An analysis of the income statement revealed that interest expense was $60,000. Aps Company's times interest earned was

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the profit margin for this company?

If a company has sales of $130 in 2017 and $182 in 2016, the percentage decrease in sales from 2016 to 2017 is 40%.

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

Filters