Question 1

Match the following terms with their definitions.
-Long-term liabilities

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 2

Calculate (A)net sales, (B)gross profit, (C)total operating expenses, and (D)net income.
Sales returns $850, rent expense $1,355, sales discounts $1,200, depreciation expense $510, cost of merchandise sold $6,500, gross sales $19,500, advertising expense $400, salary expense $2,100, heat expense $750.

Accepted Answer

A. 19,500 - 850 - 1,200 = 17,4

Question 3

In the acid test ratio, inventory and prepaid expenses are excluded.

Accepted Answer

A) True 
 B)False

Question 4

Selecting a base year and expressing each amount as a percent of the base year amount is called:

Accepted Answer

A) Trend analysis 
B) Horizontal analysis 
C) Vertical analysis 
D) Ratio analysis 
E) None of these 
A) Trend analysis 
B) Horizontal analysis 
C) Vertical analysis 
D) Ratio analysis 
E) None of these

Question 5

Match the following terms with their definitions.
-Vertical analysis

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 6

A comparative statement contains data for less than two successive accounting periods.

Accepted Answer

A) True 
 B)False

Question 7

Solve for (A)current ratio, (B)acid test, (C)average day's collection (360), (D)asset turnover, and (E)profit margin on sales. (Round to nearest hundredth or hundredth percent as needed.)
 $$\begin{array} { | l | l | } 
\hline \text { Current Assets } & \$ 26,000 \
\hline \text { Accounts Receivable } & \$ 4,100 \
\hline \text { Current Liabilities } & \$ 16,500 \
\hline \text { Inventory } & \$ 4,100 \
\hline \text { Net Sales } & \$ 52,000 \
\hline \text { Total Assets } & \$ 38,000 \
\hline \text { Net Income } & \$ 8,000 \
\hline
\end{array}$$

Accepted Answer

A. 1.58; B

Question 8

Match the following terms with their definitions.
-Retained earnings

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 9

Match the following terms with their definitions.
-Asset turnover

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 10

Vertical analysis cannot be done on a comparative statement.

Accepted Answer

A) True 
 B)False

Question 11

The total debt to total assets of Logan Company was 0.71. The total of Logan's assets was $270,000. The amount of total debt is:

Accepted Answer

A) $146,700 
B) $191,700 
C) $119,700 
D) $461,700 
E) None of these 
A) $146,700 
B) $191,700 
C) $119,700 
D) $461,700 
E) None of these

Question 12

Given the following: $$\begin{array} { | c | c | c | c | } 
\hline & 2015 & 2016 & 2017 \
\hline \text { Sales } & \$ 400,000 & \$ 350,000 & \$ 470,000 \
\hline \text { Gross Profit } & - 100,000 & - 130,000 & - 140,000 \
\hline \text { Net Income } & \$ 300,000 & \$ 220,000 & \$ 230,000 \
\hline
\end{array}$$ By trend analysis (base year is 2015), sales in 2017 to the nearest percent of the base year is:

Accepted Answer

A) 117% 
B) 116% 
C) 118% 
D) 119% 
E) None of these 
A) 117% 
B) 116% 
C) 118% 
D) 119% 
E) None of these

Question 13

Match the following terms with their definitions.
-Current liabilities

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 14

Horizontal analysis need not be done using comparative reports.

Accepted Answer

A) True 
 B)False

Question 15

Al Ring received a memo requesting that he complete a trend analysis of the following, using 2014 as the base year. (Round each percent to nearest whole percent.)Can you help Al with this request?
 $$\begin{array} { | l | l | l | l | l | } 
\hline & 2017 & 2016 & 2015 & 2014 \
\hline \text { Sales } & \$ 42,000 ( \mathrm {~A} ) & \$ 60,000 ( \mathrm { D } ) & \$ 80,000 ( \mathrm { G } ) & \$ 95,000 ( \mathrm {~J} ) \
\hline \text { Gross Profit } & \$ 21,000 ( \mathrm {~B} ) & \$ 28,000 ( \mathrm { E } ) & \$ 42,000 ( \mathrm { H } ) & \$ 60,000 ( \mathrm {~K} ) \
\hline \text { Net Income } & \$ 21,000 ( \mathrm { C } ) & \$ 32,000 ( \mathrm {~F} ) & \$ 38,000 ( \mathrm { I } ) & \$ 35,000 ( \mathrm {~L} ) \
\hline
\end{array}$$ *For simplicity, operating expenses have been omitted.

Accepted Answer

A. 44%; B. 35%; C. 6

Question 16

Land does not depreciate.

Accepted Answer

A) True 
 B)False

Question 17

Complete the current ratio for the following: Total current assets = $12,000; current liabilities = $10,000

Accepted Answer

A) 1.5 
B) 1.7 
C) 0.7 
D) 1.2 
E) None of these 
A) 1.5 
B) 1.7 
C) 0.7 
D) 1.2 
E) None of these

Question 18

Complete the partial comparative balance sheet. Round to nearest hundredth percent.
 $$\begin{array} { | c | r | r | r | c | } 
\hline \text { Assets } & \text { Amount } & \text { Percent } & \text { Amount } & \text { Percent } \
\hline \text { Current Assets: } & & & & \
\hline \text { Cash } & \$ 6,000 & \mathrm { C } & \$ 7,000 & \mathrm { G } \
\hline \begin{array} { l } 
\text { Accounts } \
\text { Receivable }
\end{array} & \$ 3,000 & \mathrm { D } & \$ 3,500 & \mathrm { H } \
\hline \text { Merch. Inventory } & \$ 1,000 & \mathrm { E } & \$ 2,000 & \mathrm { I } \
\hline \text { Prepaid Expense } & \$ 500 & \mathrm {~F} & \$ 1,000 & \mathrm {~J} \
\hline \begin{array} { l } 
\text { Total Current } \
\text { Assets }
\end{array} & \mathrm { A } & & \mathrm { B } & \
\hline
\end{array}$$

Accepted Answer

A. $10,500; B. $13,500; C. 57.

Question 19

The balance sheet lists:

Accepted Answer

A) Assets, liabilities, expenses 
B) Assets, liabilities, equity 
C) Assets, revenues, expenses 
D) Assets, revenues, equity 
E) None of these 
A) Assets, liabilities, expenses 
B) Assets, liabilities, equity 
C) Assets, revenues, expenses 
D) Assets, revenues, equity 
E) None of these

Question 20

Given the following:
 $$\begin{array} { | l | l | } 
\hline \text { Current Assets } & \$ 18,000 \
\hline \text { Accounts Receivable } & \$ 3,000 \
\hline \text { Current Liabilities } & \$ 16,000 \
\hline \text { Inventory } & \$ 2,000 \
\hline \text { Net Sales } & \$ 41,000 \
\hline \text { Total Assets } & \$ 29,000 \
\hline \text { Net Income } & \$ 6,000 \
\hline
\end{array}$$ Find the following (round to the nearest hundredth if needed): A. Current ratio; B. Acid test; C. Average day's collection; D. Asset turnover; E. Profit margin on sales.

Accepted Answer

A. 1.13; B

Match the following terms with their definitions. -Long-term liabilities

In the acid test ratio, inventory and prepaid expenses are excluded.

Selecting a base year and expressing each amount as a percent of the base year amount is called:

Match the following terms with their definitions. -Vertical analysis

A comparative statement contains data for less than two successive accounting periods.

Match the following terms with their definitions. -Retained earnings

Match the following terms with their definitions. -Asset turnover

Vertical analysis cannot be done on a comparative statement.

The total debt to total assets of Logan Company was 0.71. The total of Logan's assets was $270,000. The amount of total debt is:

Given the following: 2015 2016 2017 Sales \ 400,000 \ 350,000 \ 470,000 Gross Profit -100,000 -130,000 -140,000 Net Income \ 300,000 \ 220,000 \ 230,000 By trend analysis (base year is 2015), sales in 2017 to the nearest percent of the base year is:

Match the following terms with their definitions. -Current liabilities

Horizontal analysis need not be done using comparative reports.

Land does not depreciate.

Complete the current ratio for the following: Total current assets = $12,000; current liabilities = $10,000

Complete the partial comparative balance sheet. Round to nearest hundredth percent. Assets Amount Percent Amount Percent Current Assets: Cash \ 6,000 \ 7,000 Accounts Receivable \ 3,000 \ 3,500 Merch. Inventory \ 1,000 \ 2,000 Prepaid Expense \ 500 \ 1,000 Total Current Assets

The balance sheet lists:

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters

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

Match the following terms with their definitions. -Long-term liabilities

In the acid test ratio, inventory and prepaid expenses are excluded.

Selecting a base year and expressing each amount as a percent of the base year amount is called:

Match the following terms with their definitions. -Vertical analysis

A comparative statement contains data for less than two successive accounting periods.

Match the following terms with their definitions. -Retained earnings

Match the following terms with their definitions. -Asset turnover

Vertical analysis cannot be done on a comparative statement.

The total debt to total assets of Logan Company was 0.71. The total of Logan's assets was $270,000. The amount of total debt is:

Given the following: 2015 2016 2017 Sales \ 400,000 \ 350,000 \ 470,000 Gross Profit -100,000 -130,000 -140,000 Net Income \ 300,000 \ 220,000 \ 230,000 By trend analysis (base year is 2015), sales in 2017 to the nearest percent of the base year is:

Match the following terms with their definitions. -Current liabilities

Horizontal analysis need not be done using comparative reports.

Land does not depreciate.

Complete the current ratio for the following: Total current assets = $12,000; current liabilities = $10,000

Complete the partial comparative balance sheet. Round to nearest hundredth percent. Assets Amount Percent Amount Percent Current Assets: Cash \ 6,000 \ 7,000 Accounts Receivable \ 3,000 \ 3,500 Merch. Inventory \ 1,000 \ 2,000 Prepaid Expense \ 500 \ 1,000 Total Current Assets

The balance sheet lists:

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters