Question 1

Investigating liquidity is important because

Accepted Answer

A) if a company cannot pay its bills on time, it will have difficulty obtaining resources needed to continue operating. 
B) a company needs the ability to buy long-term assets. 
C) a company's price earnings ratio will decline. 
D) GAAP requires that assets must exceed liabilities. 
A) if a company cannot pay its bills on time, it will have difficulty obtaining resources needed to continue operating. 
B) a company needs the ability to buy long-term assets. 
C) a company's price earnings ratio will decline. 
D) GAAP requires that assets must exceed liabilities.

Question 2

The following data have been taken from the financial records of Bubba's Body Shop for the current year:   Required: 
a.Calculate the price/earnings ratio.
b.Calculate the current ratio.

Accepted Answer

a.$60 ÷ $8

Question 3

A high inventory turnover might signal

Accepted Answer

A) a problem with old and obsolete inventory. 
B) an overstock of inventory. 
C) poor inventory management. 
D) credit terms that are too tight. 
A) a problem with old and obsolete inventory. 
B) an overstock of inventory. 
C) poor inventory management. 
D) credit terms that are too tight.

Question 4

Rather than looking only at the balances reported on the financial statements, it is helpful to look at the changes in the account balances over time.This is called

Accepted Answer

A) common analysis. 
B) vertical analysis. 
C) horizontal analysis. 
D) benchmarking 
A) common analysis. 
B) vertical analysis. 
C) horizontal analysis. 
D) benchmarking

Question 5

Utica Corporation reported the following financial information:   Required: 
a.If you prepared a horizontal analysis for inventory, what dollar change will be shown for 2022?
b.If you prepared a horizontal analysis for sales, what percentage change will be shown for 2022?

Accepted Answer

a.$94,000 ̶ $88,000

Question 6

A low inventory turnover might signal

Accepted Answer

A) a problem with old and obsolete inventory. 
B) fast-moving inventory. 
C) too much inventory. 
D) not enough inventory on hand. 
A) a problem with old and obsolete inventory. 
B) fast-moving inventory. 
C) too much inventory. 
D) not enough inventory on hand.

Question 7

On a common-size balance sheet, notes receivable is shown as a percentage of

Accepted Answer

A) total liabilities. 
B) current liabilities. 
C) total stockholders' equity. 
D) total assets. 
A) total liabilities. 
B) current liabilities. 
C) total stockholders' equity. 
D) total assets.

Question 8

ABC Corporation reported net income of $26,000 last year.The company reported earnings per share of $2.80.ABC paid dividends of $1.75 on each share of outstanding stock.What was ABC's dividend payout ratio?

Accepted Answer

$1.75 ÷ $2

Question 9

Earnings per share represents how much of a company's current net income is available to distribute to each share of stock held by an investor.

Accepted Answer

A) True 
 B)False

Question 10

Common-size statements are especially helpful in comparing companies of different size.

Accepted Answer

A) True 
 B)False

Question 11

M & M has provided the following comparative income statements and supplemental information:   Required: 
a.Calculate M & M's gross margin percentage for 2021.
b.Calculate M & M's price/earnings ratio for 2021.
c.Calculate M & M's dividend payout ratio for 2021.

Accepted Answer

a.$64,000 ÷ $132,000

Question 12

The acid-test is calculated as

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 13

Unlike the percentage columns in a horizontal analysis, the columns in a common-size percentage statement can be totaled.

Accepted Answer

A) True 
 B)False

Question 14

Generally, a high inventory turnover rate is considered

Accepted Answer

A) good. 
B) bad. 
C) indifferent. 
D) proportionate to net income. 
A) good. 
B) bad. 
C) indifferent. 
D) proportionate to net income.

Question 15

The ratio that shows how much of each sales dollar that is available to cover operating expenses and provide a profit after the cost of goods sold has been covered is called

Accepted Answer

A) the contribution margin ratio. 
B) return on equity. 
C) the internal rate of return. 
D) the gross margin ratio. 
A) the contribution margin ratio. 
B) return on equity. 
C) the internal rate of return. 
D) the gross margin ratio.

Question 16

The 2020, 2021, and 2022 partial balance sheets for Ottoman Manufacturing Company appear below.   Net credit sales for Ottoman were $126,000 for 2020, $120,000 for 2021 and $114,000 for 2022, while cost of goods sold was $84,000 for 2020, $82,400 for 2021 and $72,500 for 2022. What is the accounts receivable turnover for 2021?

Accepted Answer

A) 3.75 times 
B) 4.61 times 
C) 5.00 times 
D) 6.00 times 
A) 3.75 times 
B) 4.61 times 
C) 5.00 times 
D) 6.00 times

Question 17

Phelps Piping Company manufactures PVC pipe.The company has provided the following selected financial information:   Required: 
a.What is Phelps' accounts receivable turnover for 2021?
b.What is Phelps' gross margin percentage for 2021?

Accepted Answer

a.$360,000 ÷ [($50,0

Question 18

Assume that the accounts receivable balances are $110,000, $112,000 and $116,000 for 2021, 2022, and 2023, respectively.The trend percentage for 2023 is

Accepted Answer

A) 3.6%. 
B) 5.5%. 
C) 103.6%. 
D) 105.5%. 
A) 3.6%. 
B) 5.5%. 
C) 103.6%. 
D) 105.5%.

Question 19

The 2020, 2021, and 2022 partial balance sheets for Ottoman Manufacturing Company appear below.   Net credit sales for Ottoman were $126,000 for 2020, $120,000 for 2021 and $114,000 for 2022, while cost of goods sold was $84,000 for 2020, $82,400 for 2021 and $72,500 for 2022. What is the inventory turnover for 2021?

Accepted Answer

A) 2.75 times 
B) 3.17 times 
C) 4.00 times 
D) 4.14 times 
A) 2.75 times 
B) 3.17 times 
C) 4.00 times 
D) 4.14 times

Question 20

The 2020and 2021 partial balance sheets for Ottoman Industries is shown below.   Calculate the current ratio for 2021.

Accepted Answer

A) 0.47 
B) 0.62 
C) 1.37 
D) 2.20 
A) 0.47 
B) 0.62 
C) 1.37 
D) 2.20

Investigating liquidity is important because

The following data have been taken from the financial records of Bubba's Body Shop for the current year: Required: a.Calculate the price/earnings ratio. b.Calculate the current ratio.

A high inventory turnover might signal

Rather than looking only at the balances reported on the financial statements, it is helpful to look at the changes in the account balances over time.This is called

Utica Corporation reported the following financial information: Required: a.If you prepared a horizontal analysis for inventory, what dollar change will be shown for 2022? b.If you prepared a horizontal analysis for sales, what percentage change will be shown for 2022?

A low inventory turnover might signal

On a common-size balance sheet, notes receivable is shown as a percentage of

ABC Corporation reported net income of $26,000 last year.The company reported earnings per share of $2.80.ABC paid dividends of $1.75 on each share of outstanding stock.What was ABC's dividend payout ratio?

Earnings per share represents how much of a company's current net income is available to distribute to each share of stock held by an investor.

Common-size statements are especially helpful in comparing companies of different size.

M & M has provided the following comparative income statements and supplemental information: Required: a.Calculate M & M's gross margin percentage for 2021. b.Calculate M & M's price/earnings ratio for 2021. c.Calculate M & M's dividend payout ratio for 2021.

The acid-test is calculated as

Unlike the percentage columns in a horizontal analysis, the columns in a common-size percentage statement can be totaled.

Generally, a high inventory turnover rate is considered

The ratio that shows how much of each sales dollar that is available to cover operating expenses and provide a profit after the cost of goods sold has been covered is called

Phelps Piping Company manufactures PVC pipe.The company has provided the following selected financial information: Required: a.What is Phelps' accounts receivable turnover for 2021? b.What is Phelps' gross margin percentage for 2021?

Assume that the accounts receivable balances are $110,000, $112,000 and $116,000 for 2021, 2022, and 2023, respectively.The trend percentage for 2023 is

The 2020and 2021 partial balance sheets for Ottoman Industries is shown below. Calculate the current ratio for 2021.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Financial Statement Analysis

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Exam 12: Performance Evaluation Revisited: a Balanced Approach

Investigating liquidity is important because

The following data have been taken from the financial records of Bubba's Body Shop for the current year: Required: a.Calculate the price/earnings ratio. b.Calculate the current ratio.

A high inventory turnover might signal

Rather than looking only at the balances reported on the financial statements, it is helpful to look at the changes in the account balances over time.This is called

Utica Corporation reported the following financial information: Required: a.If you prepared a horizontal analysis for inventory, what dollar change will be shown for 2022? b.If you prepared a horizontal analysis for sales, what percentage change will be shown for 2022?

A low inventory turnover might signal

On a common-size balance sheet, notes receivable is shown as a percentage of

ABC Corporation reported net income of $26,000 last year.The company reported earnings per share of $2.80.ABC paid dividends of $1.75 on each share of outstanding stock.What was ABC's dividend payout ratio?

Earnings per share represents how much of a company's current net income is available to distribute to each share of stock held by an investor.

Common-size statements are especially helpful in comparing companies of different size.

M & M has provided the following comparative income statements and supplemental information: Required: a.Calculate M & M's gross margin percentage for 2021. b.Calculate M & M's price/earnings ratio for 2021. c.Calculate M & M's dividend payout ratio for 2021.

The acid-test is calculated as

Unlike the percentage columns in a horizontal analysis, the columns in a common-size percentage statement can be totaled.

Generally, a high inventory turnover rate is considered

The ratio that shows how much of each sales dollar that is available to cover operating expenses and provide a profit after the cost of goods sold has been covered is called

Phelps Piping Company manufactures PVC pipe.The company has provided the following selected financial information: Required: a.What is Phelps' accounts receivable turnover for 2021? b.What is Phelps' gross margin percentage for 2021?

Assume that the accounts receivable balances are $110,000, $112,000 and $116,000 for 2021, 2022, and 2023, respectively.The trend percentage for 2023 is

The 2020and 2021 partial balance sheets for Ottoman Industries is shown below. Calculate the current ratio for 2021.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Financial Statement Analysis

Filters