Question 1

Which one of the following ratios does not involve assets?

Accepted Answer

A)  Account receivable turnover 
B)  Current ratio 
C)  Return on sales 
D)  Inventory turnover 
A)  Account receivable turnover 
B)  Current ratio 
C)  Return on sales 
D)  Inventory turnover

Question 2

Dils Brothers' 2019 financial statements show average shareholders' equity of $20,412 million, net income of $5,040 million, and average total assets of $86,700 million.
How much is Dils Brothers' return on assets for the year?

Accepted Answer

A)  11.42% 
B)  5.81% 
C)  24.69% 
D)  4.77% 
A)  11.42% 
B)  5.81% 
C)  24.69% 
D)  4.77%

Question 3

One key measure of profitability is the debt-to-equity ratio.

Accepted Answer

A) True 
 B)False

Question 4

Changing from straight-line depreciation to double declining-balance depreciation is an example of a change in an accounting principle.

Accepted Answer

A) True 
 B)False

Question 5

Revenues from discontinued operations of a company are reported separately from revenues from continuing operations on the income statement.

Accepted Answer

A) True 
 B)False

Question 6

A debt-to-equity ratio of greater than 1.0 means that a firm's liabilities exceed its owners' equity.

Accepted Answer

A) True 
 B)False

Question 7

Information about a segment of the business that a company sells, abandons, or otherwise disposes of is reported in the:

Accepted Answer

A)  Retained earnings statement 
B)  Comprehensive income of the income statement 
C)  Discontinued operations section of the income statement 
D)  Balance sheet 
A)  Retained earnings statement 
B)  Comprehensive income of the income statement 
C)  Discontinued operations section of the income statement 
D)  Balance sheet

Question 8

Dils Brothers' 2019 financial statements show net income of $5,040 million, sales of $306,932 million, and average total assets of $86,700 million.
How much is Dils Brothers' return on sales for the year?

Accepted Answer

A)  4.71% 
B)  1.64% 
C)  10.20% 
D)  5.81% 
A)  4.71% 
B)  1.64% 
C)  10.20% 
D)  5.81%

Question 9

Selected recent balance sheet and income statement information for the clothing companies: Coffee Plus and Tea Circle Corporation follows:
 $\begin{array}{lcc} 
& \begin{array}{r}
\text { Coffee Plus } \
\text { (in } \$ 000 \text { s) }
\end{array} & \begin{array}{r}
\text { Tea Circle Corporation } \
\text { (in millions) }
\end{array} \
\hline \text { Cash } & \$ 9,758 & \$ 8,250 \
\text { Accounts receivable } & 49,290 & 31,347 \
\text { Inventory } & 478,346 & 32,306 \
\text { Total current liabilities } & 737,601 & 39,645 \
\text { Total liabilities } & 1,340,453 & 127,689 \
\text { Total equity } & 223,209 & 46,041 \
\text { Pre-tax income (loss) } & (177,756) & 13,552 \
\text { Interest expense } & 0 & 2,651
\end{array}$
 a. Calculate the current ratio and quick ratio for both companies.
b. Which company is more liquid?
c. Calculate the times-interest-earned and debt-to-equity ratios for both companies.
d. Which company is more solvent? Explain.

Accepted Answer

@#IMG-DLM& b. When looking at either ratio it appe

Question 10

Zebra Company sells a segment of its operations at a loss. Zebra has not previously experienced such an event and does not expect to again.
The loss from the disposal of the segment should be reported in the income statement as:

Accepted Answer

A)  A separate amount in comprehensive income 
B)  A separate amount in a discontinued operations section 
C)  A separate amount in net income from continuing operations 
D)  As part of cost of goods sold 
A)  A separate amount in comprehensive income 
B)  A separate amount in a discontinued operations section 
C)  A separate amount in net income from continuing operations 
D)  As part of cost of goods sold

Question 11

At December 31, 2019, Jose Company has total assets of $1,800,000, total liabilities of $480,000, and total owner's equity of $1,320,000.
At December 31, 2019, Jose Company's debt-to-equity ratio is:

Accepted Answer

A)  0.36 
B)  1.20 
C)  2.75 
D)  0.27 
A)  0.36 
B)  1.20 
C)  2.75 
D)  0.27

Question 12

Brown Enterprises reported sales revenue totaling $1,008,000, $1,002,000, and $1,239,000 in the years, 2018, 2019, and 2020, respectively.
Performing trend analysis, with 2018 serving as the base year, what is the percentage for 2020?

Accepted Answer

A)  123.69% 
B)  22.27% 
C)  122.92% 
D)  32.91% 
A)  123.69% 
B)  22.27% 
C)  122.92% 
D)  32.91%

Question 13

Return on assets can be disaggregated into return on sales and return on common stockholders' equity ratio.

Accepted Answer

A) True 
 B)False

Question 14

Vertical analysis examines changes in financial data across time.

Accepted Answer

A) True 
 B)False

Question 15

Selected recent balance sheet and income statement information for Frischmuth Systems, Inc. follows:
 $$\begin{array} { l r r } 
\text { (in millions) } & 2019 & 2018 \
\hline \text { Average inventory } & \mathbf { \$ 2 9 4 } & \mathbf { \$ 3 1 0 } \
\text { Average accounts receivable } & \mathbf { 3 , 0 7 2 } & \mathbf { 3 , 8 9 4 } \
\text { Average accounts payable } & \mathbf { 8 3 7 } & \mathbf { 9 , 5 7 0 } \
\text { Sales } & 17,105 & \mathbf { 2 0 , 9 9 7 } \
\text { Cost of goods sold } & \mathbf { 0 , 7 2 9 } & 11,445 \
\hline
\end{array}$$ a. Calculate accounts receivable turnover for both years. Has accounts receivable turnover improved during the year or worsened?
b. Calculate inventory turnover for 2019 and 2018. Has inventory turnover improved during the year or worsened?

Accepted Answer

a. 2019 accounts receivable turnover = $

Question 16

Selected balance sheet and income statement information for Forester Company follows in millions:
 $$\begin{array} { l r } 
\text { Earnings before taxes } & \$ 850,175 \
\text { Average assets } & 5,456,781 \
\text { Net incame } & 1,614,471 \
\text { Average common stockholders' equity } & 4,481,322
\end{array}$$ a. Calculate the company's return on common stockholders' equity.
b. Explain what information this provides to management.

Accepted Answer

a. Return on common stockholders' equity

Question 17

The asset section of Fullerton Corporation's 2019 balance sheet follows:
   a. Prepare a common-size statements for the asset section of Belmont's balance sheet for 2019 and 2018. Round to one decimal place.
b. Comment on the most significant changes.

Accepted Answer

a:
 @#IMG-DLM& *Does not foot due to rounding.
b.

Question 18

Austin Plumbing Supplies has a return on assets of 25%, while the industry average of similar companies is 15%. This means that Austin Plumbing Supplies' asset turnover is higher than the industry average.

Accepted Answer

A) True 
 B)False

Question 19

The income statements for Springdale Corporation for fiscal year 2019 (year ended January 30, 2019) follow:
   a. Prepare a common-size income statement for 2019 and 2018. Round to one decimal place.
b. Comment on the most significant changes.

Accepted Answer

a.
 @#IMG-DLM& NOTE: Some percentage totals may no

Question 20

Listed below are five items or sections that may be found in a multiple-step income statement. Place the numbers 1 through 5 in to indicate the sequence of these items or sections in the income statement (with 1 assigned to the first item or section, and so on).
-Net income from continuing operations

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  7 
E)  8 
A)  4 
B)  5 
C)  6 
D)  7 
E)  8

Which one of the following ratios does not involve assets?

Dils Brothers' 2019 financial statements show average shareholders' equity of $20,412 million, net income of $5,040 million, and average total assets of $86,700 million. How much is Dils Brothers' return on assets for the year?

One key measure of profitability is the debt-to-equity ratio.

Changing from straight-line depreciation to double declining-balance depreciation is an example of a change in an accounting principle.

Revenues from discontinued operations of a company are reported separately from revenues from continuing operations on the income statement.

A debt-to-equity ratio of greater than 1.0 means that a firm's liabilities exceed its owners' equity.

Information about a segment of the business that a company sells, abandons, or otherwise disposes of is reported in the:

Dils Brothers' 2019 financial statements show net income of $5,040 million, sales of $306,932 million, and average total assets of $86,700 million. How much is Dils Brothers' return on sales for the year?

Zebra Company sells a segment of its operations at a loss. Zebra has not previously experienced such an event and does not expect to again. The loss from the disposal of the segment should be reported in the income statement as:

At December 31, 2019, Jose Company has total assets of $1,800,000, total liabilities of $480,000, and total owner's equity of $1,320,000. At December 31, 2019, Jose Company's debt-to-equity ratio is:

Brown Enterprises reported sales revenue totaling $1,008,000, $1,002,000, and $1,239,000 in the years, 2018, 2019, and 2020, respectively. Performing trend analysis, with 2018 serving as the base year, what is the percentage for 2020?

Return on assets can be disaggregated into return on sales and return on common stockholders' equity ratio.

Vertical analysis examines changes in financial data across time.

The asset section of Fullerton Corporation's 2019 balance sheet follows: a. Prepare a common-size statements for the asset section of Belmont's balance sheet for 2019 and 2018. Round to one decimal place. b. Comment on the most significant changes.

Austin Plumbing Supplies has a return on assets of 25%, while the industry average of similar companies is 15%. This means that Austin Plumbing Supplies' asset turnover is higher than the industry average.

The income statements for Springdale Corporation for fiscal year 2019 (year ended January 30, 2019) follow: a. Prepare a common-size income statement for 2019 and 2018. Round to one decimal place. b. Comment on the most significant changes.

Overview of Managerial Accounting

Managerial Accounting Concepts and Cost Flows

Cost Accounting Systems: Job Order Costing

Cost Accounting Systems: Process Costing

Activity-Based Costing

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Decision Making

Relevant Costs and Short-Term Decision Making

Planning and Budgeting

Standard Costing and Variance Analysis

Flexible Budgets, Segment Analysis, and Performance Reporting

Capital Budgeting

Statement of Cash Flows

Appendix: Accounting and the Time Value of Money

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Exam 14: Analysis and Interpretation of Financial Statements

Which one of the following ratios does not involve assets?

Dils Brothers' 2019 financial statements show average shareholders' equity of $20,412 million, net income of $5,040 million, and average total assets of $86,700 million. How much is Dils Brothers' return on assets for the year?

One key measure of profitability is the debt-to-equity ratio.

Changing from straight-line depreciation to double declining-balance depreciation is an example of a change in an accounting principle.

Revenues from discontinued operations of a company are reported separately from revenues from continuing operations on the income statement.

A debt-to-equity ratio of greater than 1.0 means that a firm's liabilities exceed its owners' equity.

Information about a segment of the business that a company sells, abandons, or otherwise disposes of is reported in the:

Dils Brothers' 2019 financial statements show net income of $5,040 million, sales of $306,932 million, and average total assets of $86,700 million. How much is Dils Brothers' return on sales for the year?

Zebra Company sells a segment of its operations at a loss. Zebra has not previously experienced such an event and does not expect to again. The loss from the disposal of the segment should be reported in the income statement as:

At December 31, 2019, Jose Company has total assets of $1,800,000, total liabilities of $480,000, and total owner's equity of $1,320,000. At December 31, 2019, Jose Company's debt-to-equity ratio is:

Brown Enterprises reported sales revenue totaling $1,008,000, $1,002,000, and $1,239,000 in the years, 2018, 2019, and 2020, respectively. Performing trend analysis, with 2018 serving as the base year, what is the percentage for 2020?

Return on assets can be disaggregated into return on sales and return on common stockholders' equity ratio.

Vertical analysis examines changes in financial data across time.

The asset section of Fullerton Corporation's 2019 balance sheet follows: a. Prepare a common-size statements for the asset section of Belmont's balance sheet for 2019 and 2018. Round to one decimal place. b. Comment on the most significant changes.

Austin Plumbing Supplies has a return on assets of 25%, while the industry average of similar companies is 15%. This means that Austin Plumbing Supplies' asset turnover is higher than the industry average.

The income statements for Springdale Corporation for fiscal year 2019 (year ended January 30, 2019) follow: a. Prepare a common-size income statement for 2019 and 2018. Round to one decimal place. b. Comment on the most significant changes.

Overview of Managerial Accounting

Managerial Accounting Concepts and Cost Flows

Cost Accounting Systems: Job Order Costing

Cost Accounting Systems: Process Costing

Activity-Based Costing

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Decision Making

Relevant Costs and Short-Term Decision Making

Planning and Budgeting

Standard Costing and Variance Analysis

Flexible Budgets, Segment Analysis, and Performance Reporting

Capital Budgeting

Statement of Cash Flows

Appendix: Accounting and the Time Value of Money

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