Exam 5: Financial Reporting and Analysis

Using the following amounts taken from the balance sheet,income statement,and cash flows statement of a business,compute the measures listed below.Round to one decimal place. a.Return on assets b.Profit margin c.Return on equity d.Cash return on assets

Which of the following should not be classified as a current asset?

Match each definition with the correct term below. -Verifiability

Using the following data,prepare a multistep income statement for Morrison Company for the month ended February 28,2013.

A company with a profit margin of 6 percent earns six cents profit for every dollar of net sales.

An investment is classified as short term or long term based on

Only the chief financial officer and the company's CPAs are responsible for the accuracy of financial statements.The chief executive officer is not expected to understand financial information.

Which accounting term does not mean the same as the others?

Which of the following is not a subtotal?

Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question.Use ending balances whenever average balances are required for computing ratios. The profit margin of Layton Novelties is

Match each definition with the correct term below. -Income from operations

Sales returns and allowances are not deducted from gross sales on the balance sheet.

Why is it important for a company to maintain the same accounting methods and practices from period to period?

The term owner's equity is a more accurate term than net worth because many assets are recorded at original cost rather than at current value.

It is possible for an asset to be a current asset even though the expected conversion of that asset into cash is to be longer than one year.

The same set of financial statements usually is prepared for each user.

Use this information to answer the following question. The debt to equity ratio is

A company with a high debt to equity ratio is in a more vulnerable position during poor economic times than a company with a low debt to equity ratio.

Match each definition with the correct term below. -Conservatism

Which of the following does not include net income in its computation?