Question 1

If beginning and ending inventories are $100,000 and 150,000,respectively,and the cost of goods sold is $450,000,what is the inventory turnover ratio?

Accepted Answer

A) 4.50 
B) 3.00 
C) 3.60 
D) 0.28 
A) 4.50 
B) 3.00 
C) 3.60 
D) 0.28 C

Question 2

From the following balance sheet for Bricks Corporation,compute the common-size balance sheet amounts.(Round all percentages to nearest tenth of a percent.)
$$\begin{array} { l r l } 
& \text { Amount } & \text { Percent } \
\text { Current Assets } & \$ 40,000 & ---- \
\text { Plant and Equipment } & \underline { 360,000 } & ---- \
\text { Total Assets } & \underline { \underline { 400,000 } } & ---- \
&  & \
\text { Current Liabilities } &\$ 100,000  & ---- \
\text { Long-term Liabilities } &180,000  & ---- \
\text { Common Stock } & 80,000 & ----\
\text { Retained Earnings } &\underline { 40,000 } &---- \
\text { Total Liabilities and } &  & \
\text { Stockholders' Equity } &\underline { \$ 400,000 }&----
\end{array}$$

Accepted Answer

$$\begin{array} { l r } 
\text { Current Assets } & 10 \% \
\text { Plant and Equipment } & \underline { 90 \% } \
{ \text { Total Assets } }& \underline { \underline { 100 \% } }  \
 \
\text { Current Liabilities } & 25 \% \
\text { Long-Term Liabilities } & 45 \% \
\text { Common Stock } & 20 \% \
\text { Retained Earnings } & \underline { 10 \% } \
\text { Total Liabilities and } & \
\text { Stockholders' Equity } & \underline {  \underline { 100 \% }} 
\end{array}$$

Question 3

With a beginning Accounts Receivable balance of $70,000,an ending balance of $140,000,and net credit sales of $800,000,compute accounts receivable turnover ratio (rounded to the nearest tenth):

Accepted Answer

A) 7.6. 
B) 11.4. 
C) 5.7. 
D) 3.8. 
A) 7.6. 
B) 11.4. 
C) 5.7. 
D) 3.8. A

Question 4

If Cara's Piano sales increased from $40,000 to $60,000 and its cost of goods sold increased from $20,000 to $40,000,then vertical analysis based on sales would show the following for cost of goods sold (rounded to the nearest percent):

Accepted Answer

A) 40% and 20%. 
B) 10% and 30%. 
C) 50% and 67%. 
D) 67% and 40%. 
A) 40% and 20%. 
B) 10% and 30%. 
C) 50% and 67%. 
D) 67% and 40%.

Question 5

Topiary's Unlimited has a cost of goods sold of $1,900,000.The beginning merchandise inventory was $125,000 and its ending merchandise inventory is $133,000.Topiary's merchandise inventory turnover ratio is:

Accepted Answer

A) 65.5 times. 
B) 33.8 times. 
C) 14.7 times. 
D) 0.1 times. 
A) 65.5 times. 
B) 33.8 times. 
C) 14.7 times. 
D) 0.1 times.

Question 6

Rick's Cars had a beginning account receivables balance of $325,000.The ending account receivables balance was $300,000.Net credit sales for the company were $4,200,000.The accounts receivable turnover for Rick's Cars is:

Accepted Answer

A) 12.92. 
B) 14. 
C) 13.44. 
D) None of the above are correct. 
A) 12.92. 
B) 14. 
C) 13.44. 
D) None of the above are correct.

Question 7

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & & \text { Asset } & & \
& \text { Liquidity } & \text { Management } & \text { Debt } & \text { Profitability } \
\hline \text { Current ratio } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 8

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Accepted Answer

A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis. 
A) comparative financial statements. 
B) common-size statements. 
C) cash flow analysis. 
D) horizontal analysis.

Question 9

Accounts receivable on January 1 was $30,000 and,at the end of the year it was $50,000.Net credit sales were $200,000.Accounts receivable turnover is:

Accepted Answer

A) 2.5 times. 
B) 4 times. 
C) 5 times. 
D) 6.67 times. 
A) 2.5 times. 
B) 4 times. 
C) 5 times. 
D) 6.67 times.

Question 10

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & & \text { Asset } & & \
& \text { Liquidity } & \text { Management } & \text { Debt } & \text { Profitability } \
\hline \text { Debt to total assets } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 11

If current assets are $75,000 and current liabilities are $15,000,the current ratio is:

Accepted Answer

A) 5:1. 
B) 0.2:1. 
C) 0.5:1. 
D) None of the above. 
A) 5:1. 
B) 0.2:1. 
C) 0.5:1. 
D) None of the above.

Question 12

If total assets are $6,000,what is the vertical analysis for Cash when it has a balance of $2,400?

Accepted Answer

A) 40% 
B) 60% 
C) 250% 
D) 25% 
A) 40% 
B) 60% 
C) 250% 
D) 25%

Question 13

The sales of Mary's Services for Years 1,2,and 3 are $25,000,$45,000,$60,000,respectively.The trend percentage for Year 3 is:

Accepted Answer

A) 42%. 
B) 240%. 
C) 140%. 
D) 58%. 
A) 42%. 
B) 240%. 
C) 140%. 
D) 58%.

Question 14

A common-size comparative statement shows:

Accepted Answer

A) percents. 
B) dollar increases/decreases. 
C) whole dollar amounts. 
D) None of the above. 
A) percents. 
B) dollar increases/decreases. 
C) whole dollar amounts. 
D) None of the above.

Question 15

Which of the following ratios measures the earnings of a company on each sales dollar?

Accepted Answer

A) Return on assets 
B) Return on sales 
C) Return on inventory 
D) Return on stockholders' equity 
A) Return on assets 
B) Return on sales 
C) Return on inventory 
D) Return on stockholders' equity

Question 16

Net income before taxes - preferred dividends divided by common stockholders' equity is the calculation for:

Accepted Answer

A) earnings per share. 
B) rate of return on stockholders' equity. 
C) rate of return on total assets. 
D) return on sales. 
A) earnings per share. 
B) rate of return on stockholders' equity. 
C) rate of return on total assets. 
D) return on sales.

Question 17

To find the percent of increase or decrease of an item in a comparative balance sheet you use the formula: % change = amount of change/base (old year).

Accepted Answer

A) True 
 B)False

Question 18

Scott Company had a current ratio of 2.76:1 in Year 1 and 2.57:1 in Year 2.This change in current ratio indicates:

Accepted Answer

A) the company's debt paying ability has improved. 
B) the company's debt paying ability has weakened. 
C) the company's customers are paying their accounts sooner. 
D) the company is able to sell its inventory faster. 
A) the company's debt paying ability has improved. 
B) the company's debt paying ability has weakened. 
C) the company's customers are paying their accounts sooner. 
D) the company is able to sell its inventory faster.

Question 19

An acid test (quick)ratio of 0.75 to 1 would indicate:

Accepted Answer

A) a ratio that would not allow a company to pay off all current liabilities with quick assets. 
B) for every $1 of short-term debt there is $0.75 of quick assets to meet short-term obligations. 
C) for every $1 of current assets there is $0.75 of short-term debt. 
D) Both A and B are correct. 
A) a ratio that would not allow a company to pay off all current liabilities with quick assets. 
B) for every $1 of short-term debt there is $0.75 of quick assets to meet short-term obligations. 
C) for every $1 of current assets there is $0.75 of short-term debt. 
D) Both A and B are correct.

Question 20

The ratio that indicates how many days it takes to turn accounts receivable into cash is the:

Accepted Answer

A) accounts receivable turnover ratio. 
B) average turnover ratio. 
C) average collection period. 
D) quick assets turnover ratio. 
A) accounts receivable turnover ratio. 
B) average turnover ratio. 
C) average collection period. 
D) quick assets turnover ratio.

Exam 22: Analyzing Financial Statements

If beginning and ending inventories are $100,000 and 150,000,respectively,and the cost of goods sold is $450,000,what is the inventory turnover ratio?

With a beginning Accounts Receivable balance of $70,000,an ending balance of $140,000,and net credit sales of $800,000,compute accounts receivable turnover ratio (rounded to the nearest tenth):

If Cara's Piano sales increased from $40,000 to $60,000 and its cost of goods sold increased from $20,000 to $40,000,then vertical analysis based on sales would show the following for cost of goods sold (rounded to the nearest percent):

Topiary's Unlimited has a cost of goods sold of $1,900,000.The beginning merchandise inventory was $125,000 and its ending merchandise inventory is $133,000.Topiary's merchandise inventory turnover ratio is:

Rick's Cars had a beginning account receivables balance of $325,000.The ending account receivables balance was $300,000.Net credit sales for the company were $4,200,000.The accounts receivable turnover for Rick's Cars is:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Current ratio

Comparative reports in which each item is expressed as a percentage of a base amount without dollar amounts are called:

Accounts receivable on January 1 was $30,000 and,at the end of the year it was $50,000.Net credit sales were $200,000.Accounts receivable turnover is:

For each of the following items, indicate by placing an X in the appropriate column whether it is a measure of: (column 1) liquidity, (column 2) asset management, (column 3) debt, or (column 4) profitability. - Asset Liquidity Management Debt Profitability Debt to total assets

If current assets are $75,000 and current liabilities are $15,000,the current ratio is:

If total assets are $6,000,what is the vertical analysis for Cash when it has a balance of $2,400?

The sales of Mary's Services for Years 1,2,and 3 are $25,000,$45,000,$60,000,respectively.The trend percentage for Year 3 is:

A common-size comparative statement shows:

Which of the following ratios measures the earnings of a company on each sales dollar?

Net income before taxes - preferred dividends divided by common stockholders' equity is the calculation for:

To find the percent of increase or decrease of an item in a comparative balance sheet you use the formula: % change = amount of change/base (old year).

Scott Company had a current ratio of 2.76:1 in Year 1 and 2.57:1 in Year 2.This change in current ratio indicates:

An acid test (quick)ratio of 0.75 to 1 would indicate:

The ratio that indicates how many days it takes to turn accounts receivable into cash is the:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

The Voucher System

Departmental Accounting

Manufacturing Accounting

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