Question 1

Horizontal analysis is a technique used to evaluate a series of financial statement data over a period of time.

Accepted Answer

A) True 
 B)False

Question 2

The following information is from Megabux, Inc.'s annual report for the years ended December 31:
 
-Refer to the Megabux annual report above.Which of the following explains the change in the gross profit ratio over the three-year period?

Accepted Answer

A) Foreign competition has made it difficult to sell as many products as Megabux sold in the past. 
B) Megabux has raised its selling price per unit. 
C) Suppliers may have raised the prices that Megabux must pay for the goods that it sells,but Megabux has not passed the higher costs on to its customers with higher selling prices. 
D) This is a trick question.The gross profit ratio has not changed over the three-year period. 
A) Foreign competition has made it difficult to sell as many products as Megabux sold in the past. 
B) Megabux has raised its selling price per unit. 
C) Suppliers may have raised the prices that Megabux must pay for the goods that it sells,but Megabux has not passed the higher costs on to its customers with higher selling prices. 
D) This is a trick question.The gross profit ratio has not changed over the three-year period.

Question 3

Jack took the annual dividend of Team Shirts,which was $0.50 per share,and divided it by the market price of $17 per share.This came to 2.9%,which is the ________.

Accepted Answer

A) dividend per share 
B) earnings per share 
C) dividend yield 
D) dividend payout ratio 
A) dividend per share 
B) earnings per share 
C) dividend yield 
D) dividend payout ratio

Question 4

Alpha Enterprise has total current assets of $2,000,000 and total current liabilities of $800,000.If the company purchases $100,000 of inventory for cash,while none of its other assets and liabilities change,its current ratio will ________.

Accepted Answer

A) increase 
B) decrease 
C) stay the same 
D) The answer cannot be determined from the information given. 
A) increase 
B) decrease 
C) stay the same 
D) The answer cannot be determined from the information given.

Question 5

Use the information provided to analyze the solvency of T-Shirt City using the debt-to-equity ratio.

Accepted Answer

Debt-to-eq

Question 6

Comprehensive income includes ________.

Accepted Answer

A) revenues,expenses,and extraordinary items 
B) unrealized gains and losses from foreign currency transactions 
C) unrealized gains and losses on certain types of investments 
D) all of these 
A) revenues,expenses,and extraordinary items 
B) unrealized gains and losses from foreign currency transactions 
C) unrealized gains and losses on certain types of investments 
D) all of these

Question 7

Investors diversify in order to ________.

Accepted Answer

A) guarantee that they will earn a profit on their investments in stocks 
B) minimize the risks of stock ownership 
C) develop an appreciation of other cultures 
D) earn a lower rate of return for a given amount of risk 
A) guarantee that they will earn a profit on their investments in stocks 
B) minimize the risks of stock ownership 
C) develop an appreciation of other cultures 
D) earn a lower rate of return for a given amount of risk

Question 8

Indicate which of the following ratios should be used in each situation.Some ratios may be used more than once.Others may not be used at all.
a.solvency
b.profitability
c.market indicator
d.liquidity

Accepted Answer

The answer of Indicate which of the following ratios should...

Question 9

Investors can minimize risk by owning a diversified portfolio.

Accepted Answer

A) True 
 B)False

Question 10

Generally accepted accounting principles require that discontinued operations be reported as ________.

Accepted Answer

A) part of regular operations 
B) a before-tax line item separate from continuing operations 
C) an after-tax line item separate from continuing operations 
D) an extraordinary item 
A) part of regular operations 
B) a before-tax line item separate from continuing operations 
C) an after-tax line item separate from continuing operations 
D) an extraordinary item

Question 11

Available-for-sale securities are ________.

Accepted Answer

A) investments the company may hold or sell 
B) investments in debt securities that a company plans to hold until the securities mature 
C) investments in debt and equity securities that a company has purchased to make a short-term profit 
D) discretionary investments with a specific maturity date 
A) investments the company may hold or sell 
B) investments in debt securities that a company plans to hold until the securities mature 
C) investments in debt and equity securities that a company has purchased to make a short-term profit 
D) discretionary investments with a specific maturity date

Question 12

The following information is provided from EZ Electronics' annual report for the years ended December 31:

-Refer to the EZ Electronics annual report above.Using vertical analysis,2012 net income would be represented as ________.

Accepted Answer

A) 19% 
B) 100% 
C) 21% 
D) 22% 
A) 19% 
B) 100% 
C) 21% 
D) 22%

Question 13

The following information is from Acme's annual report for the years ended Dec. 31:
 
-Refer to the Acme annual report above.Calculate the current ratio for 2012.

Accepted Answer

A) 2.8 
B) 1.0 
C) 2.9 
D) 1.3 
A) 2.8 
B) 1.0 
C) 2.9 
D) 1.3

Question 14

Centrex Corporation purchased 500 shares of Pfizer stock at $50 per share.The managers of Centrex Corporation intend to sell the shares as soon as their target price is reached,which will probably be within the next three months.During the holding period,the market price of the stock went down $5 per share.How should Centrex account for the change in value?

Accepted Answer

A) A footnote describing the decline in value should be part of the financial statements. 
B) An unrealized loss of $2,500 should be shown on the income statement. 
C) A realized loss of $2,500 should be shown on the income statement. 
D) The decline should not be reported,since stock prices go up and down on a daily basis. 
A) A footnote describing the decline in value should be part of the financial statements. 
B) An unrealized loss of $2,500 should be shown on the income statement. 
C) A realized loss of $2,500 should be shown on the income statement. 
D) The decline should not be reported,since stock prices go up and down on a daily basis.

Question 15

Items included in other comprehensive income include realized gains and losses from foreign currency translation.

Accepted Answer

A) True 
 B)False

Question 16

In vertical analysis,each item in a financial statement is expressed as a percentage of a selected line on the statement.

Accepted Answer

A) True 
 B)False

Question 17

Lee's Lions had to shut down its store in Houston on July 31.This year's operating income or loss from the store before July 31 would be reported on the income statement as part of ________.

Accepted Answer

A) discontinued operations 
B) extraordinary items 
C) other revenues and expenses 
D) income from continuing operations 
A) discontinued operations 
B) extraordinary items 
C) other revenues and expenses 
D) income from continuing operations

Question 18

When a company disposes of a segment of a business,this year's operating income or loss from the segment is reported as part of ________.

Accepted Answer

A) discontinued operations 
B) extraordinary items 
C) other revenues and expenses 
D) changes in continuing operations 
A) discontinued operations 
B) extraordinary items 
C) other revenues and expenses 
D) changes in continuing operations

Question 19

Discontinuing a particular business segment is a non-recurring event,so it should be classified as an extraordinary item on the income statement.

Accepted Answer

A) True 
 B)False

Question 20

Which financial statement(s)do you need to calculate the asset turnover ratio?

Accepted Answer

A) only the income statement 
B) only the balance sheet 
C) both the income statement and the balance sheet 
D) both the statement of cash flows and the income statement 
A) only the income statement 
B) only the balance sheet 
C) both the income statement and the balance sheet 
D) both the statement of cash flows and the income statement

Horizontal analysis is a technique used to evaluate a series of financial statement data over a period of time.

The following information is from Megabux, Inc.'s annual report for the years ended December 31: -Refer to the Megabux annual report above.Which of the following explains the change in the gross profit ratio over the three-year period?

Jack took the annual dividend of Team Shirts,which was $0.50 per share,and divided it by the market price of $17 per share.This came to 2.9%,which is the ________.

Alpha Enterprise has total current assets of $2,000,000 and total current liabilities of $800,000.If the company purchases $100,000 of inventory for cash,while none of its other assets and liabilities change,its current ratio will ________.

Use the information provided to analyze the solvency of T-Shirt City using the debt-to-equity ratio.

Comprehensive income includes ________.

Investors diversify in order to ________.

Indicate which of the following ratios should be used in each situation.Some ratios may be used more than once.Others may not be used at all. a.solvency b.profitability c.market indicator d.liquidity

Investors can minimize risk by owning a diversified portfolio.

Generally accepted accounting principles require that discontinued operations be reported as ________.

Available-for-sale securities are ________.

The following information is provided from EZ Electronics' annual report for the years ended December 31: -Refer to the EZ Electronics annual report above.Using vertical analysis,2012 net income would be represented as ________.

The following information is from Acme's annual report for the years ended Dec. 31: -Refer to the Acme annual report above.Calculate the current ratio for 2012.

Items included in other comprehensive income include realized gains and losses from foreign currency translation.

In vertical analysis,each item in a financial statement is expressed as a percentage of a selected line on the statement.

Lee's Lions had to shut down its store in Houston on July 31.This year's operating income or loss from the store before July 31 would be reported on the income statement as part of ________.

When a company disposes of a segment of a business,this year's operating income or loss from the segment is reported as part of ________.

Discontinuing a particular business segment is a non-recurring event,so it should be classified as an extraordinary item on the income statement.

Which financial statement(s)do you need to calculate the asset turnover ratio?

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 10: Using Financial Statement Analysis to Evaluate Firm Performance

Horizontal analysis is a technique used to evaluate a series of financial statement data over a period of time.

The following information is from Megabux, Inc.'s annual report for the years ended December 31: -Refer to the Megabux annual report above.Which of the following explains the change in the gross profit ratio over the three-year period?

Jack took the annual dividend of Team Shirts,which was $0.50 per share,and divided it by the market price of $17 per share.This came to 2.9%,which is the ________.

Alpha Enterprise has total current assets of $2,000,000 and total current liabilities of $800,000.If the company purchases $100,000 of inventory for cash,while none of its other assets and liabilities change,its current ratio will ________.

Use the information provided to analyze the solvency of T-Shirt City using the debt-to-equity ratio.

Comprehensive income includes ________.

Investors diversify in order to ________.

Indicate which of the following ratios should be used in each situation.Some ratios may be used more than once.Others may not be used at all. a.solvency b.profitability c.market indicator d.liquidity

Investors can minimize risk by owning a diversified portfolio.

Generally accepted accounting principles require that discontinued operations be reported as ________.

Available-for-sale securities are ________.

The following information is provided from EZ Electronics' annual report for the years ended December 31: -Refer to the EZ Electronics annual report above.Using vertical analysis,2012 net income would be represented as ________.

The following information is from Acme's annual report for the years ended Dec. 31: -Refer to the Acme annual report above.Calculate the current ratio for 2012.

Items included in other comprehensive income include realized gains and losses from foreign currency translation.

In vertical analysis,each item in a financial statement is expressed as a percentage of a selected line on the statement.

Lee's Lions had to shut down its store in Houston on July 31.This year's operating income or loss from the store before July 31 would be reported on the income statement as part of ________.

When a company disposes of a segment of a business,this year's operating income or loss from the segment is reported as part of ________.

Discontinuing a particular business segment is a non-recurring event,so it should be classified as an extraordinary item on the income statement.

Which financial statement(s)do you need to calculate the asset turnover ratio?

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Quality of Earnings, corporate Governance, and Ifrs

Filters