Exam 4: Financial Reporting and Analysis

Return on assets is a better measure of profitability than profit margin because it takes into account the assets invested in the business.

Delivery expense is a selling expense on the income statement.

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

Which of the following appears on the balance sheet?

To obtain a slightly more accurate measure of net income,Gabrielli,Inc.,has determined that it must hire two full-time accountants.If it decides against the hiring,it has followed the convention of

The other revenues and expenses section of a multistep income statement could include all the following except

Use this information to answer the following question. Alcorn \& Zeto Company Income Statement For the Year Ended December 31, 2010 Revenues Net sales \1 00,000 Dividend income 7,000 Total revenues \1 07,000 Costs and expenses Costs of goods sold \ 30,000 Selling expenses 10,000 General and administrative expenses 13,750 Interest expense 6,250 Total costs and expenses 60,0000 Income before income taxes \ 47,000 Income taxes 19,500 Net income \ 27,500 If the income statement were prepared in a multistep form,excess of other expenses over other revenues would be

Which accounting convention could cause an overload of information for the financial statement user?

All the following are standards of accounting information except

The convention of full disclosure requires that financial statements present all the information relevant to users' understanding of the statements.

Which of the following is not expressed in terms of a percentage?

The debt to equity ratio equals

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. Abner Systems, Inc. Income Statement For the Year Ended December 31, 2010 Net sales \2 4,000 Costs of goods sold 8,000 Gross margin \1 6,000 Operating expenses 8,000 Income before income taxes \8 ,000 Income taxes 3,200 Net income \4 ,800 The return on assets for Abner Systems is

According to the FASB,the usefulness of accounting is judged by which of the following two prime qualitative characteristics of accounting information?

The following lettered items represent a classification scheme for a balance sheet,and the numbered items represent accounts.In the blank next to each account,write the letter indicating to which category it belongs. a. Current assets b. Investments c. Property, plant, and equipment h. Retained earnings d. Intangible assets i. Not on balance sheet e. Current liabilities f. Long-term liabilities g. Contributed capital h. Retained earnings i. Not on balance sheet

General and administrative expenses are a category of operating expense.

Use the information from the following single-step income statement to prepare a condensed multistep income statement in proper form. Midway Industries Income Statement For the Year Ended December 31, 2010 Net sales \1 0,000 Costs of goods sold 5,000 Gross margin \5 ,000 Operating expenses Selling expenses \3 ,000 General and administrative expenses 1,800 Total operating expenses 4,800 Income from operations \2 00 Other revenues and expenses Interest income \3 00 Less interest expense 800 Excess of other expenses over other revenues 500 Net (loss) ( \3 00)

Interest paid on bank loans is classified as cost of goods sold.

For a merchandising company,the difference between net sales and operating expenses is called gross margin.

The main difference between intangible assets and property,plant,and equipment is the length of the asset's life.