Question 1

In a trend analysis, an index number of 139 for 2009 sales indicates that

Accepted Answer

A)  sales for 2009 were 139 percent higher than sales for the same company in the base year. 
B)  sales for 2009 for this company were 139 percent of the sales figure of another company being used in the comparison. 
C)  sales for 2009 were 139 percent of the sales for the same company in the base year. 
D)  actual sales for 2009 exceeded budgeted sales for 2009 by 39 percent. 
A)  sales for 2009 were 139 percent higher than sales for the same company in the base year. 
B)  sales for 2009 for this company were 139 percent of the sales figure of another company being used in the comparison. 
C)  sales for 2009 were 139 percent of the sales for the same company in the base year. 
D)  actual sales for 2009 exceeded budgeted sales for 2009 by 39 percent.

Question 2

Financial performance measurement is useful for all of the following except assessment of

Accepted Answer

A)  accounting methods. 
B)  return by investors. 
C)  risk by creditors. 
D)  risk by investors. 
A)  accounting methods. 
B)  return by investors. 
C)  risk by creditors. 
D)  risk by investors.

Question 3

Vertical analysis will result in common-size statements.

Accepted Answer

A) True 
 B)False

Question 4

Liquidity ratios are an indication of a company's

Accepted Answer

A)  ability to effectively employ its resources. 
B)  overall debt to equity position. 
C)  overall debt position. 
D)  ability to pay bills when they are due and to meet unexpected needs for cash. 
A)  ability to effectively employ its resources. 
B)  overall debt to equity position. 
C)  overall debt position. 
D)  ability to pay bills when they are due and to meet unexpected needs for cash.

Question 5

The following selected amounts were extracted from the financial statements of Flamingo Corporation.
   Prepare a trend analysis for net sales, cost of goods sold, and gross margin. (Round answers to the nearest tenth of 1 percent.) Use Year 1 as the base year.

Accepted Answer

The answer of The following selected amounts were extracted from...

Question 6

Reports made to the SEC by public companies are often more comprehensive than those issued to the public.

Accepted Answer

A) True 
 B)False

Question 7

Lois Kent has owned and managed the operations of a small chain of sporting goods stores for the past two years. She has asked her administrative assistant to provide her with some annual reports of other companies that sell sporting goods as well as some published reports showing norms for the sporting goods industry so that Lois can compare the financial ratios of her company with those of other companies that sell sporting goods. Discuss the limitations of using comparisons with other companies and industry norms, which Lois needs to remember.

Accepted Answer

Lois can learn some important things abo

Question 8

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures.     What is the inventory turnover for this corporation? Round your answer to one decimal place.

Accepted Answer

A)  1.2 times 
B)  1.6 times 
C)  2.4 times 
D)  4.0 times 
A)  1.2 times 
B)  1.6 times 
C)  2.4 times 
D)  4.0 times

Question 9

Interim financial statements are subjected to a full audit by an independent auditor.

Accepted Answer

A) True 
 B)False

Question 10

The comparison of financial measures or ratios of the same company over a period of times is superior to the use of rule-of-thumb measures.

Accepted Answer

A) True 
 B)False

Question 11

What is the effect of the payment of an account payable on the current ratio and the quick ratio, respectively? (Assume the current ratio was 2.3 times and the quick ratio was 2.1 times before this transaction.)

Accepted Answer

A)  Decrease in current ratio; no effect on quick ratio 
B)  Increase in current ratio; increase in quick ratio 
C)  No effect on current ratio; no effect on quick ratio 
D)  Decrease in current ratio; decrease in quick ratio 
A)  Decrease in current ratio; no effect on quick ratio 
B)  Increase in current ratio; increase in quick ratio 
C)  No effect on current ratio; no effect on quick ratio 
D)  Decrease in current ratio; decrease in quick ratio

Question 12

Holiday Corporation provided these figures for the year ended December 31, 2009: Cost of goods sold, $516,117; change in inventory, $67,483 decrease; average accounts payable, $58,209.
What is the company's payables turnover? Round your answer to one decimal place.

Accepted Answer

A)  8.3 times 
B)  7.7 times 
C)  10.1 times 
D)  7.2 times 
A)  8.3 times 
B)  7.7 times 
C)  10.1 times 
D)  7.2 times

Question 13

Cash flows to sales and cash flows to assets are measured in terms of

Accepted Answer

A)  times. 
B)  a percentage. 
C)  dollars. 
D)  days. 
A)  times. 
B)  a percentage. 
C)  dollars. 
D)  days.

Question 14

Trend analysis requires the establishment of a base year for comparison purposes.

Accepted Answer

A) True 
 B)False

Question 15

a. Indicate the effect of a sale of merchandise on account (on credit) on each of the following items. Assume the selling price exceeds the cost of the inventory. Use "Increase," "Decrease," or "No effect" to express your answer for each, and place your answers in the spaces provided.
 $\begin{array}{|l|l|}
\hline \text { Current ratio } &\quad\quad\quad\quad \
\hline \text { Quick ratio } & \
\hline \text { Inventory turnover } & \
\hline \text { Asset turnover } & \
\hline
\end{array}$ 
b. Indicate the effect of a payment of an account payable on each of the following items. Assume that the first two ratios exceeded 1.0 before the transaction. Use "Increase," "Decrease," or "No effect" to express your answer for each, and place your answers in the spaces provided.
 $\begin{array}{|l|l|}
\hline \text { Current ratio } &\quad\quad\quad\quad \
\hline \text { Quick ratio } & \
\hline \text { Return on equity } & \
\hline \text { Receivable turnover } & \
\hline
\end{array}$

Accepted Answer

The answer of a. Indicate the effect of a sale...

Question 16

In a common-size income statement, each item is expressed as a percentage of net sales.

Accepted Answer

A) True 
 B)False

Question 17

Horizontal analysis will reveal the percentage of net sales consumed by salaries expense.

Accepted Answer

A) True 
 B)False

Question 18

A common measure of liquidity is

Accepted Answer

A)  profit margin. 
B)  receivable turnover. 
C)  return on assets. 
D)  asset turnover. 
A)  profit margin. 
B)  receivable turnover. 
C)  return on assets. 
D)  asset turnover.

Question 19

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures.     What is the receivable turnover for this corporation? Round your answer to one decimal place.

Accepted Answer

A)  8.0 times 
B)  6.0 times 
C)  4.8 times 
D)  1.8 times 
A)  8.0 times 
B)  6.0 times 
C)  4.8 times 
D)  1.8 times

Question 20

Companies file their quarterly reports with the SEC on Form 8K.

Accepted Answer

A) True 
 B)False

Exam 16: Financial Performance Measurement

In a trend analysis, an index number of 139 for 2009 sales indicates that

Financial performance measurement is useful for all of the following except assessment of

Vertical analysis will result in common-size statements.

Liquidity ratios are an indication of a company's

The following selected amounts were extracted from the financial statements of Flamingo Corporation. Prepare a trend analysis for net sales, cost of goods sold, and gross margin. (Round answers to the nearest tenth of 1 percent.) Use Year 1 as the base year.

Reports made to the SEC by public companies are often more comprehensive than those issued to the public.

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures. What is the inventory turnover for this corporation? Round your answer to one decimal place.

Interim financial statements are subjected to a full audit by an independent auditor.

The comparison of financial measures or ratios of the same company over a period of times is superior to the use of rule-of-thumb measures.

What is the effect of the payment of an account payable on the current ratio and the quick ratio, respectively? (Assume the current ratio was 2.3 times and the quick ratio was 2.1 times before this transaction.)

Holiday Corporation provided these figures for the year ended December 31, 2009: Cost of goods sold, $516,117; change in inventory, $67,483 decrease; average accounts payable, $58,209. What is the company's payables turnover? Round your answer to one decimal place.

Cash flows to sales and cash flows to assets are measured in terms of

Trend analysis requires the establishment of a base year for comparison purposes.

In a common-size income statement, each item is expressed as a percentage of net sales.

Horizontal analysis will reveal the percentage of net sales consumed by salaries expense.

A common measure of liquidity is

Following are the financial statements for Starman Corporation for the year ended December 31, 2009. Assume that all balance sheet amounts represent both average and ending figures. What is the receivable turnover for this corporation? Round your answer to one decimal place.

Companies file their quarterly reports with the SEC on Form 8K.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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