Question 1

United Products began the year with an Accounts Receivable balance of $250,000,and had a year-end balance of $280,000.Credit sales of $800,000 generated a gross profit of $150,000.Calculate the receivables turnover ratio for the year.

Accepted Answer

The answer of United Products began the year with an...

Question 2

Richard's Sporting Goods reports net income of $100,000,net sales of $500,000,and average assets of $1,000,000.The asset turnover is:

Accepted Answer

A)  0.1 times.
B)  0.5 times.
C)  2 times.
D)  5 times.E) B) and C)
F) A) and B)

Question 3

Use the following information to answer the next ten questions:
Excerpts from TPX Company's December 31,2015 and 2014,financial statements are presented below:
 
-TPX Company's 2015 profit margin is:

Accepted Answer

A)  18.8%.
B)  9.0%.
C)  19.4%.
D)  15.1%.E) A) and B)
F) All of the above

Question 4

Horizontal analysis examines trends in a company

Accepted Answer

A)  Over time.
B)  Between income statement accounts in the same year.
C)  Between balance sheet accounts in the same year.
D)  Between income statement and balance sheet accounts in the same year.E) A) and B)
F) B) and C)

Question 5

Use the following information to answer the next ten questions:
Excerpts from Stealth Company's December 31,2015 and 2014,financial statements are presented below:
 
-Stealth Company's 2015 receivables turnover ratio is:

Accepted Answer

A)  2.85.
B)  4.70.
C)  5.00.
D)  10.63.E) All of the above
F) B) and C)

Question 6

We report any profits or losses on discontinued operations in the current year,separately from profits and losses on the portion of the business that will continue.

Accepted Answer

A) True 
 B)False

Question 7

A low current ratio indicates that a company has sufficient current assets to pay current liabilities as they become due.

Accepted Answer

A) True 
 B)False

Question 8

Define earnings persistence.How does earnings persistence relate to the reporting of discontinued operations and extraordinary items?

Accepted Answer

Earnings persistence is the ability of c...

Question 9

We use the times interest earned ratio to compare interest payments with a company's income available to pay those charges.

Accepted Answer

A) True 
 B)False

Question 10

Use the following information to answer the next ten questions:
Excerpts from Stealth Company's December 31,2015 and 2014,financial statements are presented below:
 
-Stealth Company's 2015 average days in inventory is:

Accepted Answer

A)  60.5 days.
B)  92.2 days.
C)  100.8 days.
D)  89.7 days.E) B) and C)
F) A) and B)

Question 11

To be an extraordinary item,an event that produces a gain or loss must be either unusual in nature or infrequent in occurrence.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an example of horizontal analysis?

Accepted Answer

A)  Comparing COGS with sales.
B)  Comparing net income across companies.
C)  Comparing debt with equity.
D)  Comparing the growth in sales over time.E) A) and C)
F) B) and C)

Question 13

We can use ratios to help evaluate a firm's performance and financial position.

Accepted Answer

A) True 
 B)False

Question 14

Using horizontal analysis,if the base year is negative and the following year is positive,the percentage change is just as useful as if the base year and the following year were both positive.

Accepted Answer

A) True 
 B)False

Question 15

Conservative accounting practices are those that result in reporting higher income,higher assets,and lower liabilities.

Accepted Answer

A) True 
 B)False

Question 16

If an item meets one but not both criteria for extraordinary item treatment,it is correctly excluded from extraordinary items and included with other revenue and expenses.

Accepted Answer

A) True 
 B)False

Question 17

Aggressive accounting practices result in reporting higher income,higher assets,and lower liabilities.

Accepted Answer

A) True 
 B)False

Question 18

Use the following information to answer the next ten questions:
Excerpts from TPX Company's December 31,2015 and 2014,financial statements are presented below:
 
-TPX Company's 2015 return on assets is:

Accepted Answer

A)  48.2%.
B)  9.3%.
C)  8.8%.
D)  9.0%.E) A) and C)
F) A) and B)

Question 19

An extraordinary item must meet which of the following criteria?

Accepted Answer

A)  Unusual in nature.
B)  Infrequent in occurrence.
C)  Unusual in nature and infrequent in occurrence.
D)  Unusual in nature or infrequent in occurrence.E) All of the above
F) A) and D)

Question 20

Which of the following is not a common type of comparison in accounting?

Accepted Answer

A)  Comparisons of sales growth between companies.
B)  Comparisons of earnings per share between companies.
C)  Comparisons of earnings this year with earnings for the same company last year.
D)  Comparisons to industry.E) A) and B)
F) All of the above

Exam 12: Financial Statement Analysis

Define earnings persistence.How does earnings persistence relate to the reporting of discontinued operations and extraordinary items?

Correct AnswerverifiedEarnings persistence is the ability of c...View AnswerShow Answer

We can use ratios to help evaluate a firm's performance and financial position.

Correct AnswerverifiedShow Answer

Using horizontal analysis,if the base year is negative and the following year is positive,the percentage change is just as useful as if the base year and the following year were both positive.

Correct AnswerverifiedShow Answer

We report any profits or losses on discontinued operations in the current year,separately from profits and losses on the portion of the business that will continue.

Correct AnswerverifiedShow Answer

A low current ratio indicates that a company has sufficient current assets to pay current liabilities as they become due.

Correct AnswerverifiedShow Answer

Use the following information to answer the next ten questions: Excerpts from TPX Company's December 31,2015 and 2014,financial statements are presented below: -TPX Company's 2015 profit margin is:

Correct AnswerverifiedShow Answer

Use the following information to answer the next ten questions: Excerpts from Stealth Company's December 31,2015 and 2014,financial statements are presented below: -Stealth Company's 2015 receivables turnover ratio is:

Correct AnswerverifiedShow Answer

To be an extraordinary item,an event that produces a gain or loss must be either unusual in nature or infrequent in occurrence.

Correct AnswerverifiedShow Answer

Aggressive accounting practices result in reporting higher income,higher assets,and lower liabilities.

Correct AnswerverifiedShow Answer

United Products began the year with an Accounts Receivable balance of $250,000,and had a year-end balance of $280,000.Credit sales of $800,000 generated a gross profit of $150,000.Calculate the receivables turnover ratio for the year.

Correct AnswerverifiedShow Answer

If an item meets one but not both criteria for extraordinary item treatment,it is correctly excluded from extraordinary items and included with other revenue and expenses.

Correct AnswerverifiedShow Answer

Horizontal analysis examines trends in a company

Correct AnswerverifiedShow Answer

Richard's Sporting Goods reports net income of $100,000,net sales of $500,000,and average assets of $1,000,000.The asset turnover is:

Correct AnswerverifiedShow Answer

Use the following information to answer the next ten questions: Excerpts from Stealth Company's December 31,2015 and 2014,financial statements are presented below: -Stealth Company's 2015 average days in inventory is:

Correct AnswerverifiedShow Answer

Which of the following is not a common type of comparison in accounting?

Correct AnswerverifiedShow Answer

Which of the following is an example of horizontal analysis?

Correct AnswerverifiedShow Answer

An extraordinary item must meet which of the following criteria?

Correct AnswerverifiedShow Answer

We use the times interest earned ratio to compare interest payments with a company's income available to pay those charges.

Correct AnswerverifiedShow Answer

Conservative accounting practices are those that result in reporting higher income,higher assets,and lower liabilities.

Correct AnswerverifiedShow Answer

Use the following information to answer the next ten questions: Excerpts from TPX Company's December 31,2015 and 2014,financial statements are presented below: -TPX Company's 2015 return on assets is:

Correct AnswerverifiedShow Answer

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Earnings persistence is the ability of c...
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