Question 1

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

A)   within a period of time.
B)   over a period of time.
C)   on a certain date.
D)   as it may appear in the future.E) C) and D)
F) None of the above

Question 2

Salamagundi, Inc. has the following Income Statement (in millions) : SALAMAGUNDI, INC.
Income Statement
For the Year Ended December 31, 2017
  Net Sales $160 Cost of Goods Sold 100 Gross Profit 60 Operating Expenses 40 Net Income $20\begin{array}{lr}	ext { Net Sales } & \$ 160 \	ext { Cost of Goods Sold } & 100 \	ext { Gross Profit } & 60 \	ext { Operating Expenses } & 40 \	ext { Net Income } & \$ 20\end{array} Net Sales  Cost of Goods Sold  Gross Profit  Operating Expenses  Net Income ​$1601006040$20​  Using vertical analysis, what percentage is assigned to net sales?

Accepted Answer

A)   160%
B)   Can't be computed.
C)   60%
D)   100% E) A) and D)
F) A) and C)

Question 3

Horizontal analysis is also known as

Accepted Answer

A)   linear analysis.
B)   vertical analysis.
C)   trend analysis.
D)   common size analysis.E) C) and D)
F) A) and C)

Question 4

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.  What is the return on common stockholders' equity for this company?

Accepted Answer

A)   25.8%
B)   12.9%
C)   22.6%
D)   32.3%E) None of the above
F) A) and B)

Question 5

All of the following are ways that a company's current ratio would decrease except

Accepted Answer

A)   purchasing inventory on account.
B)   adding equal amounts to the numerator and denominator.
C)   paying off one-third of its accounts payable.
D)   paying cash for new equipment.E) C) and D)
F) B) and C)

Question 6

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Accepted Answer

A) True 
 B)False

Question 7

Match the ratios with their formulas by entering the appropriate letter in the space provided. 
-
365 days/Accounts receivable turnover

Accepted Answer

A)  Current ratio
B)  Price-earnings ratio
C)  Profit margin
D)  Asset turnover
E)  Earnings per shareF) Times interest earnedG) Inventory turnoverH) Average collection periodI) Days in inventoryJ) Payout ratioK) D) and I)
L) A) and E)

Question 8

In reporting discontinued operations, the income statement should show in a special section 1. gains on the disposal of a discontinued component. 2. losses on the disposal of a discontinued component.

Accepted Answer

A)   1 only.
B)   2 only.
C)   neither 1 nor 2.
D)   both 1 and 2.E) C) and D)
F) A) and B)

Question 9

Assume the following sales data for a company:  2018$960,0002017750,0002016600,000\begin{array} { l r } 2018 & \$ 960,000 \2017 & 750,000 \2016 & 600,000\end{array}201820172016​$960,000750,000600,000​  If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Accepted Answer

A)   60%
B)   25%
C)   125%
D)   160% E) B) and C)
F) A) and D)

Question 10

Which situation below might indicate a company has a low quality of earnings?

Accepted Answer

A)   Revenue is recorded when recognized
B)   Repair costs are capitalized and then depreciated.
C)   The financial statements are prepared in accordance with generally accepted accounting principles.
D)   The same accounting principles are used each year.E) None of the above
F) All of the above

Question 11

Assume the following sales data for a company:  2018$980,0002017875,0002016700,000\begin{array} { l r } 2018 & \$ 980,000 \2017 & 875,000 \2016 & 700,000\end{array}201820172016​$980,000875,000700,000​  If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Accepted Answer

A)   140%
B)   125%
C)   40%
D)   25% E) All of the above
F) A) and B)

Question 12

The following information is available for Patterson Company:  20172016 Accounts receivable $360,000$340,000 Inventory 280,000320,000 Net credit sales 3,150,0002,600,000 Cost of goods sold 1,800,000840,000 Net income 300,000170,000\begin{array}{lrr}&2017&2016\	ext { Accounts receivable } & \$ 360,000 & \$ 340,000 \	ext { Inventory } & 280,000 & 320,000 \	ext { Net credit sales } & 3,150,000 & 2,600,000 \	ext { Cost of goods sold } & 1,800,000 & 840,000 \	ext { Net income } & 300,000 & 170,000\end{array} Accounts receivable  Inventory  Net credit sales  Cost of goods sold  Net income ​2017$360,000280,0003,150,0001,800,000300,000​2016$340,000320,0002,600,000840,000170,000​  The accounts receivable turnover for 2017 is

Accepted Answer

A)   8.8 times.
B)   4.5 times.
C)   9.0 times.
D)   9.3 times. E) B) and C)
F) A) and B)

Question 13

Belcanto Corporation experienced a fire on December 31, 2017, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances.  Additional information:
1. The inventory turnover is 4.2 times
2. The return on common stockholders' equity is 14%. The company had no additional paid-in-capital.
3. The accounts receivable turnover is 10.2 times.
4. The return on assets is 12.5%.
5. Total assets, Dec. 31, 2016 = $604,750.
Instructions
Compute the following values for 2017.
(a) Cost of goods sold.
(b) Net credit sales.
(c) Net income.
(d) Total assets.

Accepted Answer

The answer of Belcanto Corporation experienced a fire on December...

Question 14

The best way to study the relationship of the components within a financial statement is to prepare

Accepted Answer

A)   common size statements.
B)   a trend analysis.
C)   profitability analysis.
D)   ratio analysis.E) A) and B)
F) None of the above

Question 15

Match the ratios with their formulas by entering the appropriate letter in the space provided. 
-
Cash dividends declared on common stock/Net income

Accepted Answer

A)  Current ratio
B)  Price-earnings ratio
C)  Profit margin
D)  Asset turnover
E)  Earnings per shareF) Times interest earnedG) Inventory turnoverH) Average collection periodI) Days in inventoryJ) Payout ratioK) A) and B)
L) H) and I)

Question 16

The following ratios have been computed for Southern Company for 2017.  The 2017 financial statements for Southern Company with missing information follows:    Instructions
Use the above ratios and information from the Southern Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.

Accepted Answer

(1) Net income = $40000; ($200000 × 20...

Question 17

The ratios that are used to determine a company's short-term debt paying ability are

Accepted Answer

A)   asset turnover, times interest earned, current ratio, and accounts receivables turnover.
B)   times interest earned, inventory turnover, current ratio, and receivables turnover.
C)   times interest earned, accounts receivable turnover ratio, current ratio, and inventory turnover.
D)   current ratio, account receivable turnover, and inventory turnover.E) None of the above
F) All of the above

Question 18

Explain sustainable income. What relationship does this concept have to the treatment of irregular items on the income statement?

Accepted Answer

Sustainable income is defined as the mos...

Question 19

Which of the following would be considered an "Other Comprehensive Income" item?

Accepted Answer

A)   Net income
B)   Gain on disposal of discontinued operations
C)   Other revenues and gains
D)   Unrealized loss on available-for-sale securitiesE) None of the above
F) A) and B)

Question 20

Match the ratios with their formulas by entering the appropriate letter in the space provided. 
-
365 days/Inventory turnover

Accepted Answer

A)  Current ratio
B)  Price-earnings ratio
C)  Profit margin
D)  Asset turnover
E)  Earnings per shareF) Times interest earnedG) Inventory turnoverH) Average collection periodI) Days in inventoryJ) Payout ratioK) D) and I)
L) C) and G)

Exam 13: Financial Statement Analysis

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Correct Answer
verified

In reporting discontinued operations, the income statement should show in a special section 1. gains on the disposal of a discontinued component. 2. losses on the disposal of a discontinued component.

Correct Answer
verified

Which situation below might indicate a company has a low quality of earnings?

Correct Answer
verified

Horizontal analysis is also known as

Correct Answer
verified

Match the ratios with their formulas by entering the appropriate letter in the space provided. - 365 days/Accounts receivable turnover

Correct Answer
verified

Match the ratios with their formulas by entering the appropriate letter in the space provided. - 365 days/Inventory turnover

Correct Answer
verified

The ratios that are used to determine a company's short-term debt paying ability are

Correct Answer
verified

All of the following are ways that a company's current ratio would decrease except

Correct Answer
verified

Correct Answer
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(1) Net income = $40000; ($200000 × 20...
View Answer

The best way to study the relationship of the components within a financial statement is to prepare

Correct Answer
verified

Explain sustainable income. What relationship does this concept have to the treatment of irregular items on the income statement?

Correct Answer
verified
Sustainable income is defined as the mos...
View Answer

Correct Answer
verified

Assume the following sales data for a company: $\begin{array} { l r } 2018 & \$ 960,000 \\2017 & 750,000 \\2016 & 600,000\end{array}$ If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Correct Answer
verified

Horizontal analysis is a technique for evaluating financial statement data

Correct Answer
verified

Match the ratios with their formulas by entering the appropriate letter in the space provided. - Cash dividends declared on common stock/Net income

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Assume the following sales data for a company: $\begin{array} { l r } 2018 & \$ 980,000 \\2017 & 875,000 \\2016 & 700,000\end{array}$ If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Correct Answer
verified

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

Correct Answer
verified

Which of the following would be considered an "Other Comprehensive Income" item?

Correct Answer
verified

Exam 13: Financial Statement Analysis

In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.

Correct AnswerverifiedShow Answer

In reporting discontinued operations, the income statement should show in a special section 1. gains on the disposal of a discontinued component. 2. losses on the disposal of a discontinued component.

Correct AnswerverifiedShow Answer

Which situation below might indicate a company has a low quality of earnings?

Correct AnswerverifiedShow Answer

Horizontal analysis is also known as

Correct AnswerverifiedShow Answer

Match the ratios with their formulas by entering the appropriate letter in the space provided. - 365 days/Accounts receivable turnover

Correct AnswerverifiedShow Answer

Match the ratios with their formulas by entering the appropriate letter in the space provided. - 365 days/Inventory turnover

Correct AnswerverifiedShow Answer

The ratios that are used to determine a company's short-term debt paying ability are

Correct AnswerverifiedShow Answer

All of the following are ways that a company's current ratio would decrease except

Correct AnswerverifiedShow Answer

Correct Answerverified (1) Net income = $40000; ($200000 × 20...View AnswerShow Answer

The best way to study the relationship of the components within a financial statement is to prepare

Correct AnswerverifiedShow Answer

Explain sustainable income. What relationship does this concept have to the treatment of irregular items on the income statement?

Correct AnswerverifiedSustainable income is defined as the mos...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Assume the following sales data for a company: 2018$960,0002017750,0002016600,000\begin{array} { l r } 2018 & \$ 960,000 \\2017 & 750,000 \\2016 & 600,000\end{array}201820172016​$960,000750,000600,000​ If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Correct AnswerverifiedShow Answer

Horizontal analysis is a technique for evaluating financial statement data

Correct AnswerverifiedShow Answer

Match the ratios with their formulas by entering the appropriate letter in the space provided. - Cash dividends declared on common stock/Net income

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume the following sales data for a company: 2018$980,0002017875,0002016700,000\begin{array} { l r } 2018 & \$ 980,000 \\2017 & 875,000 \\2016 & 700,000\end{array}201820172016​$980,000875,000700,000​ If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Correct AnswerverifiedShow Answer

The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What is the return on common stockholders' equity for this company?

Correct AnswerverifiedShow Answer

Which of the following would be considered an "Other Comprehensive Income" item?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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(1) Net income = $40000; ($200000 × 20...
View Answer

Correct Answer
verified

Correct Answer
verified
Sustainable income is defined as the mos...
View Answer

Correct Answer
verified

Assume the following sales data for a company: $\begin{array} { l r } 2018 & \$ 960,000 \\2017 & 750,000 \\2016 & 600,000\end{array}$ If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Assume the following sales data for a company: $\begin{array} { l r } 2018 & \$ 980,000 \\2017 & 875,000 \\2016 & 700,000\end{array}$ If 2016 is the base year, what is the percentage increase in sales from 2016 to 2017?

Correct Answer
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Correct Answer
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Correct Answer
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