Question 1

If the current credit terms are 2/10,n/30 for Jones Inc.,an accounts receivable turnover of 3 for the current year would be considered normal.

Accepted Answer

A) True 
 B)False

Question 2

The current ratio is computed by dividing current assets by .

Accepted Answer

A)  fixed assets
B)  inventories
C)  current liabilities
D)  accounts receivableE) B) and D)
F) All of the above

Question 3

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

Accepted Answer

A)  decrease.
B)  remain the same.
C)  neither increase nor decrease.
D)  increase.E) A) and D)
F) A) and B)

Question 4

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

Accepted Answer

A)  vertical analysis.
B)  horizontal analysis.
C)  liquidity analysis.
D)  solvency analysis.E) None of the above
F) B) and D) A

Question 5

A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:

Accepted Answer

A)  $400,000.
B)  $600,000.
C)  $800,000.
D)  $200,000.E) A) and D)
F) None of the above

Question 6

Condensed data taken from the ledger of Crawford Company at December 31,2016 and 2015,are as follows:

Accepted Answer

Crawford Company Comparative Balance She...

Question 7

The ability to convert assets into cash is called .

Accepted Answer

A)  Solvency
B)  Profitability
C)  Working capital
D)  LiquidityE) All of the above
F) A) and C)

Question 8

Which one of the following is not a characteristic generally evaluated in ratio analysis?

Accepted Answer

A)  Liquidity
B)  Profitability
C)  Solvency
D)  MarketabilityE) A) and D)
F) A) and C)

Question 9

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following measures the liquidity position of a corporation?

Accepted Answer

A)  Earnings per share
B)  Inventory turnover
C)  Current ratio
D)  Number of times interest charges earnedE) A) and C)
F) All of the above

Question 11

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

Accepted Answer

A) True 
 B)False  True

Question 12

The relationship of $320,000 to $200,000,expressed as a ratio,is:

Accepted Answer

A)  3.0 to 2.
B)  3.8 to 2.
C)  3.2 to 2.
D)  3.5 to 2.E) A) and C)
F) B) and C)

Question 13

Which of the following is included in the computation of the quick ratio?

Accepted Answer

A)  Prepaid rent
B)  Accounts receivable
C)  Inventory
D)  SuppliesE) All of the above
F) C) and D)

Question 14

The purpose of an audit is to:

Accepted Answer

A)  determine whether or not a company is a good investment.
B)  render an opinion on the fairness of the statements.
C)  determine whether or not a company complies with income tax regulations.
D)  determine whether or not a company has a good credit risk.E) B) and D)
F) None of the above

Question 15

The balance sheet and income statement for the year ended 2016 indicate the following:

Accepted Answer

A)  2.6
B)  3.6
C)  0.7
D)  2.9E) C) and D)
F) B) and C)

Question 16

The percentage analysis of the relationship of each component in a financial statement to a total within the statement is referred as vertical analysis.

Accepted Answer

A) True 
 B)False  True

Question 17

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred as:

Accepted Answer

A)  leverage.
B)  solvency.
C)  yield.
D)  quick assets.E) C) and D)
F) A) and D)

Question 18

What type of analysis is indicated by the following?

Accepted Answer

A)  Vertical analysis
B)  Horizontal analysis
C)  Liquidity analysis
D)  Common-size analysisE) A) and B)
F) None of the above

Question 19

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is an analysis used in assessing solvency?

Accepted Answer

A)  Accounts receivable analysis
B)  Fixed assets turnover
C)  Earnings per share
D)  P/E ratioE) A) and C)
F) B) and D)

Exam 9: Financial Statement Analysis

If the current credit terms are 2/10,n/30 for Jones Inc.,an accounts receivable turnover of 3 for the current year would be considered normal.

Correct AnswerverifiedShow Answer

The current ratio is computed by dividing current assets by .

Correct AnswerverifiedShow Answer

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

Correct AnswerverifiedShow Answer

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

Correct AnswerverifiedA

A company with working capital of $600,000 and a current ratio of 3.25 pays a $200,000 short-term liability.The amount of working capital immediately after payment is:

Correct AnswerverifiedShow Answer

Condensed data taken from the ledger of Crawford Company at December 31,2016 and 2015,are as follows:

Correct AnswerverifiedCrawford Company Comparative Balance She...View AnswerShow Answer

The ability to convert assets into cash is called .

Correct AnswerverifiedShow Answer

Which one of the following is not a characteristic generally evaluated in ratio analysis?

Correct AnswerverifiedShow Answer

Assuming that the quantities of inventory on hand during the current year were sufficient to meet all demands for sales,a decrease in the inventory turnover for the current year when compared with the turnover for the preceding year indicates an improvement in the management of inventory.

Correct AnswerverifiedShow Answer

Which of the following measures the liquidity position of a corporation?

Correct AnswerverifiedShow Answer

A decrease in the ratio of liabilities to stockholders' equity indicates an improvement in the margin of safety for creditors.

Correct AnswerverifiedTrue

The relationship of $320,000 to $200,000,expressed as a ratio,is:

Correct AnswerverifiedShow Answer

Which of the following is included in the computation of the quick ratio?

Correct AnswerverifiedShow Answer

The purpose of an audit is to:

Correct AnswerverifiedShow Answer

The balance sheet and income statement for the year ended 2016 indicate the following:

Correct AnswerverifiedShow Answer

The percentage analysis of the relationship of each component in a financial statement to a total within the statement is referred as vertical analysis.

Correct AnswerverifiedTrue

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred as:

Correct AnswerverifiedShow Answer

What type of analysis is indicated by the following?

Correct AnswerverifiedShow Answer

The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Correct AnswerverifiedShow Answer

Which of the following is an analysis used in assessing solvency?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
Crawford Company Comparative Balance She...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified