Question 1

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

Accepted Answer

A)   a substitute for sound judgment.
B)   useful analytical measures.
C)   enough information for analysis, industry information is not needed.
D)   unnecessary for analysis, but reaction is better.E) None of the above
F) B) and D)

Question 2

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

Accepted Answer

A) True 
 B)False

Question 3

Define solvency and profitability. How are they alike?

Accepted Answer

Solvency is the ability of a company to ...

Question 4

Which of the following is required by the Sarbanes-Oxley Act of 2002?

Accepted Answer

A)   A price-earnings ratio.
B)   A report on internal control.
C)   A vertical analysis.
D)   A common-sized statement.E) A) and B)
F) B) and C)

Question 5

When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard.

Accepted Answer

A) True 
 B)False

Question 6

In a common size income statement, the 100% figure is:

Accepted Answer

A)   net cost of goods sold.
B)   net income.
C)   gross profit.
D)   net sales.E) A) and D)
F) B) and C)

Question 7

Hsu Company reported the following on its income statement:  An analysis of the income statement revealed that interest expense was $80,000. Hsu Company's times interest earned was

Accepted Answer

A)   8 times.
B)   6.25 times.
C)   5.25 times.
D)   5 times.E) C) and D)
F) None of the above

Question 8

Balance sheet and income statement data indicate the following:  Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point) ?

Accepted Answer

A)   3.7
B)   4.4
C)   4.5
D)   3.5E) None of the above
F) B) and D)

Question 9

An advantage of the current ratio is that it considers the makeup of the current assets.

Accepted Answer

A) True 
 B)False

Question 10

Horizontal analysis is a technique for evaluating financial statement data

Accepted Answer

A)   for one period of time.
B)   over a period of time.
C)   on a certain date.
D)   as it may appear in the future.E) A) and C)
F) B) and C)

Question 11

The denominator of the rate of return on total assets ratio is the average total assets.

Accepted Answer

A) True 
 B)False

Question 12

The following items are reported on a company's balance sheet:
 
 Required:
Determine (1) the current ratio and (2) the quick ratio. Round to one decimal place.

Accepted Answer

The answer of The following items are reported on a...

Question 13

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following should be classified as an extraordinary item on the income statement?

Accepted Answer

A)   Gain on a sale of a long term investment.
B)   Loss due to discontinued operations.
C)   Restructuring charges.
D)   Loss resulting from an infrequent natural disaster.E) None of the above
F) All of the above

Question 15

The Cash and Accounts Receivable for a company are provided below:
  Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

Accepted Answer

The answer of The Cash and Accounts Receivable for a...

Question 16

When a company changes from one acceptable accounting method to another, the change is reported

Accepted Answer

A)   in the statement of retained earnings, as a correction to the beginning balance.
B)   in the income statement, below income from continuing operations.
C)   in the income statement, above income from continuing operations
D)   through a retroactive restatement of prior period earnings.E) None of the above
F) A) and C)

Question 17

If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.

Accepted Answer

A) True 
 B)False

Question 18

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.

Accepted Answer

A) True 
 B)False

Question 19

A company reports the following:
  Determine the (a) accounts receivable turnover, and (b) number of days' sales in receivables. Round your answer to one decimal place.

Accepted Answer

The answer of A company reports the following:
  Determine...

Question 20

An extraordinary item must be either unusual in nature or infrequent in occurrence.

Accepted Answer

A) True 
 B)False

Exam 15: Financial Statement Analysis

The Cash and Accounts Receivable for a company are provided below: Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?

Correct AnswerverifiedShow Answer

In a common size income statement, the 100% figure is:

Correct AnswerverifiedShow Answer

Horizontal analysis is a technique for evaluating financial statement data

Correct AnswerverifiedShow Answer

Which of the following is required by the Sarbanes-Oxley Act of 2002?

Correct AnswerverifiedShow Answer

The following items are reported on a company's balance sheet: Required: Determine (1) the current ratio and (2) the quick ratio. Round to one decimal place.

Correct AnswerverifiedShow Answer

An advantage of the current ratio is that it considers the makeup of the current assets.

Correct AnswerverifiedShow Answer

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

Correct AnswerverifiedShow Answer

When you are interpreting financial ratios, it is useful to compare a company's ratios to some form of standard.

Correct AnswerverifiedShow Answer

An extraordinary item must be either unusual in nature or infrequent in occurrence.

Correct AnswerverifiedShow Answer

If a firm has a quick ratio of 1, the subsequent payment of an account payable will cause the ratio to increase.

Correct AnswerverifiedShow Answer

The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.

Correct AnswerverifiedShow Answer

Hsu Company reported the following on its income statement: An analysis of the income statement revealed that interest expense was $80,000. Hsu Company's times interest earned was

Correct AnswerverifiedShow Answer

Which of the following should be classified as an extraordinary item on the income statement?

Correct AnswerverifiedShow Answer

Define solvency and profitability. How are they alike?

Correct AnswerverifiedSolvency is the ability of a company to ...View AnswerShow Answer

A company reports the following: Determine the (a) accounts receivable turnover, and (b) number of days' sales in receivables. Round your answer to one decimal place.

Correct AnswerverifiedShow Answer

Comparing dividends per share to earnings per share indicates the extent to which the corporation is retaining its earnings for use in operations.

Correct AnswerverifiedShow Answer

The auditor's report is where the auditor certifies that the financial statements are correct and accurate.

Correct AnswerverifiedShow Answer

The denominator of the rate of return on total assets ratio is the average total assets.

Correct AnswerverifiedShow Answer

When a company changes from one acceptable accounting method to another, the change is reported

Correct AnswerverifiedShow Answer

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point) ?

Correct AnswerverifiedShow Answer

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Solvency is the ability of a company to ...
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