Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

Accepted Answer

A) True 
 B)False

Question 3

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) B) and C)
F) None of the above

Question 4

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. 
 What are the dividends per common share for this company?

Accepted Answer

A)   $20.00
B)   $3.33
C)   $1.11
D)   $0.90E) A) and D)
F) B) and C)

Question 5

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

Accepted Answer

A) True 
 B)False

Question 6

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) A) and B)
F) None of the above

Question 7

In horizontal analysis, the current year is the base year.

Accepted Answer

A) True 
 B)False

Question 8

Condensed data taken from the ledger of Joplin Company at December 31, 2012 and 2011, are as follows:
  Prepare a comparative balance sheet, with horizontal analysis, for December 31, 2012 and 2011. (Round percents to one decimal point.)

Accepted Answer

The answer of Condensed data taken from the ledger of...

Question 9

Based on the following data for the current year, what is the number of days' sales in accounts receivable?

Accepted Answer

A)   7.3
B)   2.5
C)   14.6
D)   25E) All of the above
F) B) and C)

Question 10

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

Accepted Answer

A) True 
 B)False

Question 11

The excess of current assets over current liabilities is referred to as working capital.

Accepted Answer

A) True 
 B)False

Question 12

If two companies have the same current ratio, their ability to pay short-term debt is the same.

Accepted Answer

A) True 
 B)False

Question 13

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

Accepted Answer

A) True 
 B)False

Question 14

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) B) and D)
F) C) and D)

Question 15

Revenue and expense data for Martinez Company are as follows:
   Round percentage to one decimal place.

Accepted Answer

(a)

_TB20...

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The percent of fixed assets to total assets is an example of

Accepted Answer

A)   vertical analysis
B)   solvency analysis
C)   profitability analysis
D)   horizontal analysisE) A) and D)
F) B) and C)

Question 18

The independent auditor's report does which of the following?

Accepted Answer

A)   describes which financial statements are covered by the audit
B)   gives the auditor's opinion regarding the fairness of the financial statements
C)   summarizes what the auditor did
D)   states that the financial statements were presented on timeE) B) and C)
F) A) and D)

Question 19

Income statement information for Lucy Company is provided below:
  Prepare a vertical analysis of the income statement for Lucy Company.

Accepted Answer

The answer of Income statement information for Lucy Company is...

Question 20

In horizontal analysis, each item is expressed as a percentage of the

Accepted Answer

A)   base year figure.
B)   retained earnings figure.
C)   total assets figure.
D)   net income figure.E) All of the above
F) B) and C)

Exam 17: Financial Statement Analysis

The rate earned on total assets measures the profitability of total assets, without considering how the assets are financed.

Correct AnswerverifiedShow Answer

In horizontal analysis, each item is expressed as a percentage of the

Correct AnswerverifiedShow Answer

Based on the following data for the current year, what is the number of days' sales in accounts receivable?

Correct AnswerverifiedShow Answer

Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.

Correct AnswerverifiedShow Answer

Using measures to assess a business's ability to pay its current liabilities is called current position analysis.

Correct AnswerverifiedShow Answer

In horizontal analysis, the current year is the base year.

Correct AnswerverifiedShow Answer

If two companies have the same current ratio, their ability to pay short-term debt is the same.

Correct AnswerverifiedShow Answer

Income statement information for Lucy Company is provided below: Prepare a vertical analysis of the income statement for Lucy Company.

Correct AnswerverifiedShow Answer

The percent of fixed assets to total assets is an example of

Correct AnswerverifiedShow Answer

The following information pertains to Carlton Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. What are the dividends per common share for this company?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A company can use comparisons of its financial data to the data of other companies and industry values to evaluate its position.

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Revenue and expense data for Martinez Company are as follows: Round percentage to one decimal place.

Correct Answerverified(a) _TB20...View AnswerShow Answer

The independent auditor's report does which of the following?

Correct AnswerverifiedShow Answer

The excess of current assets over current liabilities is referred to as working capital.

Correct AnswerverifiedShow Answer

Condensed data taken from the ledger of Joplin Company at December 31, 2012 and 2011, are as follows: Prepare a comparative balance sheet, with horizontal analysis, for December 31, 2012 and 2011. (Round percents to one decimal point.)

Correct AnswerverifiedShow Answer

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(a)
_TB20...
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