Question 1

Which of the following nonfinancial factors is most likely to be a cause of a going-concern problem?

Accepted Answer

A)   Hiring a new CEO
B)   Loss of a key patent
C)   Announcing a new stock issue
D)   Replacing an old product lineE) B) and D)
F) All of the above

Question 2

The following information is taken from the financial statements of a company for the current year:
 
-Use the information above to answer the following question.On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Accepted Answer

A)   100%
B)   14%
C)   60%
D)   Cannot be determinedE) A) and C)
F) A) and D)

Question 3

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

Accepted Answer

A)   Liquidity
B)   Market share
C)   Profitability
D)   SolvencyE) B) and D)
F) A) and B)

Question 4

Choose the appropriate letter to match the term and the definition.Not all definitions will be used.
Term
1._____ Full Disclosure Principle
2._____ Ratio Analysis
3._____ Liquidity
4._____ Going-Concern Assumption
5._____ Profitability
6._____ Solvency
7._____ Trend Analysis
8._____ Vertical Analysis
Definition
A)The ability of a company to meet its short-run financial obligations.
B)A type of analysis that focuses on relationships within a single financial statement.
C)Also known as time-series analysis.
D)The standard that companies should present all relevant information needed to interpret a company's financial position and performance.
E)The standard that expenses should be recognized when incurred.
F)A measure of current earnings performance.
G)A result from comparing a company's results to other companies in the industry.
H)A measure of long-run survivability.
I)The standard that revenue should be recorded when earned,provided payment is reasonably expected.
J)Measures that relate financial variables reported in one or more of the financial statements from the same year.
K)The characteristic that financial information needs to be valuable to decision makers.
L)The standard that takes for granted a company's near term financial survival.

Accepted Answer

1.D
2.J
3....

Question 5

Which of the following is a profitability measure?

Accepted Answer

A)   Net income ÷ Revenues
B)   Total assets ÷ Total stockholders' equity
C)   Total liabilities ÷ Total stockholders' equity
D)   Cost of goods sold ÷ Average inventoryE) All of the above
F) None of the above

Question 6

Which of the following measures would assist in assessing the liquidity of a company?

Accepted Answer

A)   Return on equity
B)   Fixed asset turnover ratio
C)   Receivables turnover ratio
D)   Times interest earnedE) A) and B)
F) C) and D)

Question 7

Which of the following statements is not true?

Accepted Answer

A)   Horizontal analyses help financial statement users recognize changes that unfold over time.
B)   Vertical analyses focus on relationships between items on the same financial statement.
C)   Ratio analyses focus on relationships between items on one or more of the financial statements.
D)   Horizontal analyses help financial statement users recognize changes that occur between companies.E) A) and B)
F) C) and D)

Question 8

Vesuvius Company has net sales revenue of $780,000,cost of goods sold of $343,200,net income of $119,200,and preferred dividends of $10,000 during the current year.At the beginning of the year,503,000 shares of common stock were outstanding,and,at the end of the year,537,000 shares of common stock were outstanding.A total of 1,000 preferred shares were outstanding throughout the year.The company's earnings per share for the current year is closest to:

Accepted Answer

A)   $1.50.
B)   $0.84.
C)   $0.21.
D)   $0.87.E) A) and B)
F) None of the above

Question 9

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to:

Accepted Answer

A)   2.39.
B)   2.61.
C)   2.5.
D)   2.81.E) A) and B)
F) All of the above

Question 10

A company that has a current ratio less than one cannot cover:

Accepted Answer

A)   current liabilities with its current cash flow.
B)   current expenses with its current sales revenue.
C)   expenses with its current revenues.
D)   current liabilities with its current assets.E) A) and B)
F) A) and C)

Question 11

For each of the accounting treatments below,indicate whether it is followed in GAAP,or IFRS,or both,by placing an "X" in the appropriate column(s).

Accepted Answer

The answer of For each of the accounting treatments below,indicate...

Question 12

In which of the following company attributes would a long-term bond holder be most interested?

Accepted Answer

A)   Quality of earnings
B)   Solvency
C)   Profitability
D)   LiquidityE) A) and B)
F) None of the above

Question 13

Financial statement analysis is useful for:

Accepted Answer

A)   evaluating a company's success in meeting the challenges that it faces.
B)   selecting the most appropriate accounting rules to follow.
C)   determining the market price of a company's stock.
D)   comparing US companies with foreign companies.E) B) and C)
F) A) and D)

Question 14

Which of the following statements about nonrecurring and other special items is correct?

Accepted Answer

A)   Some special items, such as changes in the value of certain balance sheet accounts, are excluded from the calculation of net income.
B)   Nonrecurring items such as discontinued operations are presented above the income tax expense line on the income statement.
C)   Discontinued operations are reported net of tax as part of the income from continuing operations.
D)   The cumulative effect of change in accounting principles is reported on the income statement as part of income from continuing operations.E) A) and B)
F) A) and C)

Question 15

To analyze changes in a company's net income over the last ten years,you should perform:

Accepted Answer

A)   horizontal analysis.
B)   vertical analysis.
C)   cross-section analysis.
D)   ratio analysis.E) All of the above
F) A) and C)

Question 16

Extraordinary items:

Accepted Answer

A)   are rare because the rules are restrictive.
B)   include gains and losses from sales of noncurrent assets.
C)   are recurring and frequent in occurrence.
D)   are included in the determination of gross profit.E) C) and D)
F) A) and C)

Question 17

Which type of ratio indicates a company's ability to generate income in the current period?

Accepted Answer

A)   Profitability ratios
B)   Liquidity ratios
C)   Solvency ratios
D)   Current ratiosE) B) and C)
F) B) and D)

Question 18

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Accepted Answer

A)   0.32.
B)   0.56.
C)   0.86.
D)   0.14.E) C) and D)
F) B) and D)

Question 19

Westcott,Inc.has the following information from its accounting records:

If Westcott uses cash of $5,000 to pay a current liability,its:

Accepted Answer

A)   current ratio increases and its debt-to-assets ratio increases
B)   current ratio increases and its debt-to-assets ratio decreases
C)   current ratio decreases and its debt-to-assets ratio increases
D)   current ratio decreases and its debt-to-assets ratio decreasesE) B) and C)
F) C) and D)

Question 20

Which of these are liquidity ratios?

Accepted Answer

A)   Net profit margin
B)   Receivables turnover
C)   Fixed asset turnover
D)   Times interest earnedE) A) and B)
F) B) and C)

Exam 13: Measuring and Evaluating Financial Performance

Correct Answer
verified

Which of the following nonfinancial factors is most likely to be a cause of a going-concern problem?

Correct Answer
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Which of the following statements about nonrecurring and other special items is correct?

Correct Answer
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For each of the accounting treatments below,indicate whether it is followed in GAAP,or IFRS,or both,by placing an "X" in the appropriate column(s).

Correct Answer
verified

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

Correct Answer
verified

Which of these are liquidity ratios?

Correct Answer
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Extraordinary items:

Correct Answer
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Financial statement analysis is useful for:

Correct Answer
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Westcott,Inc.has the following information from its accounting records: If Westcott uses cash of $5,000 to pay a current liability,its:

Correct Answer
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Which of the following statements is not true?

Correct Answer
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In which of the following company attributes would a long-term bond holder be most interested?

Correct Answer
verified

Which of the following measures would assist in assessing the liquidity of a company?

Correct Answer
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Which of the following is a profitability measure?

Correct Answer
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Which type of ratio indicates a company's ability to generate income in the current period?

Correct Answer
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Correct Answer
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1.D
2.J
3....
View Answer

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Correct Answer
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The following information is taken from the financial statements of a company for the current year: -Use the information above to answer the following question.On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Correct Answer
verified

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to:

Correct Answer
verified

To analyze changes in a company's net income over the last ten years,you should perform:

Correct Answer
verified

A company that has a current ratio less than one cannot cover:

Correct Answer
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Exam 13: Measuring and Evaluating Financial Performance

Correct AnswerverifiedShow Answer

Which of the following nonfinancial factors is most likely to be a cause of a going-concern problem?

Correct AnswerverifiedShow Answer

Which of the following statements about nonrecurring and other special items is correct?

Correct AnswerverifiedShow Answer

For each of the accounting treatments below,indicate whether it is followed in GAAP,or IFRS,or both,by placing an "X" in the appropriate column(s).

Correct AnswerverifiedShow Answer

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

Correct AnswerverifiedShow Answer

Which of these are liquidity ratios?

Correct AnswerverifiedShow Answer

Extraordinary items:

Correct AnswerverifiedShow Answer

Financial statement analysis is useful for:

Correct AnswerverifiedShow Answer

Westcott,Inc.has the following information from its accounting records: If Westcott uses cash of $5,000 to pay a current liability,its:

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

In which of the following company attributes would a long-term bond holder be most interested?

Correct AnswerverifiedShow Answer

Which of the following measures would assist in assessing the liquidity of a company?

Correct AnswerverifiedShow Answer

Which of the following is a profitability measure?

Correct AnswerverifiedShow Answer

Which type of ratio indicates a company's ability to generate income in the current period?

Correct AnswerverifiedShow Answer

Correct Answerverified1.D2.J3....View AnswerShow Answer

Company X has net sales revenue of $780,000,cost of goods sold of $343,200,and all other expenses of $327,600.The net profit margin is closest to:

Correct AnswerverifiedShow Answer

The following information is taken from the financial statements of a company for the current year: -Use the information above to answer the following question.On a common size income statement for the year,what is the percentage that would be shown next to the dollar amount of sales revenue?

Correct AnswerverifiedShow Answer

A company has current assets of $450,000 and a current ratio is 2.5.Assume that the company prepays rent for 9 months in the amount of $20,000.The current ratio after this transaction is closest to:

Correct AnswerverifiedShow Answer

To analyze changes in a company's net income over the last ten years,you should perform:

Correct AnswerverifiedShow Answer

A company that has a current ratio less than one cannot cover:

Correct AnswerverifiedShow Answer

Correct Answer
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1.D
2.J
3....
View Answer

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