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Which of the following will not improve a company's gross profit percentage?


A) An increase in the sales price
B) A decrease in the cost of inventory
C) A decrease in the shipping cost for merchandise purchased
D) Collecting cash from customers in advance

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

Correct Answer

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Assume the following sales data for a company: Assume the following sales data for a company: By what percentage did sales differ between Years 1 and 2 and Years 2 and 3, respectively? A) 40.0% and (10.7%) B) 28.6% and (12.0%) C) 40.0% and (15.0%) D) 32.0% and (10.7%) By what percentage did sales differ between Years 1 and 2 and Years 2 and 3, respectively?


A) 40.0% and (10.7%)
B) 28.6% and (12.0%)
C) 40.0% and (15.0%)
D) 32.0% and (10.7%)

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

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Horizontal analysis:


A) is used to identify trends over time.
B) identifies the relative contribution made by each financial statement line item.
C) provides an understanding of the relationships among various items on financial statements.
D) involves comparing amounts across different financial statements.

E) None of the above
F) B) and D)

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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). 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

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


A) Profitability ratios
B) Liquidity ratios
C) Solvency ratios
D) Current ratios

E) C) and D)
F) All of the above

Correct Answer

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How competitors calculate depreciation is most likely to affect comparisons between competitors if property, plant and equipment:


A) makes up a large percentage of assets and average useful lives are fairly different.
B) makes up a small percentage of assets and assets are financed in a different way.
C) makes up a small percentage of assets and average useful lives are fairly similar.
D) is primarily leased in the industry, not purchaseD.
Different accounting methods for depreciation are likely to have a major impact on the comparability of financial ratios among competitors if property, plant, and equipment make up a large portion of total assets and the companies use a varying range of estimated useful lives for buildings and equipment.

E) All of the above
F) A) and B)

Correct Answer

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A

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


A) Hiring a new CEO
B) Loss of a key patent
C) Announcing a new stock issue
D) Replacing an old product line

E) All of the above
F) B) and D)

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The following information pertains to the CJ Company: A. 12.7% B. 1.7% C. 0.6% D. 0.9%

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blured image What would be repor...

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The conceptual framework for financial accounting and reporting consists of which three main components?


A) Goals, Concepts, and Exceptions.
B) Objective, Codes, and Guidelines.
C) Objective, Elements, and Concepts.
D) Concepts, Principles, and Practices.

E) A) and C)
F) A) and B)

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Mercedes, Co. has the following quarterly financial information. Mercedes, Co. has the following quarterly financial information. Required: Part a. Calculate the gross profit percentage for each quarter. Part b. Calculate the net profit margin for each quarter. Part c. Calculate the EPS for each quarter. Part d. Calculate the Price/Earnings ratio at the end of the year. Part e. Evaluate the company's profitability. Round all ratios to two decimal places. Required: Part a. Calculate the gross profit percentage for each quarter. Part b. Calculate the net profit margin for each quarter. Part c. Calculate the EPS for each quarter. Part d. Calculate the Price/Earnings ratio at the end of the year. Part e. Evaluate the company's profitability. Round all ratios to two decimal places.

Correct Answer

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Part a
Gross profit percentage = [(Net s...

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Which of these is not one of the categories of ratio analysis?


A) Profitability
B) Liquidity
C) Solvency
D) Probability

E) A) and C)
F) A) and D)

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Which of the following is calculated by dividing net income by revenues?


A) Gross profit margin
B) Current ratio
C) Net profit margin
D) Asset turnover

E) C) and D)
F) A) and B)

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Which of the measures below is used to assess profitability?


A) Current ratio
B) Debt-to-assets ratio
C) Asset turnover
D) Receivables turnover

E) A) and B)
F) B) and D)

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C

Consider the formula used to calculate each of the following financial performance ratios. From the list of financial statement items below, match its letter with the ratio it is used to calculate. Some financial statement items will be used more than once. Some ratios will use one letter from the list and some ratios will use two letters from the list. Ratio ___ Net Profit Margin ___ Debt-to-assets ratio ___ EPS ___ ROE ___ Days to collect ___ Days to sell ___ Price earnings ratio ___ Current ratio ___ Fixed asset turnover ___ Gross profit percentage ___ Quick ratio Financial Statement Item A) Net income B) Interest paid C) Cost of goods sold D) Net sales revenue E) Total liabilities F) Total assets at year end G) Average stockholders' equity H) Current liabilities

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A and D, E...

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Which of the following would improve a current ratio that is now 1.2?


A) Selling long-term assets for cash
B) Purchasing land for cash
C) Buying equipment in exchange for a two-year note
D) Purchasing inventory on account

E) A) and B)
F) B) and C)

Correct Answer

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Which of these ratios measure liquidity?


A) Receivables turnover
B) Net profit margin
C) Debt-to-assets ratio
D) Fixed asset turnover

E) None of the above
F) C) and D)

Correct Answer

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At the end of last year, Ace Company had total assets in the amount of $6,000,000 and total liabilities in the amount of $4,000,000. The company issued shares to new stockholders at the beginning of the current year for $1,000,000. As a direct result of this transaction, the:


A) debt-to-assets ratio will increase.
B) asset turnover ratio will decrease.
C) net profit margin ratio will increase.
D) net profit margin ratio will decrease.

E) A) and D)
F) All of the above

Correct Answer

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Which of the following factors would cause the least amount of concern about a company's ability to continue as a going-concern?


A) Excessive reliance on debt financing
B) Loss of key personnel without comparable replacement
C) Inadequate maintenance of long-lived assets
D) Declining profit margins

E) All of the above
F) A) and D)

Correct Answer

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How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:


A) large percentage of assets and inventory costs are stable.
B) large percentage of assets and inventory costs are not stable.
C) small percentage of assets and inventory costs are not stable.
D) small percentage of assets and inventory costs are stable.

E) A) and B)
F) A) and D)

Correct Answer

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The ratio that measures how many times a company replenishes its inventory in a year is the:


A) days to sell ratio.
B) receivables turnover ratio.
C) inventory turnover ratio.
D) days to collect ratio.

E) A) and D)
F) B) and D)

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C

Showing 1 - 20 of 145

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