Question 1

Solve for (A) current ratio, (B) acid test (quick), (C) average day's collection (360), (D) asset turnover, and (E) profit margin on sales. Round to nearest hundredth or hundredth percent as needed.
  
A. 1.31;
B. 1.09;
C. 37 days;
D. 1.28;
E. 14.63%

Accepted Answer

The answer of Solve for (A) current ratio, (B) acid...

Question 2

Horizontal analysis need not be done using comparative reports.

Accepted Answer

A) True 
 B)False  False

Question 3

The return on equity ratio looks at how effectively assets are being utilized.

Accepted Answer

A) True 
 B)False

Question 4

Cost of merchandise sold is equal to beginning inventory minus net purchases minus ending inventory.

Accepted Answer

A) True 
 B)False

Question 5

A relationship of one number to another is a ratio.

Accepted Answer

A) True 
 B)False

Question 6

The acid test ratio does not include:

Accepted Answer

A)   Cash
B)   Accounts receivable
C)   Supplies
D)   Inventory
E)   None of theseF) B) and E)
G) A) and E)

Question 7

Complete the following vertical analysis of a balance sheet:  (Round to nearest tenth percent.)

Accepted Answer

A)   11.6%, 8.1%, 71.8%, 8.5%
B)   11.5%, 8.0%, 72%, 11.7%
C)   13%, 8.6%, 80%, 12.7%
D)   15%, 10.2%, 66.1%, 12.5%
E)   None of theseF) C) and D)
G) A) and B)

Question 8

Land does not depreciate.

Accepted Answer

A) True 
 B)False  True

Question 9

The income statement shows the financial condition of a business over a period of time.

Accepted Answer

A) True 
 B)False

Question 10

Trend analysis expresses each number as a percent of the base year.

Accepted Answer

A) True 
 B)False

Question 11

The company's gross profit based on the following is sales $48,000, sales returns and allowances $6,000, operating expenses $6,200, beginning inventory $900, net purchases $9,100, ending inventory $2,300.

Accepted Answer

A)   $34,000
B)   $43,000
C)   $34,003
D)   $34,300
E)   None of theseF) C) and D)
G) B) and D)

Question 12

The cost of merchandise sold from the following data is as follows: sales $80,000, beginning inventory $5,000, purchases $21,800, purchase discounts $790, ending inventory $5,100.

Accepted Answer

A)   $21,560
B)   $20,190
C)   $20,910
D)   $21,650
E)   None of theseF) C) and D)
G) B) and D)

Question 13

In horizontal analysis the oldest year is the base.

Accepted Answer

A) True 
 B)False

Question 14

Alice Co. has a current ratio of 2.7. The acid test ratio is 2.2. The current liabilities of Alice Co. are $46,000. Could you calculate the dollar amount of merchandise inventory?

Accepted Answer

The answer of Alice Co. has a current ratio of...

Question 15

A return on equity of 17% implies which of the following?

Accepted Answer

A)   For every 17 cents invested, a return of $1.00 results
B)   For every $1.00 invested, a return of 17 cents results
C)   For every $1.17 invested, a return of 17 cents results
D)   For every $10.00 invested, a return of $1.17 results
E)   None of the aboveF) All of the above
G) A) and D)

Question 16

A ratio of 4:5:2 mean that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

Accepted Answer

A) True 
 B)False

Question 17

Which one is not used to calculate net sales?

Accepted Answer

A)   Purchases
B)   Sales discount
C)   Sales returns and allowance
D)   Gross sales
E)   None of theseF) C) and D)
G) A) and B)

Question 18

Reductions in the selling price for early payment are called sales returns and allowances.

Accepted Answer

A) True 
 B)False

Question 19

Complete:
  
A. $42,000;
B. 23.81%;
C. 16.67%;
D. 9.52%;
E. 50.00%

Accepted Answer

The answer of Complete:
  
A. $42,000;
B. 23.81%;
C. 16.67%;
D. 9.52%;
E....

Question 20

The asset turnover from the following is (round to nearest tenth) :

Accepted Answer

A)   1.7
B)   1.5
C)   1.9
D)   1.6
E)   None of theseF) A) and D)
G) A) and C)

Exam 16: How to Read, Analyze, and Interpret Financial Reports

Solve for (A) current ratio, (B) acid test (quick), (C) average day's collection (360), (D) asset turnover, and (E) profit margin on sales. Round to nearest hundredth or hundredth percent as needed. A. 1.31; B. 1.09; C. 37 days; D. 1.28; E. 14.63%

Correct AnswerverifiedShow Answer

Horizontal analysis need not be done using comparative reports.

Correct AnswerverifiedFalse

The return on equity ratio looks at how effectively assets are being utilized.

Correct AnswerverifiedShow Answer

Cost of merchandise sold is equal to beginning inventory minus net purchases minus ending inventory.

Correct AnswerverifiedShow Answer

A relationship of one number to another is a ratio.

Correct AnswerverifiedShow Answer

The acid test ratio does not include:

Correct AnswerverifiedShow Answer

Complete the following vertical analysis of a balance sheet: (Round to nearest tenth percent.)

Correct AnswerverifiedShow Answer

Land does not depreciate.

Correct AnswerverifiedTrue

The income statement shows the financial condition of a business over a period of time.

Correct AnswerverifiedShow Answer

Trend analysis expresses each number as a percent of the base year.

Correct AnswerverifiedShow Answer

The company's gross profit based on the following is sales $48,000, sales returns and allowances $6,000, operating expenses $6,200, beginning inventory $900, net purchases $9,100, ending inventory $2,300.

Correct AnswerverifiedShow Answer

The cost of merchandise sold from the following data is as follows: sales $80,000, beginning inventory $5,000, purchases $21,800, purchase discounts $790, ending inventory $5,100.

Correct AnswerverifiedShow Answer

In horizontal analysis the oldest year is the base.

Correct AnswerverifiedShow Answer

Alice Co. has a current ratio of 2.7. The acid test ratio is 2.2. The current liabilities of Alice Co. are $46,000. Could you calculate the dollar amount of merchandise inventory?

Correct AnswerverifiedShow Answer

A return on equity of 17% implies which of the following?

Correct AnswerverifiedShow Answer

A ratio of 4:5:2 mean that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

Correct AnswerverifiedShow Answer

Which one is not used to calculate net sales?

Correct AnswerverifiedShow Answer

Reductions in the selling price for early payment are called sales returns and allowances.

Correct AnswerverifiedShow Answer

Complete: A. $42,000; B. 23.81%; C. 16.67%; D. 9.52%; E. 50.00%

Correct Answerverified11eb0d2a_146e_dfb6_9790_bd2d1243198e_TB2612_00

The asset turnover from the following is (round to nearest tenth) :

Correct AnswerverifiedShow Answer

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False

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True

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11eb0d2a_146e_dfb6_9790_bd2d1243198e_TB2612_00

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