Multiple Choice Question 92 The current ratio may also be referred to as the

Multiple Choice Question 92 

The current ratio may also be referred to as the

short run ratio. 

acid-test ratio. 

working capital ratio. 

contemporary ratio.

Multiple Choice Question 104 

A company has a receivables turnover of 10 times. The average receivables during the period are $500,000. What is the amount of net credit sales for the period?

$500,000 

$50,000 

Cannot be determined from the information given 

$5,000,000    

Multiple Choice Question 69 

In performing a vertical analysis, the base for prepaid expenses is

total assets. 

prepaid expenses. 

total liabilities and stockholders' equity. 

total current assets.

Multiple Choice Question 50 

In analyzing financial statements, horizontal analysis is a

theory. 

requirement. 

principle. 

tool.

Multiple Choice Question 133 

The following information is available for Compton Company:

20122011

Accounts receivable$  460,000$  500,000

Inventory280,000320,000

Net credit sales2,470,0001,400,000

Cost of goods sold1,860,0001,060,000

Net income300,000170,000

The receivables turnover ratio for 2012 is

1.6 times. 

5.4 times. 

5.1 times.     

3.9 times.

Multiple Choice Question 54 

The formula for horizontal analysis of changes since the base period is the current year amount

plus the base year amount divided by the base year amount. 

minus the base year amount divided by the current year amount.

divided by the base year amount. 

minus the base year amount divided by the base year amount.

Multiple Choice Question 76 

The current ratio is

used to evaluate a company's liquidity and short-term debt paying ability. 

calculated by dividing current liabilities by current assets.

used to evaluate a company's solvency and long-term debt paying ability. 

calculated by subtracting current liabilities from current assets.

Multiple Choice Question 58 

Comparative balance sheets are usually prepared for

two years. 

three years. 

one year. 

four years.

Multiple Choice Question 124 

The following information pertains to Sampson Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

Assets

Cash and short-term investments$ 45,000

Accounts receivable (net)25,000

Inventory11,000

Property, plant and equipment210,000

Total Assets$291,000

Liabilities and Stockholders’ Equity

Current liabilities$ 50,000

Long-term liabilities90,000

Stockholders’ equity—common151,000

Total Liabilities and Stockholders’ Equity$291,000

Income Statement

Sales$120,000

Cost of goods sold55,000

Gross profit65,000

Operating expenses30,000

Net income$ 35,000

Number of shares of common stock6,000

Market price of common stock$20

Dividends per share.50

What is the inventory turnover for Sampson?

3,2 times 

5 times    

10.9 times 

0.20 times

Multiple Choice Question 170 

What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?

Liquidity 

Solvency 

Leverage 

Profitability

Multiple Choice Question 175 

When there has been a change in accounting principle,

the old principle should be used in reporting the results of operations for the current year. 

the new principle should be used in reporting the results of operations of the current year, but there is no change to prior years. 

the change should be reported retroactively. 

the cumulative effect of the change should be reported in the current year’s retained earnings statement.

Multiple Choice Question 49 

Which one of the following is not a tool in financial statement analysis?

Ratio analysis 

Horizontal analysis 

Circular analysis 

Vertical analysis

Multiple Choice Question 116 

Net income does not appear in the numerator of the

return on assets. 

payout ratio. 

profit margin. 

return on common stockholders' equity.

Multiple Choice Question 153 

Hook Inc. has an investment in non-trading securities of $80,000. This investment experienced an unrealized loss of $5,000 during the current year. Assuming a 35% tax rate, the effect of this loss on comprehensive income will be

$5,000 decrease. 

$80,000 increase. 

$28,000 decrease. 

no effect.

Multiple Choice Question 143 

The following financial statement information is available for Bongo Corporation:

20132012

Net income$115,000$ 80,000

Income tax expense50,00029,000

Interest expense15,00014,000

Dividends paid to preferred stockholders22,00020,000

Dividends paid to preferred stockholders15,00010,000

The times interest earned for 2013 is

11 times. 

8.8 times. 

12 times.   

7.7 times.