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## ACC 291 Week 4 DQ 2

ACC 291 Week 4 DQ 2

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ACC 291 Week 4 DQ 2

What are some common ratios used to analyze financial information? Which are the most important? What are some examples of how ratios are used in the decision-making process?

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 Rescooped by Nadyne Lynn from educations

## ACC 291 Week 4 Individual WileyPLUS Practice Ch 14

ACC 291 Week 4 Individual WileyPLUS Practice Ch 14

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ACC 291 Week 4 Individual WileyPLUS Practice Ch 14

Question 1

Comparisons of data within a company are an example of the following comparative basis:

Industry averages.

Intracompany.

Intercompany.

Both intracompany and intercompany.

Question 2

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

base year amount.

net income amount.

stockholders' equity amount.

total assets amount.

Question 3

In vertical analysis, the base amount for depreciation expense is generally:

fixed assets.

net sales.

depreciation expense in a previous year.

gross profit.

Question 4
The data in the schedule is a display of vertical analysis because the individual asset items are expressed as a percentage of total assets.

The following schedule is a display of what type of analysis?
Amount    Percent
Current assets    \$200,000    25%
Property, plant, and equipment    600,000    75%
Total assets    \$800,000    100%

ratio analysis

horizontal analysis

differential analysis

vertical analysis

Question 5

Sammy Corporation reported net sales of \$300,000, \$330,000, and \$360,000 in the years, 2009, 2010, and 2011, respectively. If 2009 is the base year, what is the trend percentage for 2011?

77%

108%

120%

130%

Question 6

Which of the following measures is an evaluation of a firm's ability to pay current liabilities?

Acid-test ratio

Current ratio

Both acid-test ratio and current ratio

None of the above

Question 7

A measure useful in evaluating the efficiency in managing inventories is:

a. inventory turnover.

b. average days to sell inventory.

c. Both (a) and (b).

d. None of the above.

Question 8

Financial statement information follows as of the end of each year.
2011    2010
Inventory    \$54,000    \$48,000
Current assets    81,000    106,000
Total assets    382,000    326,000
Net sales    784,000    697,000
Cost of goods sold    306,000    277,000
Compute the days in inventory for 2011.

64.4 days

6 days

60.8 days

24 days

Question 9

Financial statement information follows as of the end of each year.

2011    2010
Inventory    \$54,000    \$48,000
Current assets    81,000    106,000
Total assets    382,000    326,000
Current liabilities    27,000    36,000
Total liabilities    102,000    88,000
Compute the current ratio for 2011.

3.75:1

1.26:1

.80:1

3.0:1

Question 10

Financial statement information follows as of the end of each year.

2011    2010
Inventory    \$54,000    \$48,000
Net sales    784,000    697,000
Cost of goods sold    306,000    277,000
Net income    134,000    90,000
Compute the profit margin ratio for 2011.

18.1%

37.9%

17.1%

5.9%

Question 11

Financial statement information follows as of the end of each year.
2011    2010
Stockholders’ equity    \$280,000    \$238,000
Net income    134,000    90,000
Tax expense    22,000    18,000
Interest expense    12,000    12,000
Dividends paid to preferred stockholders    20,000    20,000
Dividends paid to common stockholders    15,000    10,000
Compute the return on common stockholders’ equity for 2011.

47.9%

44.0%

51.7%

40.7%

Question 12

Financial statement information follows as of the end of each year.
2011    2010
Stockholders’ equity    \$280,000    \$238,000
Net income    134,000    90,000
Tax expense    22,000    18,000
Interest expense    12,000    12,000
Dividends paid to preferred stockholders    20,000    20,000
Dividends paid to common stockholders    15,000    10,000
Compute the times interest earned for 2011.

13.0 times

14.0 times

11.2 times

65.3 times

Question 13

In reporting discontinued operations, the income statement should show in a special section:

a. gains and losses on the disposal of the discontinued segment.

b. gains and losses from operations of the discontinued segment.

c. Both (a) and (b).

d. Neither (a) nor (b).

Question 14

Scout Corporation has income before taxes of \$400,000 and an extraordinary loss of \$100,000. If the income tax rate is 25% on all items, the income statement should show income before extraordinary items and extraordinary items, respectively, of

\$325,000 and \$100,000.

\$300,000 and \$75,000.

\$325,000 and \$75,000.

\$300,000 and \$100,000.

Question 15

Which situation below might indicate a company has a low quality of earnings?

The same accounting principles are used each year.

The company is continually reporting pro forma income numbers.

Revenue is recognized when earned.

Maintenance costs are expensed as incurred.

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