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Comprehensive income may be shown on:


A) the balance sheet as a contra-asset account and reports the changes in investments' fair value.
B) the income statement by adding or subtracting special items, such as changes in foreign currency exchange rates and certain investments.
C) IFRS financial statements only.
D) non-public companies' financial statements only.

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

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Choose the appropriate letter to match the term and the definition.Not all definitions will be used. Term 1._____ Time-Series Analysis 2._____ Common-Size Financial Statements 3._____ Management Discussion and Analysis 4._____ Price/Earnings Ratio 5._____ Earnings Per Share 6._____ Comprehensive Income 7._____ Discontinued Operations 8._____ Net Income Definition A)The practice of reporting accounting data in the national monetary unit. B)A nonrecurring item associated with abandoning or selling an operation. C)The earnings of a company after taxes. D)An increase in an asset or a decrease in a liability that results from peripheral activities. E)After-tax earnings adjusted for gains and losses that may disappear before they are realized. F)A section of the annual report that can be used in interpreting the results of financial statement analysis. G)The ratio calculated by dividing the net income by the number of common shares outstanding. H)The ratio calculated by dividing the price of a share of stock by the earnings per share. I)Also known as ratio analysis. J)A nonrecurring item on the income statement that reflects gains and losses associated with extraordinary events. K)Another name for a trend analysis. L)The practice of reporting information in percentages rather than monetary amounts.

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1.K
2.L
3....

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The primary objective of external financial reporting is to:


A) enhance the ability of the company to acquire financial capital from external sources.
B) accurately provide financial results for tax purposes.
C) comply with external regulations and requirements of government and professional associations.
D) provide useful information to decision makers, especially investors and creditors.

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

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The principle that requires companies to include notes to their financial statements is the:


A) full disclosure principle.
B) going-concern principle.
C) cost-benefit principle.
D) historical cost principle.

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

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Which of the following actions would likely increase the Return on Equity (ROE) ?


A) An increase in the cost of goods sold
B) The purchase of treasury stock
C) Issuing shares of preferred stock
D) An increase in the income tax rate

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

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According to the full disclosure principle,financial reports should present detailed information about every transaction.

A) True
B) False

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Listed below are the current ratios of four different companies.Based on these current ratios,which company is in the most liquid position?


A) 2.0
B) 1.8
C) 2.5
D) 2.1

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

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Cost of goods sold divided by average inventory is the calculation for which of the following ratios?


A) Net profit margin ratio
B) Current ratio
C) Inventory turnover ratio
D) Fixed asset turnover ratio

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

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The financial information below presents selected information from the financial statements of Pelican Company.Sales revenue during the current year was $13,700,300 and cost of goods sold was $8,905,195.All of Pelican's sales are made on account and are due within 30 days. The financial information below presents selected information from the financial statements of Pelican Company.Sales revenue during the current year was $13,700,300 and cost of goods sold was $8,905,195.All of Pelican's sales are made on account and are due within 30 days. Required: Part a.Current ratios as of the end of the current and prior year. Part b.Calculate the receivables turnover ratio for the current year. Part c.Calculate the days to collect for the current year. Part d.Calculate the inventory turnover ratio for the current year. Part d.Calculate the days to sell for the current year. Part e.Evaluate the company's liquidity position at the end of the current year.Cite any additional information not given in the problem that would be helpful in evaluating the company's liquidity. Round all ratios to two decimal places. Required: Part a.Current ratios as of the end of the current and prior year. Part b.Calculate the receivables turnover ratio for the current year. Part c.Calculate the days to collect for the current year. Part d.Calculate the inventory turnover ratio for the current year. Part d.Calculate the days to sell for the current year. Part e.Evaluate the company's liquidity position at the end of the current year.Cite any additional information not given in the problem that would be helpful in evaluating the company's liquidity. Round all ratios to two decimal places.

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Part a
Current ratio = Current assets ÷ ...

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Which ratio is used to evaluate how well a company is managing its property,plant,and equipment?


A) Receivables turnover
B) Inventory turnover
C) Fixed asset turnover
D) Asset turnover

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

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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) All of the above
F) B) and C)

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

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Which of the following is calculated by dividing net sales revenue by average net receivables?


A) Days to sell ratio
B) Current ratio
C) Profit margin
D) Receivables turnover ratio

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

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Horizontal analysis is the comparison of each financial statement amount to another amount on the same financial statement.

A) True
B) False

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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) All of the above

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Company A uses the FIFO inventory method and Company B uses the LIFO method.If prices are rising and there are no other significant differences between the companies,which of the following is correct?


A) Company A will report a higher current ratio and lower earnings per share than Company B.
B) Company A will report a higher current ratio and higher earnings per share than Company B.
C) Company A will report a lower current ratio and higher earnings per share than Company B.
D) Company A will report a lower current ratio and lower earnings per shares than Company B.

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

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Which balance sheet line item has the highest percentage increase from the prior year to the current year? Which balance sheet line item has the highest percentage increase from the prior year to the current year? A) Inventory B) Cash C) Accounts receivable D) Prepaid insurance


A) Inventory
B) Cash
C) Accounts receivable
D) Prepaid insurance

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

Correct Answer

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


A) Fixed asset turnover
B) Times interest earned ratio
C) Inventory turnover ratio
D) Debt-to-assets ratio

E) All of the above
F) None of the above

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A debt-to-assets ratio of 0.50 indicates that the company has:


A) more liabilities than stockholders' equity.
B) equal amounts of liabilities and stockholders' equity.
C) more stockholders' equity than liabilities.
D) no liabilities.

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

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During the current accounting period,revenue from credit sales is $671,000.The Accounts Receivable balance is $51,480 at the beginning of the period and $52,200 at the end of the period.Which of the following statements is correct?


A) The receivables turnover ratio is 12.9.
B) On average, it takes 12.9 days to collect payment from credit customers.
C) The receivables turnover ratio is 28.3.
D) On average, the company sells its inventory every 28.3 days.

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

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