ACC 561 Week 2 Study Guide and Practice Quiz www.paperscholar.com DIRECT LINK TO THIS STUDY GUIDE: http://www.paperscholar.com/acc-561-week-2-study-guide-and-practice-quiz/
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Question 1 The relationship between current assets and current liabilities is important in evaluating a company’s • market value. • solvency. • profitability. • liquidity. Question 2 Which of the following is a measure of liquidity? • Debt to equity ratio • Earnings per share • Working capital • Profit margin Question 3 Current assets divided by current liabilities is known as the • profit margin.
capital structure. • working capital • current ratio. Question 4 Danner Corporation reported net sales of $600,000, $680,000, and $800,000 in the years 2011, 2012, and 2013, respectively. If 2011 is the base year, what percentage do 2013 sales represent of the base? • 113% • 33% • 133% • 75% Question 5 In analyzing financial statements, horizontal analysis is a • requirement. • principle. • theory. • tool. Question 6 Comparative balance sheets • are usually prepared for at least one year. • do not show a comparison of total stockholders’ equity. • do not show both dollar amount and percentage changes. • are usually prepared for at least two years. Question 7 Assume the following cost of goods sold data for a company: 2013 $1,500,000 2012 1,200,000 2011 1,000,000 If 2011 is the base year, what is the percentage increase in cost of goods sold from 2011 to 2013? • 50% • 150% • 67% • 20% Question 8 Comparisons of data within a company are an example of the following comparative basis: • Interregional. • Industry averages. • Intracompany. • Intercompany. Question 9 The following schedule is a display of what type of analysis? Amount Percent •
Current assets $100,000 25% Property, plant, and equipment 300,000 75% Total assets $400,000 100% • Horizontal analysis • Differential analysis • Vertical analysis • Ratio analysis Question 10 A common measure of profitability is the • return on common stockholders’ equity ratio. • current ratio. • current cash debt coverage ratio. • debt to total assets. Question 11 Which one of the following would be considered a long-term solvency ratio? • Return on total assets • Debt to total assets ratio • Current cash debt coverage ratio • Receivables turnover Question 12 The current ratio is • calculated by subtracting current liabilities from current assets. • 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. Question 13 Richards, Inc. has the following income statement (in millions): RICHARDS, INC. Income Statement For the Year Ended December 31, 2012 Net Sales $180 Cost of Goods Sold 60 Gross Profit 120 Operating Expenses 75 Net Income $ 45 Using vertical analysis, what percentage is assigned to net income?