Introduction to Financial Statements Analysis
Test Preparation
Course Introduction
Introduction to Financial Statements Analysis offers students a foundational understanding of how to interpret and use financial statements to assess an organizations financial health and performance. The course covers key concepts such as the structure and components of balance sheets, income statements, and cash flow statements, as well as the principles of ratio analysis, trend analysis, and comparative financial analysis. Emphasis is placed on the practical application of analytical tools and techniques to evaluate profitability, liquidity, solvency, and efficiency, enabling students to make informed decisions based on financial data.
Recommended Textbook
Horngren's Accounting Volume 2 10th Canadian Edition by Tracie L. Miller Nobles
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7 Chapters
1392 Verified Questions
1392 Flashcards
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Chapter 1: Partnerships
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202 Verified Questions
202 Flashcards
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Sample
Questions
Q1) When there is an admission of a new partner and a bonus is given to the old partners,cash is always obtained by the old partners at the admission of the new partner.
A)True
B)False
Answer: False
Q2) A partnership balance sheet will show the ending capital balance for each partner.
A)True
B)False
Answer: True
Q3) A partnership balance sheet includes:
A) a category for assets contributed by each partner
B) a category for liabilities incurred by each partner
C) an ending capital account balance for each partner
D) an ending drawing account balance for each partner
Answer: C
Q4) List four of the characteristics of a partnership.
Answer: Co-ownership; ease of formation; limited life; mutual agency; unlimited liability; no partnership income taxes
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Chapter 2: Corporations: Share Capital and the Balance Sheet
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) Land is acquired by issuing 500 common shares.The land has a current market value of $12,000.There is no market value for the common shares available.The journal entry requires a:
A) debit to Cash for $12,000
B) debit to Common Shares for $12,000
C) credit to Retained Earnings for $12,000
D) credit to Common Shares for $12,000
Answer: D
Q2) Refer to Table 13-5.The return on assets for Jansen Corporation was:
A) 19.5%
B) 18.7%
C) 17.5%
D) 16.8%
Answer: A
Q3) Annually the corporation must pay dividends to their shareholders.
A)True
B)False
Answer: False
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Chapter 3: Corporations: Retained Earnings and the
Income Statement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) Refer to Table 14-5.The total contributed capital after the declaration of a 10% common stock dividend is: __________.
Answer: $700,000 + (50,000 × 10% × $12.00_= $760,000
Q2) Which of the following is needed when declaring a common stock dividend?
A) number of common shares authorized
B) number of preferred shares authorized
C) number of preferred shares issued
D) number of common shares issued
Answer: D
Q3) In a 2-for-1 stock split,the balance in the common shares account:
A) is cut in half
B) remains the same
C) doubles
D) triples
Answer: B
Q4) In a 3 for 1 stock split,the number of shares outstanding triples.
A)True
B)False
Answer: True
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Chapter 4: Long-Term Liabilities
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) All of the following would qualify as a capital lease except:
A) there is reasonable assurance that the lessee will obtain ownership of the leased asset at the end of the lease term
B) the lease term is of such a length that the lessee will obtain almost all of the benefits (usually 75% or more) from the use of the leased asset over its life
C) the lessor retains the usual risks and rewards of owning the leased asset
D) the lessor would both recover the original investment and earn a return on that investment from the lease
Q2) Bonds that are backed only by the good faith of the borrower are referred to as:
A) mortgage bonds
B) debenture bonds
C) serial bonds
D) registered bonds
Q3) Convertible bonds are issued at a higher interest rate in order to attract investors.
A)True
B)False
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Chapter 5: Investments and International Operations
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) On December 31,2017,Parent Corporation paid $800,000 to acquire 100% of the voting common shares of Child Corporation.At that date Child Corporation had common shares of $500,000 and retained earnings of $250,000.Assume any amount paid in excess of shareholders' equity is attributable to goodwill.
a_Prepare the entry on Parent Corporation's books to record the purchase of \(\text { the Child Corporation shares. }\) b_Show in journal entry format how accounts on the consolidation worksheet \(\text { will be affected by the elimination entry. }\)
Q2) Refer to Table 16-4.The journal entry at December 31 to record the amortization of the premium will include:
A) credit to Interest Revenue of $558
B) debit to Interest Revenue of $558
C) credit to Interest Revenue of $9,300
D) credit to Investment in Bonds of $558
Q3) The Fair-Value Valuation Allowance account is a companion account to the Short-Term Investments or Long-Term Investments account.
A)True
B)False
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7
Chapter 6: The Cash Flow Statement
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207 Verified Questions
207 Flashcards
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Sample Questions
Q1) The application of the indirect method requires an analysis of:
A) balance sheet accounts and the gains/losses on dispositions
B) income statement accounts
C) all accounts in the general ledger
D) only current asset and current liability accounts
Q2) Which of the following statements accurately describes the cash flow statement?
A) It shows the relative proportion of debt and assets.
B) It shows the link between accrual based income and the cash reported on the balance sheet.
C) It indicates when long-term debt will mature.
D) It shows the link between book income and earnings per share.
Q3) Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from investing activities?
A) ($241,900)
B) ($326,900)
C) ($195,000)
D) ($254,600)
Q4) Reports cash receipts and cash payments classified according to the entity's major activities
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Chapter 7: Financial Statement Analysis
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214 Verified Questions
214 Flashcards
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Sample Questions
Q1) Long-term solvency is the ability to generate enough cash to meet current payments as they become due.
A)True
B)False
Q2) Ratio of the sum of cash plus short-term investments plus net current receivables to current liabilities
Q3) Assuming the inventory balance at the end of 2017 is $20,000,and it has increased by 10% since the end of 2016,the balance at the end of 2016 (rounded to the nearest whole dollar_was:
A) $18,000
B) $18,182
C) $16,364
D) $22,000
Q4) Current assets divided by current liabilities
Q5) A "value" investor will generally favour a share with a market price that is high compared to its book value.
A)True
B)False
Q6) Ratio of income from operations to interest expense
Page 9
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