Chapter 14 – Financial Statement Analysis
Copyright Cengage Learning. Powered by Cognero.
Page 21
ANSWER:
True
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14-APP1 – LO: 14–APP1
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
56. Unusual items affecting the prior period’s income statement consist of changes in or errors in applying accounting
principles.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14-APP1 – LO: 14–APP1
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
57. Earnings per share amounts are only required to be presented for income from continuing operations and net income
on the face of the statement.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14-APP1 – LO: 14–APP1
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
Chapter 14 – Financial Statement Analysis
Copyright Cengage Learning. Powered by Cognero.
Page 23
d.
audit report
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
61. The percent of fixed assets to total assets is an example of
a.
b.
c.
d.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
62. What type of analysis is indicated by the following?
Increase (Decrease)
Current Year
Preceding Year
Amount
Percent
Current assets
$ 430,000
$ 500,000
$(70,000)
(14%)
Fixed assets
1,740,000
1,500,000
240,000
16%
a.
vertical analysis
b.
horizontal analysis
c.
liquidity analysis
d.
common-size analysis
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
Chapter 14 – Financial Statement Analysis
Copyright Cengage Learning. Powered by Cognero.
Page 25
a.
judge the relative potential of two companies of similar size in different industries
b.
determine which companies in a single industry are of the same value
c.
determine which companies in a single industry are of the same size
d.
make a better comparison of two companies of different sizes in the same industry
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
66. Assume the following sales data for a company:
Current year
$325,000
Preceding year
250,000
What is the percentage increase in sales from the preceding year to the current year?
a.
70%
b.
76.9%
c.
30%
d.
50%
ANSWER:
c
RATIONALE:
Percentage increase in sales in the current year = [(Current year sales – Preceding year
sales) / Preceding year sales] × 100 = [($325,000 – $250,000) / $250,000] × 100 =
[$75,000 / $250,000] × 100 = 30%
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
67. In a common-sized balance sheet, 100% is
a.
total property, plant, and equipment
b.
total current assets
c.
total liabilities
Chapter 14 – Financial Statement Analysis
Copyright Cengage Learning. Powered by Cognero.
Page 26
d.
total assets
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
68. In a common-sized income statement, 100% is the
a.
net cost of goods sold
b.
net income
c.
gross profit
d.
sales
ANSWER:
d
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
69. Horizontal analysis is a technique for evaluating financial statement data
a.
for one period of time
b.
over a period of time
c.
on a certain date
d.
as it may appear in the future
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
Chapter 14 – Financial Statement Analysis
Copyright Cengage Learning. Powered by Cognero.
Page 28
a.
100%
b.
25%
c.
125%
d.
75%
ANSWER:
b
RATIONALE:
Percentage increase in sales in the current year = [(Current year sales – Preceding year
sales) / Preceding year sales] × 100 = [($1,025,000 – $820,000) / $820,000] × 100 =
[$205,000 / $820,000] × 100 = 25%
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
73. Income statement information for Sadie Company is below:
Sales
$175,000
Cost of goods sold
115,000
Gross profit
$ 60,000
Using vertical analysis of the income statement for Sadie Company, determine the gross profit margin.
a.
100%
b.
66%
c.
34%
d.
29%
ANSWER:
c
RATIONALE:
Gross profit margin = (Gross profit / Sales) × 100 = ($60,000 / $175,000) × 100 = 34%
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
74. In a vertical analysis, the base for cost of goods sold is
a.
total selling expenses
Chapter 14 – Financial Statement Analysis
Copyright Cengage Learning. Powered by Cognero.
Page 29
b.
sales
c.
total expenses
d.
gross profit
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–02 – LO: 14–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
75. Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are
a.
a substitute for sound judgment
b.
useful analytical measures
c.
enough information for analysis; industry information is not needed
d.
unnecessary for analysis if industry information is available
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.14–01 – LO: 14–01
FNMN.WAJO.19.14–05 – LO: 14–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:35 PM
DATE MODIFIED:
10/16/2017 6:37 PM
76. The relationship of $325,000 to $125,000, expressed as a ratio, is
a.
2.0
b.
2.6
c.
2.5
d.
0.45
ANSWER:
b
RATIONALE:
Ratio = $325,000 / $125,000 = 2.6
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy