978-0136115274 Chapter 10 Quiz Chapter 10

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CHAPTER 10 NAME ___________________________________

TEN-MINUTE QUIZ SECTION _____________ DATE____________

_____________________________________________________________________________

_____ 1. Items separated from the regular earnings of a company include:

a. Discontinued operations

b. Extraordinary items

c. Loss on sale of equipment

d. Two of the above

_____ 2. To be reported as an extraordinary item, the event must be:

a. Unusual and infrequent

b. Unusual and frequent

c. Normal and infrequent

d. Part of continuing operations

_____ 3. When using horizontal analysis, the base year is normally:

a. The current year

b. The earliest year presented

c. The latest year presented

d. The year with the highest revenues

_____ 4. Jacksonville Company reported cost of goods sold of $80,000 in 20X5 and

$92,000 in 20X6. The percentage change is:

a. 12%

b. 13%

c. 15%

d. None of the above

_____ 5. A method of financial statement analysis that must use two or more years of

financial statements is known as:

a. Horizontal

b. Diagonal

c. Ratio

d. All of the above

_____ 6. What type of ratios measure the company’s ability to pay its current bills and

operating costs?

a. Liquidity

b. Solvency

c. Profitability

d. Market indicator

_____ 7. Liquidity ratios include all of the following, except:

a. Return on assets

b. Current ratio

c. Working capital

d. Acid test

_____ 8. Which of the following types of ratios measure the ability of a company to

survive over a long period of time?

a. Liquidity ratios

b. Solvency ratios

c. Profitability ratios

d. Market indicators

_____ 9. An extremely high price-earnings ratio may indicate:

a. That the stock is underpriced

b. That the stock is overpriced

c. That the investment is low risk

d. That the company pays high dividends

_____ 10. Dividend-yield ratio is calculated by:

a. Dividing dividend per share by market price per share

b. Dividing market price per share by dividend per share

c. Subtracting the dividend per share from the earnings per share

d. Dividing the dividend per share by the earnings per share

ANSWER KEY – CHAPTER 10 – TEN-MINUTE QUIZ