Acc557 Financial Accounting: Week 11 Chapter 14 Study Guide (15 MCQs) - Version 2

Acc557 Financial Accounting
Week 11 Study Guide - Version 2
Chapter 14 (15 MCQs)

Multiple Choice Question 79
1. Parker Hardware Store had net credit sales of $8,000,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The receivables turnover was
11.4 times.
12.3 times.
4.6 times.
7.7 times.

Multiple Choice Question 49
2. Which one of the following is not a tool in financial statement analysis?
Ratio analysis
Horizontal analysis
Vertical analysis
Circular analysis

IFRS Multiple Choice Question 243
3. Under IFRS, there is no classification for
changes in accounting principles.
changes in accounting estimates.
discontinued operations.
extraordinary items

Multiple Choice Question 155
4. ACME Company reports income before income taxes of $2,400,000 and had an extra-ordinary loss of $800,000. If the tax rate is 30%,
the income before the extraordinary item is $1,680,000.
the income before the extraordinary item is $1,920,000.
the extraordinary loss will be reported at $240,000.
the extraordinary loss would be reported on the income statement at $800,000.

Multiple Choice Question 65
5. Darius, Inc. has the following income statement (in millions):
Income Statement
For the Year Ended December 31, 2012
Net Sales $300
Cost of Goods Sold 120
Gross Profit 180
Operating Expenses 44
Net Income $136

Using vertical analysis, what percentage is assigned to Net Income?
None of these

Multiple Choice Question 135
6. The following amounts were taken from the financial statements of Plant Company:
2013 2012
Total assets $800,000 $1,000,000
Net sales 720,000 650,000
Gross profit 352,000 320,000
Net income 126,000 117,000
Weighted average number of common shares outstanding 90,000 90,000
Market price of common stock $35 $39

The return on assets ratio for 2013 is

Multiple Choice Question 174
7. Parrish, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the division’s assets with a book value of $1,250,000 are sold for $850,000. Operating income from January 1 to June 30 for the division amounted to $125,000. Ignoring income taxes, what total amount should be reported on Parrish’s income statement for the current year under the caption, Discontinued Operations?
$400,000 loss
$275,000 loss

Multiple Choice Question 112
8. Earnings per share is calculated
only for preferred stock.
only for treasury stock.
for common and preferred stock.
only for common stock.

Multiple Choice Question 171
9. The acid-test ratio is also known as the
current ratio.
fast ratio.
quick ratio.
times interest earned ratio

Multiple Choice Question 70
10. In performing a vertical analysis, the base for sales revenues on the income statement is
net income.
cost of goods available for sale.
net sales.

Multiple Choice Question 162
11. The order of presentation of nontypical items that may appear on the income statement is
Other revenues and expenses, Extraordinary items, Discontinued operations.
Extraordinary items, Discontinued operations, Other revenues and expenses.
Discontinued operations, Extraordinary items, Other revenues and expenses.
Other revenues and expenses, Discontinued operations, Extraordinary items

Multiple Choice Question 98
12. A measure of the percentage of each dollar of sales that results in net income is
return on assets.
earnings per share.
profit margin.
return on common stockholders' equity.

Multiple Choice Question 159
13. Which one of the following would be classified as an extraordinary item?
Expropriation of property by a foreign government.
Losses attributed to a labor strike.
Write-down of inventories.
Gains or losses from sales of equipment.

Multiple Choice Question 122
14. The following information pertains to Sampson Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.
Cash and short-term investments $ 45,000
Accounts receivable (net) 25,000
Inventory 20,000
Property, plant and equipment 210,000
Total Assets $300,000

Liabilities and Stockholders’ Equity
Current liabilities $ 50,000
Long-term liabilities 90,000
Stockholders’ equity—common 160,000
Total Liabilities and Stockholders’ Equity $300,000

Income Statement
Sales $ 120,000
Cost of goods sold 66,000
Gross profit 54,000
Operating expenses 30,000
Net income $ 24,000

Number of shares of common stock 6,000
Market price of common stock $20
Dividends per share .50

What is the current ratio for Sampson?

Multiple Choice Question 170
15. What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash?
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