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Exam 13: How to Read, Analyze, and Interpret Financial Reports

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Question 1

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Land does not depreciate.

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Question 2

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A balance sheet shows the financial condition of a business at a particular date.

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In using horizontal analysis, comparative reports are:

The computer is the only tool needed in monitoring a business's financial condition.

Cost of merchandise sold equals beginning inventory:

Selecting a base year and expressing each amount as a percent of the base year amount is called:

Vertical analysis cannot be done on a comparative statement.

Could we speed up our collections? could be one question raised about the average day's collection ratio.

A relationship of one number to another is a ratio.

Which of the following is not a current asset?

A ratio of 2:2:1 means:

Net purchases are the cost of purchases minus purchase discounts minus purchase returns and allowances.

The balance sheet lists:

In the acid test ratio, inventory and prepaid expenses are not excluded.

Reductions in the selling price for early payment are called sales returns and allowances.

The company's gross profit based on the following is sales $48,000, sales returns and allowances $6,000, operating expenses $6,200, beginning inventory $900, net purchases $9,100, ending inventory $2,300.

Given the following: By trend analysis (base year is 2010) , sales in 2012 to the nearest percent of the base year is:

When each asset is analyzed as a percent of total assets for a single period, this is known as:

The return on equity ratio looks at how effectively assets are being utilized.

The cost of merchandise sold from the following data is as follows: sales $80,000, beginning inventory $5,000, purchases $21,800, purchase discounts $790, ending inventory $5,100.