Question 1

We report any profits or losses on discontinued operations in the current year,separately from profits and losses on the portion of the business that will continue.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following ratios is most useful in evaluating liquidity?

Accepted Answer

A)  Acid-test ratio.
B)  Return on equity.
C)  Profit margin ratio.

Question 3

Popson Inc.incurred a material loss due to the write-down of inventory.This loss should be reported as:

Accepted Answer

A)  Other revenues.
B)  A loss from discontinued operations.
C)  Other expenses.

Question 4

The average collection period converts the receivables turnover ratio into days.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an example of horizontal analysis?

Accepted Answer

A)  Comparing gross profit across companies.
B)  Comparing gross profit with operating expenses.
C)  Comparing assets with equity.
D)  Comparing the change in sales over time.

Question 6

Which of the following is NOT an example of applying conservatism in accounting?

Accepted Answer

A)  Recording contingent losses that are probable.
B)  Expensing all research and development costs as they are incurred.
C)  Using the lower of cost and net realizable value for inventory accounting.
D)  Increasing the useful life used in calculating depreciation.

Question 7

Assuming a current ratio of 1.0 and an acid-test ratio of 0.75,how will the purchase of inventory with cash affect each ratio?

Accepted Answer

A)  Increase the current ratio and increase the acid-test ratio.
B)  No change to the current ratio and decrease the acid-test ratio.
C)  Decrease the current ratio and decrease the acid-test ratio.

Exam 12: Financial Statement Analysis

The average collection period converts the receivables turnover ratio into days.

Correct Answer
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Popson Inc.incurred a material loss due to the write-down of inventory.This loss should be reported as:

Correct Answer
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Assuming a current ratio of 1.0 and an acid-test ratio of 0.75,how will the purchase of inventory with cash affect each ratio?

Correct Answer
verified

We report any profits or losses on discontinued operations in the current year,separately from profits and losses on the portion of the business that will continue.

Correct Answer
verified

Which of the following ratios is most useful in evaluating liquidity?

Correct Answer
verified

Which of the following is an example of horizontal analysis?

Correct Answer
verified

Which of the following is NOT an example of applying conservatism in accounting?

Correct Answer
verified

Exam 12: Financial Statement Analysis

The average collection period converts the receivables turnover ratio into days.

Correct AnswerverifiedShow Answer

Popson Inc.incurred a material loss due to the write-down of inventory.This loss should be reported as:

Correct AnswerverifiedShow Answer

Assuming a current ratio of 1.0 and an acid-test ratio of 0.75,how will the purchase of inventory with cash affect each ratio?

Correct AnswerverifiedShow Answer

We report any profits or losses on discontinued operations in the current year,separately from profits and losses on the portion of the business that will continue.

Correct AnswerverifiedShow Answer

Which of the following ratios is most useful in evaluating liquidity?

Correct AnswerverifiedShow Answer

Which of the following is an example of horizontal analysis?

Correct AnswerverifiedShow Answer

Which of the following is NOT an example of applying conservatism in accounting?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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