Strayer ACC556 CHAPTER 13 EXERCISE Latest 2019 April Question # 00602303 Course Code : ACC556 Subject: Business Due on: 06/18/2019 Posted On: 06/18/2019 08:36 AM Tutorials: 1 Rating: 4.5/5

ACC556 Financial Accounting for Managers

CHAPTER 13 EXERCISE

Question 1 Comprehensive
income includes all revenues, expenses, gains, losses, and dividends.

Answers:

True

False

Question 2 A
primary purpose of vertical analysis is to observe trends over a three-year
period.

Answers:

True

False

Question 3 Leverage
and return on equity are closely related.

Answers:

True

False

Question 4 Because
pro forma earnings are based on specific rules, these amounts are highly
reliable.

Answers:

True

False

Question 5 Which
of the following income statement figures would probably be the best indicator
of a company’s future performance?

Answers:

Total
revenues

Income from operations

Net income

Gross
profit

Question 6 The
discontinued operations section of the income statement refers to

Answers:

discontinuance
of a product line.

the income
or loss on products that have been completed and sold.

obsolete
equipment and discontinued inventory items.

the disposal of a significant component of a
business.

Question 7 Patchett
Company reported income before taxes of $800,000 and an extraordinary loss of
$200,000. Assume that the company’s tax rate is 25%. What amounts will be
reported on the income statement for income before irregular items and extraordinary
items, respectively?

Answers:

$600,000
and $200,000

$600,000
and $150,000

$800,000
and $200,000

$800,000
and $150,000

Question 8 All
of the following statements are true regarding comprehensive income except

Answers:

companies
are required to report comprehensive income.

a company would add an unrealized loss on
available-for-sale securities to net income to calculate comprehensive income.

comprehensive
income does not include changes resulting from investments by stockholders.

comprehensive
income does not include dividends to stockholders.

Question 9 Horizontal
analysis of comparative financial statements includes the

Answers:

development
of common size statements.

calculation
of liquidity ratios.

calculation of dollar amount and percentage
changes from financial statements over a period of time, as compared to a base
year.

evaluation
of financial statement data that expresses each item in a financial statement
as a percentage of a base amount.

Question 10
Assume the following cost of goods sold data for a company:

2015 $1,300,000

2014 1,200,000

2013 1,000,000

If 2013 is
the base year, what is the percentage increase in cost of goods sold from 2013
to 2015?

Answers:

130%

30%

70%

20%

Question 11
The best way to study the relationship of the components within a financial
statement is to prepare

Answers:

common size statements.

a trend
analysis.

profitability
analysis.

ratio
analysis.

Question 12
The following schedule is a display of what type of analysis?

Amount Percent

Current
assets
$100,000 25%

Property,
plant, and equipment 300,000 75%

Total
assets $400,000 100%

Answers:

Horizontal
analysis

Differential
analysis

Vertical
analysis

Ratio
analysis

Question 13
Stockholders are most interested in evaluating

Answers:

liquidity.

solvency.

profitability.

marketability.

Question 14
Somen to Park Corporation had net credit sales of $4,060,000 and cost of goods
sold of $3,000,000 for the year. The Accounts Receivable balances at the
beginning and end of the year were $650,000 and $750,000, respectively. The accounts
receivable turnover was

Answers:

6.7 times.

6.2 times.

5.8 times.

6.4 times.

Question 15
BVI Corporation had net income of $1,600,000 and paid dividends to common
stockholders of $400,000 in 2014. The weighted average number of shares
outstanding in 2014 was 500,000 shares. BVI Corporation’s common stock is
selling for $50 per share on the NASDAQ. BVI Corporation’s payout ratio for
2014 is

Answers:

$5 per
share.

25%.

20%.

12.5%.

Question 16
A successful grocery store would probably have

Answers:

a low
inventory turnover.

a high inventory turnover.

zero profit
margin.

low volume.

Question 17
The following information pertains to Blue Flower Company. Assume that all
balance sheet amounts represent both average and ending balance figures. Assume
that all sales were on credit.

Assets

Cash and
short-term investments
$ 45,000

Accounts
receivable (net)
30,000

Inventory
15,000

Property,
plant and equipment
210,000

Total
Assets
$300,000

Liabilities and Stockholders’ Equity

Current
liabilities
$ 60,000

Long-term
liabilities
90,000

Stockholders’
equity—common
15,000

Total
Liabilities and Stockholders’ Equity
$300,000

Income Statement

Sales
revenue $ 121,000

Cost of
goods sold
66,000

Gross
margin
55,000

Operating
expenses
30,000

Net
income $
25,000

Number of shares of common stock 6,000

Market
price of common stock $20

Dividends
per share on common stock
.50

Cash
provided by operations $40,000

What is the
current ratio for this company?

Question 18
For each of the ratios listed below, indicate by the appropriate code letter,
whether it is a liquidity ratio, a profitability ratio, or a solvency ratio.

Price-earnings
ratio

Return on
assets

Accounts
receivable turnover ratio

Earnings
per share

Payout
ratio

Current
cash debt coverage

Current
ratio

Debt to
assets ratio

Free cash
flow

Inventory
turnover

All Answer
Choices

A. Profitability
ratio

B. Liquidity
ratio

C. Solvency
ratio