ACC 561 Week 2 Quiz Latest

1. The relationship between current assets and current liabilities is important in evaluating a company’s

• market value.
• solvency.
• profitability.
• liquidity.

2. Which of the following is a measure of liquidity?

• Debt to equity ratio
• Profit margin
• Working capital
• Earnings per shar 

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3. Current assets divided by current liabilities is known as the

• capital structure.
• working capital
• current ratio.
• profit margin.

4. Danner Corporation reported net sales of $600,000, $680,000, and $800,000 in the years 2011, 2012, and 2013, respectively. If 2011 is the base year, what percentage do 2013 sales represent of the base?

• 33%
• 133%
• 75%
• 113% 

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5 .An analyzing financial statements, horizontal analysis is a

• theory.
• requirement.
• tool.
• principle.

6. Comparative balance sheets

• are usually prepared for at least one year.
• are usually prepared for at least two years.
• do not show both dollar amount and percentage changes.
• do not show a comparison of total stockholders’ equity. 

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7. Assume the following cost of goods sold data for a company:

2013	$1,500,000
2012	1,200,000
2011	1,000,000

If 2011 is the base year, what is the percentage increase in cost of goods sold from 2011 to 2013?

• 50%
• 67%
• 150%
• 20%

8. Comparisons of data within a company are an example of the following comparative basis:

• Intercompany.
• Interregional.
• Industry averages.
• Intracompany. 

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9. 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%

• Horizontal analysis
• Differential analysis
• Vertical analysis
• Ratio analysis

10. A common measure of profitability is the

• current ratio.
• debt to total assets.
• current cash debt coverage ratio.
• return on common stockholders’ equity ratio. 

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11. Which one of the following would be considered a long-term solvency ratio?

• Return on total assets
• Current cash debt coverage ratio
• Debt to total assets ratio
• Receivables turnover

12. The current ratio is

• calculated by dividing current liabilities by current assets.
• used to evaluate a company’s liquidity and short-term debt paying ability.
• used to evaluate a company’s solvency and long-term debt paying ability.
• calculated by subtracting current liabilities from current assets. 

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13.Richards, Inc. has the following income statement (in millions):

RICHARDS, INC.

Income Statement

For the Year Ended December 31, 2012

Net Sales                                                                          $180

Cost of Goods Sold                                                           60

Gross Profit                                                                        120

Operating Expenses                                                         75

Net Income                                                                         $ 45

Using vertical analysis, what percentage is assigned to net income?

• A.100%
• B.75%
• C.25%
• D.None of the above.

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