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Accounting Exam
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Questions in this quiz (25)
1The percent of fixed assets to total assets is an example of
- Averitcal anaylisis
- Bsolvencay analysis
- Cprofitability analysis
- Dhorizontal analysis
2The percentage analysis of increases and decreases in individual items in comparative financial statements is called
- Ahorizontal analysis
- Bveritcal analysis
- Csolvency analysis
- Dprofitability analysis
3An analysis in which all the components of an income statement are expressed as a percentage of net sales is called
- Ahorizontal analysis
- Bliquidity analysis
- Ccommon-size analysis
- Dvertical analysis
4Statements in which all items are expressed only in relative terms (percentages of a common base) are
- Acommon-size statements
- Bhorizontal statements
- Cpercentage statements
- Dvertical statements
5The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as
- ASolvency and leverage
- BSolvency and profitability
- CSolvency and liquidity
- DSolvency and equity
6Which of the following is NOT an analysis used in assessing solvency?
- ARatio of net sales to assets
- BNumber of times interest charges are earned
- CCurrent position analysis
- DInventory analysis
7The ratio computed by dividing current assets by current liabilities is the
- Acurrent ratio
- Bearnings ratio
- Cacid-test ratio
- Dquick ratio
8The ratio of the sum of cash, receivables, and marketable securities to current liabilities is called the
- Acurrent ratio
- Bprice-earnings ratio
- Cearnings ratio
- Dquick ratio
9An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to
- Aincrease
- Bdecrease
- Cremain the same
- Deither increase or decrease
10Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?
- ARatio of fixed assets to long-term liabilities
- BRatio of net sales to assets
- CNumbers of days' sales in receivables
- DRate earned on stockholder's
11The number of times interest charges are earned is computed as
- Aincome before income tax plus interest charges divided by interest charges
- Bnet income plus interst charges divided by interest charges
- Cincome before income tax divided by interest charges
- Dnet income divided by interest charges
12The ______________ measures the profitability of total assets, without considering how the assets are financed.
- Arate earned on total assets
- Bprice-earnings ratio
- Cratio of net sales to assets
- Ddividend yield
13The ______________ measures the profitability of total assets, without considering how the assets are financed.
- Arate earned on total assets
- Bprice-earnings ratio
- Cratio of net sales to assets
- Ddividend yield
14For most profitable companies, the rate earned on total assets will be less than
- Athe rate earned on stockholder's equity
- Bthe rate earned on total liabilities and stockholder's equity
- Cthe rate earned on sales
- Dcannot be determine without more information
15For most profitable companies, the rate earned on total assets will be less than
- Athe rate earned on stockholder's equity
- Bthe rate earned on total liabilities and stockholder's equity
- Cthe rate earned on sales
- Dcannot be determine without more information
16Which additional report is required of independent auditors since the passage of the Sarbanes-Oxley Act in 2002?
- AA report attesting to management's assement of internal control
- BA report assessing the probability that the company will reamin in business
- CA report asseing the market value of the company's current stock
- DA report assessing the competency of the company's board of directors
17Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of
- Acapital investment analysis
- Bsales mix analysis
- Cvariable cost analysis
- Dabsorption cost analysis
18Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of
- Acapital investment analysis
- Bsales mix analysis
- Cvariable cost analysis
- Dabsorption cost analysis
19By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money
- Ahas a time value
- Bhas an international rate of exchange
- Cis the language of business
- Dis the measure of assets, liabilities, and stockholders' equity on financial statements
20The primary advantage of the average rate of return method are its ease of computation and the fact that
- Ait emphasizes the amount of income earned over the life of the proposal
- BIt is especially useful to managers whose primary concern is liquidity
- CThere is less possibility of loss from changes in economic conditions and obsolescence when the commitment is short-term
- Dranking of proposals are necessary
21Which of the following can be used to place capital investment proposals involving different amounts of investment on a comparable basis for purposes of net present value analysis?
- ARatio of fixed assets to long-term liabilities
- BRatio of net sales to assets
- CNumbers of days' sales in receivables
- DRate earned on stockholder's equity
22An analysis of a proposal by the net present value method indicated that the present value exceeded the amount to be invested. Which of the following statements best describes the results of this analysis?
- AThe proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.
- BThe proposal is desirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis.
- CThe proposal is undesirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis.
- DThe proposal is undesirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.
23In general, present value methods of analyzing capital investments are more desirable than methods ignoring present value because
- Athe present value methods consider that a dollar today is worth more than a dollar in the future due to the potential earning power of that dollar.
- Bthe calculations in methods that ignore present value are more complex than those in methods using present value.
- Cthe calculations in methods that consider present value are less complex than those methods ignoring present value.
- Dthe present value methods consider that a dollar in the future is worth more than a dollar today due to the potential earning power of that dollar.
24Which method of evaluating capital investment proposals uses the concept of present value to compute a rate of return?
- Ainternal rate of return
- BAverage rate of return
- CAccounting rate of return
- DCash payback period
25When several alternative investment proposals of the same amount are being considered, the one with the largest net present value is the most desirable. If the alternative proposals involve different amounts of investment, it is useful to prepare a relative ranking of the proposals by using a(n)
- Apresent value index.
- Baverage rate of return.
- Cconsumer price index.
- Dprice-level index.
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- accounting Quiz on Accounting Exam, created by Tyler Satter on 08/11/2017.
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- Tyler Satter
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- English
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