Accounting_203_Chapter_14_Test

Accounting_203_Chapter_14_Test - ACCOUNTING 203 Chapter 14...

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ACCOUNTING 203 Chapter 14 Practice Test True and False Questions 1. Horizontal analysis involves comparing two or more years’ financial data for a single company. 2. Common-size statements are statements of companies of similar size and operations. 3. The gross margin percentage is computed by dividing the gross margin by sales. 4. The dividend payout ratio is equal to the current earnings per share divided by the dividend per share. 5. When computing the price-earnings ratio, the current market price of common stock is used. Multiple Choice Questions 6. The formula for the gross margin percentage is: A) (Sales- Cost of goods sold)/ Cost of goods sold B) (Sales-Cost of goods sold)/Sales C) Net income/ Sales D) Net income? Cost of goods sold 7. Which of the following is not a potential source of financial leverage? A) Long-term debt. B) Common stock. C) Preferred stock. D) Current liabilities. 8. Issuing new shares of stock in a five-for-one split of common stock would: A) decrease the book value per share of common stock. B) increase the book value per share of common stock. C) increase total stockholders’ equity. D) decrease total stockholders’ equity. 9. A company’s current ratio and an acid-test ratio are both greater then 1. Payment of an account payable of $64,500 would: A) increase the current ratio but the acid-test ratio would not be affected. B)
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Accounting_203_Chapter_14_Test - ACCOUNTING 203 Chapter 14...

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