Acc 102 Exam I Review
1. A comparative financial statement:
A. Places the balance sheet, the income statement, and the statement of cash flows side-by-side in order to
compare the results.
B. Places two or more years of a financial statement side-by-side in order to compare results.
C. Places the financial statements of two or more companies side-by-side in order to compare results.
D. Places the dollar amounts next to the percentage amounts of a given year for the income statement.
2. The changes in financial statement items from a base year to following years are called:
A. Money changes.
B. Trend percentages.
C. Component percentages.
3. The price-earnings ratio is measured by dividing:
A. Book value by earnings per share.
B. Par value by earnings per share.
C. Market value by earnings per share.
D. Market value by total net income.
4. Comparative financial statements compare the company's current statements with:
A. Those of prior periods.
B. Those of other companies in the same industry.
C. Those of the company's principal competitor.
D. The budgeted level of performance for the period.
5. The measures most often used in evaluating solvency—the current ratio, quick ratio, and amount of working
capital—are developed from amounts appearing in the:
A. Balance sheet.
B. Income statement.
C. Statement of retained earnings.
D. Statement of cash flows.
6. The current ratio is calculated by:
A. Dividing current assets by total assets.
B. Dividing current assets by total liabilities.
C. Dividing current assets by stockholders' equity.
D. Dividing current assets by current liabilities.
7. The debt ratio indicates the percentage of:
A. Total assets financed by long-term mortgages.
B. Revenue consumed by interest expense.
C. Total assets financed by creditors.
D. Total liabilities classified as current.
8. The debt ratio is used primarily as a measure of:
A. Short-term liquidity.
B. Creditors' long-term risk.
D. Return on Investment.
9. All of the following captions or subtotals are typical of a multiple-step income statement, except for:
A. Net sales.
B. Gross profit.
C. Total costs and expenses.
D. Operating income.
10. When comparing the current ratio to the quick ratio:
A. The current ratio will always be greater.
B. The quick ratio will always be greater.
C. The quick ratio is sometimes greater and sometimes less than the current ratio.
D. They always will be the same.
11. The gross profit rate represents:
A. Total sales revenue.
B. The percentage change in net sales from the prior period.
C. The percentage of sales revenue remaining after providing for the cost of the merchandise sold.
D. Net income stated as a percentage of total sales revenue.
12. Operating income excludes each of the following, except:
A. Interest expense.
B. Income taxes.
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