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ACC 561 Week 2 Study Guide and Practice Quiz PaperScholar Study Aids
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ACC 561 Week 2 Study Guide and Practice Quiz

ACC 561 Week 2 Study Guide and Practice Quiz


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

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

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

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

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

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

Question 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?

  • 113%
  • 33%
  • 133%
  • 75%

Question 5
In analyzing financial statements, horizontal analysis is a

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

Question 6
Comparative balance sheets

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

Question 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%
  • 150%
  • 67%
  • 20%

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

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

Question 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

Question 10
A common measure of profitability is the

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

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

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

Question 12
The current ratio is

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

Question 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?

  • 100%
  • 75%
  • 25%
  • None of the above.