ACCOUNTING 200-Which of the following types of financial stmt

ACCOUNTING 200-Which of the following types of financial stmt

Subject: Business    / Accounting
Question
21. Which of the following types of financial statement analysis would be used to see how a
company’s operating expenses as a percentage of net sales have changed from one year to the
next?
a)
b)
c)
d) Analysis of internal control system
Ratio analysis
Vertical and horizontal analysis
Trend analysis 22. Which of the following types of financial statement analysis would be used to see how the
sales revenue of a company has changed from one year to the next?
a)
b)
c)
d) Horizontal analysis of balance sheet
Vertical analysis of income statement
Vertical analysis of balance sheet
Horizontal analysis of income statement 23. Which of the following statements accurately describes the statement of cash flows?
a)
b)
c)
d) It indicates when long-term debt will mature
It shows the link between book income and earnings per share
It shows the relative proportion of debt and assets
It shows the link between accrual based income and the cash reported on the balance
sheet 24. While preparing a statement of cash flows using the indirect method, the Depreciation
Expense _______.
a)
b)
c)
d) Is added back as an adjustment to Net income in the operating activities section
Is shown as a negative cash flow in the investing activities section
Is added back to purchase of plant assets under investing activities
Is shown as a negative cash flow under operating activities 25. Rodriguez Tint Inc. uses the indirect method to prepare its statement of cash flows. Refer to
the following portion of the comparative balance sheet:
Rodriguez Inc.
Comparative Balance sheet
December 31, 2014 and 2013 2014
Cash
$21,000
Accounts Receivable
31,000
Inventory
53,000
Plant and Equipment
123,000
Accumulated Depreciation – Plant & equip. (43,000)
Total Assets
$228,000 2013
$18,000
35,000
25,000
90,000
(40,000)
$168,000 increase/decrease
$3,000
(4,000)
28,000
33,000
(3,000)
$60,000 Additional information provided by the company includes the following:
1) Equipment costing $65,000 was purchased for cash.
2) Equipment with a cost of $32,000 and accumulated depreciation of $7,000 was sold for
$45,000.
What was the amount of net cash provided by (used for) investing activities?
a)
b)
c)
d) $120,000
$(20,000)
$20,000
$(120,000) 27. e-Shop Inc. provides the following data:
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net.
Merchandise Inventory
Total current assets
Property, plant, and equipment, net
Total assets
Net credit sales $500,000
a)
b)
c)
d) 1 times
4.03 times
0.67 times
1.99 times 2015 2014 $31,000
38,000
55,000
$124,000
121,000
245,000 $25,000
62,000
50,000
137,000
120,000
257,000 28. “Analysts look for red flags in financial statements that may signal financial trouble”. Which
of the following is a “red flag” suggesting that a company may be in trouble?
a)
b)
c)
d) A decrease in divided payout ratio from year to year
A decline in days’ sales in inventory
Net cash flow from operating activities is consistently lower than net income
A reduction in the debt ratio 29. A summary of significant accounting policies and explanations of specific items on the
financial statements will be given in _______.
a)
b)
c)
d) The notes to financial statements
The balance sheet
The report of independent registered public accounting firm
The income statement 30. the activities that are included in the operating activities section of the statement of cash
flows are ________.
a)
b)
c)
d) Activities that increase or decrease long – term assets
Activities that create revenue or expenses
Activities that pertain to construction of new facilities
Activities that obtain the cash needed to launch and sustain the business 32. Avatar Auto Parts Company uses the indirect method to prepare the statement of cash
flows. Refer to the following section of the comparative balance sheet:
Avatar Company
Comparative Balance sheet
December 31, 2014 and 2013
Accounts payable
Accrued liabilities
Long – term notes payable
Total liabilities 2014
$4,000
2,000
84,000
$90,000 2013
$6,000
1,000
90,000
$97,000 increase/decrease
$(2,000)
1,000
(6,000)
$(7,000) How will the change in Accounts Payable be shown on the statement of cash flows?
a)
b)
c)
d) As a deduction from investing cash flows
As an addition to net income
As a deduction from net income
As an addition to operating cash flows 33. Cash received from the issuance of notes payable is a(n) _____ on the statement of cash
flows.
a)
b)
c)
d) Financing activity
Investing activity
Non – cash activity
Operating activity 34. Felix skateboards company used the indirect method to prepare the statement of cash
flows. Refer to the following income statement:
Felix Company
Income statement
Year ended December 31, 2015
Sales Revenue
Interest revenue
Gain on sale of plant assets
Total revenues and gains
Cost of goods sold
Salary expense
Depreciation expense
Other operating expenses
Interest expense
Income tax expense
Total expenses
Net income (loss) $245,000
2,000
5,000
118,000
43,000
13,000
25,000
1,500
5,500 Additional information provided by the company includes the following:
1) Current assets, other than cash, increased by $24,000
2) Current liabilities decreased by $1,000
How much is the net cash provided by operating activities?
a)
b)
c)
d) $21,000
$34,000
$29,000
$39,000 $252,000 206,000
$46,000 35. e-Shop Inc. has net sales on account of $1,200,000. The average net accounts receivable are
$600,000. Calculate the days’ sales in receivables.
a)
b)
c)
d) 439.8 days
182.5 days
304.0 days
8.7 days 36. The vertical analysis statement of Nobell Inc. is as shown below:
Nobell Inc.
Comparative Income Statement
Years Ended December 31, 2015 and 2014
(In millions)
2016
Net sales
$6,355
Cost of Goods sold
3,370
Gross profit
$2,985
Operating expenses
Selling expenses
$675
Administrative expenses
$410
Total expenses
$1,085
Operating income
$1,900
Other revenue and (expenses)
Interest revenue
0
Interest expense
(400)
Total revenues and (expenses) (400)
Income before taxes
$1,500
Income tax expense
230
Net income
$1,270 % of total
100%
53.0
47.0 2015
$4,920
2,200
$2,720 % of total
100%
44.7
55.3 10.6
6.5
17.1
29.9 $580
425
$1,005
$1,715 11.8
8.6
20.4
34.9 0
(6.3)
(6.3)
23.6
3.6
20.0 0
(695)
(695)
$1,020
210
$810 0
(14.1)
(14.1)
20.7
4.3
16.5 The figure 16.5% shown for net income in 2015 signifies that _________.
a)
b)
c)
d) Net income is increased by 16.5% over the previous year
Net income is 16.5% of net sales revenues
Net income is equal to 16.5 times of the income before income tax
Net income is 16.5% of gross profit