This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 18 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The percent of property, plant and equipment to total assets is an example of: A) Vertical analysis. B) Solvency analysis. C) Profitability analysis. D) Horizontal analysis. Show Answer Correct Answer: A) Vertical analysis. 2. All of the following are revenues, except for? A) Accounts receivable. B) Dividends received. C) Rent Revenue. D) Commission Revenue. Show Answer Correct Answer: A) Accounts receivable. 3. What does the times-interest-earned ratio measure? A) The percentage of the firm's capital provided by debtholders. B) The firm's ability to pay off short-term obligations without relying on the sale of inventories. C) The firm's ability to meet its annual interest payments. D) The rate of return on common stockholders' investment. Show Answer Correct Answer: C) The firm's ability to meet its annual interest payments. 4. Comparative analysis is also known as ..... Analysis. A) Horizontal. B) Vertical. C) Parallel. D) None. Show Answer Correct Answer: A) Horizontal. 5. Ratios are used as tools in financial analysis A) Instead of horizontal and vertical analyses. B) Because they can provide information that may not be apparent from inspection of the individual components of a particular ratio. C) Because even single ratios by themselves are quite meaningful. D) Because they are prescribed by GAAP. Show Answer Correct Answer: B) Because they can provide information that may not be apparent from inspection of the individual components of a particular ratio. 6. A company's cost of merchandise sold increased by 6.7% over the prior year. Management A) Considers this to be an unfavorable trend. B) Cannot evaluate this change without knowing the change in sales. C) Should reduce the amount of merchandise purchased during the next year. D) Should reduce operating costs to maintain a constant operating margin. Show Answer Correct Answer: B) Cannot evaluate this change without knowing the change in sales. 7. Leverage ratio is ..... A) The ratio is used to measure how much a company is financed with assets. B) The ratio is used to measure how much a company is financed with capital. C) The ratio is used to measure how much a company is financed with profits. D) The ratio is used to measure how much a company is financed with debt. Show Answer Correct Answer: D) The ratio is used to measure how much a company is financed with debt. 8. Operating Profit Before Interest & Tax = Gross Profit-? A) Non-Operating Expenses. B) Operating Expenses. C) Direct Expenses. D) Interest. Show Answer Correct Answer: B) Operating Expenses. 9. Unsecured Loans from friends and relatives, repayable after one year, should be classified as? A) Current Liabilities. B) Term Liabilities. C) Net Worth. D) Anywhere. Show Answer Correct Answer: B) Term Liabilities. 10. If the rental agreement meets the financing rental criteria, then at the beginning of the rental agreement the lessee (lessee) notes A) Assets (Dr) and Cash (Kr). B) Rental Fees (Dr) and Cash (Kr). C) Rent Payable (Dr), Interest Costs (Dr), and Cash (Kr). D) Assets-Finance Lease (Dr) and Liabilities-Finance Lease (Kr). Show Answer Correct Answer: D) Assets-Finance Lease (Dr) and Liabilities-Finance Lease (Kr). 11. . The objective of financial reporting, according to the IASB framework, is to: A) Provide information about the firm to current and potential investors. B) Decide the acceptable standards for presenting financial performance. C) Minimize management discretion in presenting the financial results of a firm. D) None of above. Show Answer Correct Answer: B) Decide the acceptable standards for presenting financial performance. 12. The current ratio assumes a business could sell its merchandise inventory quickly. A) True. B) False. Show Answer Correct Answer: A) True. 13. A firm's financial statements show that the Accounts Receivable (AR) Days ratio for the firm was 15, and the Accounts Payable (AP) Days ratio was 20. Based on this information, should investors include Accounts Receivables in their assessment of the liquidity of the firm? A) Yes, because AR is converted to cash faster than AP is paid out. B) No, because AP Days is higher than AR Days. C) No, because it takes longer to convert AR to cash than AP is paid out. D) Unsure, as these ratios do not relate to the firm's liquidity. Show Answer Correct Answer: A) Yes, because AR is converted to cash faster than AP is paid out. 14. When the carrying amount of property, plant and equipment exceeds its recoverable amount, the company will carry out a recovery A) Asset Revaluation. B) Asset Identification. C) Impairment of Asset Value. D) Asset Reclassification. Show Answer Correct Answer: C) Impairment of Asset Value. 15. Which one of the following is a current asset? A) Bank Account. B) Operating Note. C) Land. D) Machinery. Show Answer Correct Answer: A) Bank Account. 16. What are the components of an income statement? A) Assets, liabilities, and equity. B) Cash flow from operating activities, investing activities, and financing activities. C) Revenue, expenses, gains, and losses. D) Balance sheet, statement of cash flows, and statement of retained earnings. Show Answer Correct Answer: C) Revenue, expenses, gains, and losses. 17. Following is not a Non-Quick Assets A) Prepaid Expenses. B) Advance Payments. C) Closing Stock. D) Debtors. Show Answer Correct Answer: D) Debtors. 18. Variance analysis is done as part of vertical analysis A) True. B) False. Show Answer Correct Answer: B) False. 19. Market ratios A) Measure the ability of the company to meet its daily financial needs. B) Measure a company's financial performance in relative to the market value of the stock. Show Answer Correct Answer: B) Measure a company's financial performance in relative to the market value of the stock. 20. How the sales growth is calculated? A) (Last Year Sales-Current Year Sales) / Last Year Sales. B) (Last Year Sales-Current Year Sales) / Current Year Sales. C) (Current Year Sales-Last Year Sales) / Current Year Sales. D) (Current Year Sales-Last Year Sales) / Last Year Sales. Show Answer Correct Answer: D) (Current Year Sales-Last Year Sales) / Last Year Sales. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Statement Analysis Quiz 1Financial Statement Analysis Quiz 2Financial Statement Analysis Quiz 3Financial Statement Analysis Quiz 4Financial Statement Analysis Quiz 5Financial Statement Analysis Quiz 6Financial Statement Analysis Quiz 7Financial Statement Analysis Quiz 8Financial Statement Analysis Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books