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Salamagundi, Inc.has the following Income Statement (in millions) : Salamagundi, Inc.has the following Income Statement (in millions) : Using vertical analysis, what percentage is assigned to Gross profit? A) 37.5% B) 100% C) 60% D) 62.5% Using vertical analysis, what percentage is assigned to Gross profit?


A) 37.5%
B) 100%
C) 60%
D) 62.5%

E) A) and B)
F) B) and C)

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Declining profitability and liquidity ratios are indications that a company may not survive.

A) True
B) False

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Comparisons of company data with industry averages provide information about a company's relative position within the industry.

A) True
B) False

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The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the accounts receivable turnover for this company? A) 2.8 times B) 2 times C) 3.4 times D) 3 times What is the accounts receivable turnover for this company?


A) 2.8 times
B) 2 times
C) 3.4 times
D) 3 times

E) A) and B)
F) A) and C)

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Alternative accounting methods affect the quality of earnings.

A) True
B) False

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In a common-size financial statement, which of the following is given a percentage of 100%?


A) Total liabilities
B) Net income
C) Total assets
D) Cost of goods sold

E) All of the above
F) A) and B)

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Assume the following sales data for a company: Assume the following sales data for a company: If 2019 is the base year, what is the percentage increase in sales from 2019 to 2020? A) 140% B) 125% C) 40% D) 25% If 2019 is the base year, what is the percentage increase in sales from 2019 to 2020?


A) 140%
B) 125%
C) 40%
D) 25%

E) C) and D)
F) A) and B)

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Companies report most changes in accounting principle currently.

A) True
B) False

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The following items were taken from the financial statements of Kramer Manufacturing, Inc., over a 3-year period: The following items were taken from the financial statements of Kramer Manufacturing, Inc., over a 3-year period: Instructions Using horizontal analysis and 2019 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit.Explain whether the trends are favorable or unfavorable for each item. Instructions Using horizontal analysis and 2019 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit.Explain whether the trends are favorable or unfavorable for each item.

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blured image 1(2021 Net sal./2019 Net sal.) 2(2021 G...

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Comprehensive income would not include


A) dividends declared.
B) unrealized gains on available-for-sale securities.
C) discontinued operations.
D) other expenses and losses.

E) B) and C)
F) A) and D)

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The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. The following information pertains to Blue Flower Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the return on assets for this company? A) 16.1% B) 11.3% C) 6.5% D) 12.9% What is the return on assets for this company?


A) 16.1%
B) 11.3%
C) 6.5%
D) 12.9%

E) B) and D)
F) B) and C)

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The asset turnover is


A) net sales divided by net income.
B) average total assets divided by net income.
C) net sales divided by average total assets.
D) average total assets divided by net sales.

E) A) and B)
F) B) and D)

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Horizontal analysis (trend analysis) percentages for Omega Company's sales, cost of goods sold, and expenses are listed here. Horizontal analysis (trend analysis) percentages for Omega Company's sales, cost of goods sold, and expenses are listed here. Instructions Explain whether Omega's net income increased, decreased, or remained unchanged over the 3-year period. Instructions Explain whether Omega's net income increased, decreased, or remained unchanged over the 3-year period.

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Comparing the percentages presented resu...

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Net sales are $2,700,000, beginning total assets are $700,000, and the asset turnover is 3.0.What is the ending total asset balance?


A) $900,000
B) $1,100,000
C) $700,000
D) $800,000

E) B) and D)
F) None of the above

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Comparative balance sheets


A) are usually prepared for at least one year.
B) are usually prepared for at least two years.
C) do not show both dollar amount and percentage changes.
D) do not show a comparison of total stockholders' equity.

E) All of the above
F) A) and B)

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Vertical analysis is a technique that expresses each item in a financial statement


A) in dollars and cents.
B) as a percent of the item in the previous year.
C) as a percent of a base amount.
D) starting with the highest value down to the lowest value.

E) A) and C)
F) C) and D)

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Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2019, 2020, and 2021, respectively.If 2019 is the base year, what percentage do 2021 sales represent of the base?


A) 108%
B) 120%
C) 83%
D) 20%

E) C) and D)
F) B) and C)

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Which of the following would not be considered an example of a discontinued operation?


A) Shifting production processes within an operation
B) Elimination of a major class of customers
C) Elimination of an entire activity
D) Disposal of a significant component of a business

E) B) and C)
F) A) and B)

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If a company has a discontinued operation gain of $30,000 and a 32% tax rate, what is the effect on net income?


A) Increase of $30,000.
B) Increase of $20,400.
C) Increase of $9,600.
D) No effect.

E) A) and D)
F) A) and B)

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Comparisons of financial data made within a company are called


A) intracompany comparisons.
B) interior comparisons.
C) intercompany comparisons.
D) industry comparisons.

E) B) and D)
F) None of the above

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