CHAPTER 18 FINANCIAL STATEMENT ANALYSIS Question 167. What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash? a. Leverage b. Solvency c. Profitability d. Liquidity 168. The acid-test ratio is also known as the a. current ratio. b. quick ratio. c. fast ratio. d. times interest earned ratio. 169. The debt to assets ratio a. is a solvency ratio. b. is computed by dividing total assets by total debt. c. measures the total assets provided by stockholders. d. is a profitability ratio. 170. An extraordinary item is one that a. occurs infrequently and is uncontrollable in nature. b. occurs infrequently and is unusual in nature. c. is material and is unusual in nature. d. is material and is uncontrollable in nature. 171. Troy, Inc. decided on January 1 to discontinue its telescope manufacturing division. On July 1, the divisions assets with a book value of $1,260,000 are sold for $840,000. Operating income from January 1 to June 30 for the division amounted to $130,000. Ignoring income taxes, what total amount should be reported on Troys income statement for the current year under the caption, Discontinued Operations? a. $130,000 b. $290,000 loss c. $420,000 loss d. $550,000 172. When there has been a change in accounting principle, a. the old principle should be used in reporting the results of operations for the current year. b. the cumulative effect of the change should be reported in the current years retained earnings statement. c. the change should be reported retroactively. d. the new principle should be used in reporting the results of operations of the current year, but there is no change to prior years. 173. Under IFRS, there is no classification for a. changes in accounting estimates. b. changes in accounting principles. c. discontinued operations. d. extraordinary items. 174. The accounting for each of the following is the same under IFRS and GAAP except for a. extraordinary items. b. discontinued operations. c. changes in accounting principles. d. changes in accounting estimates. 175. Distinguishing normal levels of income from irregular items is of interest for the FASB IASB a. no no b. no yes c. yes no d. yes yes 176. All revenue and expense items are considered ordinary in nature under a. both IFRS and GAAP. b. GAAP. c. IFRS. d. neither IFRS or GAAP. 177. Under IFRS, the statement of comprehensive income can be prepared under a. the one-statement approach only. b. the two-statement approach only. c. either the one-statement approach or the two-statement approach d. either the two-statement approach or the stockholders’ equity statement approach. 178. Under IFRS, the components of other comprehensive income can be reported in each of the following ways except a. the one-statement approach. b. the two-statement approach. c. the statement of stockholders’ equity approach. d. All of these answer choices are correct. 179. Which of the following is not an acceptable way of displaying the components of other comprehensive income? a. Combined statement of retained earnings b. One-statement approach c. Two-statement approach d. All of these answer choices are correct. 180. Under IFRS, comprehensive income may be displayed (reported) in a. the equity section of the statement of financial position. b. the one-statement or the two-statement approach. c. two-statement approach only. d. the retained earnings statement.