CHAPTER 18 FINANCIAL STATEMENT ANALYSIS

Question

157. A
loss on the write down of obsolete inventory should be reported as

a. “other expenses and losses.”

b. part of discontinued operations.

c. an operating expense.

d. an extraordinary item.

158. If
an item meets one (but not both) of the criteria for an extraordinary item, it

a. only needs to be disclosed in the footnotes
of the financial statements.

b. may be treated as sales revenue (if it is a
gain) and as an operating expense (if it is a loss).

c. is reported as an “other revenue or
gain” or “other expense and loss,” net of tax.

d. is reported at its gross amount as an
“other revenue or gain” or “other expense or loss.”

159. The
order of presentation of nontypical items that may appear on the income
statement is

a. Extraordinary items, Discontinued operations,
Other revenues and expenses.

b. Discontinued operations, Extraordinary items,
Other revenues and expenses.

c. Other revenues and expenses, Discontinued
operations, Extraordinary items.

d. Other revenues and expenses, Extraordinary
items, Discontinued operations.

160. Each of the
following is a factor affecting quality of earnings except

a. alternative
accounting methods.

b. improper
recognition.

c. pro
forma income.

d. extraordinary items.

161. Comparisons can be made on each of
the following bases except

a. industry
averages.

b. intercompany
basis.

c. intracompany
basis.

d. Each of these is a basis for
comparison.

162…..Comparisons of data within a company are an example of the following
comparative basis:

a. Industry
averages

b. Intercompany

c. Intracompany

d. Interregional

163…..Carter
Corporation reported net sales of $250,000, $400,000, and $600,000 in the years
2013, 2014, and 2015 respectively. If 2013 is the base year, what is the trend
percentage for 2015?

a. 100%

b. 40%

c. 140%

d. 240%

164. In vertical
analysis, the base amount for each income statement item is

a. gross
profit.

b. net
income.

c. net
sales.

d. sales.

165. When
performing vertical analysis, the base amount for administrative expense is
generally

a. administrative
expense in a previous year.

b. net
sales.

c. gross
profit.

d. fixed
assets.

166. Ratios that measure the short-term
ability of the company to pay its maturing obligations are

a. liquidity
ratios.

b. profitability
ratios.

c. solvency
ratios.

d. trend ratios.