Question : 41.On common size income statements, each component in the income : 1237526

 

 

41.On common size income statements, each component in the income statement is represented as a percentage of:   

A.Net income.

 

B.Net sales.

 

C.Total assets.

 

D.Profit.

 

 

 

 

42.During the years 2013 through 2015, Powers, Inc., reported the following amounts of net income (dollars in thousands):  Relative to the prior year, the percentage change in net income:   

A.Was the same in 2014 and 2015.

 

B.Was larger in 2015 than in 2014.

 

C.Was smaller in 2015 than in 2014.

 

D.Cannot be determined without knowing how many shares of stock were outstanding.

2015: 20/150 = 13% while 2014: 30/120 = 25%

 

 

 

43.A high quality of earnings is indicated by:   

A.Earnings derived largely from newly introduced products.

 

B.Declaration of both cash and stock dividends.

 

C.Use of the FIFO method of inventory during sustained inflation.

 

D.A history of increasing earnings and conservative accounting methods.

 

 

 

 

44.In evaluating the quality of a company’s earnings, which of the following factors is least important?   

A.The accounting methods used by management.

 

B.The trend of the company’s earnings over a period of years.

 

C.The dollar amount of earnings per share.

 

D.The stability and sources of the company’s earnings.

 

 

 

 

45.The term, classified financial statements, refers:   

A.To the financial statements of all companies working on government projects.

 

B.Only to the financial statements of defense contractors working on secret projects.

 

C.To financial statements prepared for use by management, but not for distribution outside of the organization.

 

D.To financial statements in which items with certain characteristics are placed together in a group in an effort to develop useful subtotals.

 

 

 

 

46.The operating cycle of a company:   

A.Must be less than one year.

 

B.Is usually greater than one year.

 

C.Is the time it takes to purchase inventory, sell inventory, and collect cash from the sale.

 

D.Is the time it takes to acquire a loan, pay the interest, and retire the loan by paying the creditor in full.

 

 

 

 

47.The excess of current assets over current liabilities is called:   

A.Current ratio.

 

B.Working capital.

 

C.Debt ratio.

 

D.Quick ratio.

 

 

 

 

48.Quick assets include which of the following?   

A.Cash, marketable securities, and receivables.

 

B.Cash, marketable securities, and inventories.

 

C.Cash, prepaid rent, and receivables.

 

D.Market securities, receivables, and inventories.

 

 

 

 

49.The ratio which measures total liabilities as a percentage of total assets is called:   

A.Current ratio.

 

B.Working capital.

 

C.Debt ratio.

 

D.Quick ratio.

 

 

 

 

50.The principle factor/s affecting the quality of working capital is/are:   

A.The nature of the current assets.

 

B.The length of time to convert current assets into cash.

 

C.Both the nature of the current assets and the length of time to convert current assets into cash.

 

D.Neither the nature of the current assets nor the length of time to convert current assets into cash.