ACCOUNTING TEST QUIZ

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Question 1

Which one of the following is not a characteristic generally evaluated in ratio analysis?

liquidity

profitability

solvency

marketability

Question 2

A loss on disposal of a segment would be reported in the income statement as a(n)

administrative expense

other expense

deduction from income from continuing operations

selling expense

Question 3

Based on the following data for the current year, what is the number of days’ sales in accounts receivable?

Net sales on account during year
$584,000
Cost of merchandise sold during year
300,000
Accounts receivable, beginning of year
45,000
Accounts receivable, end of year
35,000
Inventory, beginning of year
90,000
Inventory, end of year
110,000

7.3

2.5

14.6

25

Question 4

An extraordinary item results from

a segment of the business being sold.

corporate income tax being paid.

a change from one accounting method to another acceptable accounting method.

a transaction or event that is unusual and occurs infrequently.

Question 5

Which of the following is a measure of the liquid position of a corporation?

earnings per share

inventory turnover

current ratio

number of times interest charges earned

Question 6

Hsu Company reported the following on its income statement:

Income before income taxes
$420,000

Income tax expense
120,000

Net income
$300,000

An analysis of the income statement revealed that interest expense was $80,000. Hsu Company’s times interest earned was

8 times.

6.25 times.

5.25 times.

5 times.

What is the price earnings ratio for this company? Round your answer to one decimal point.

8.0 times

2.5 times

4.0 times

6.0 times

question 9:
A company that is leveraged is one that

contains debt financing.

contains equity financing.

has a high current ratio.

has a high earnings per share.

ques 10:
Which of the following is required by the Sarbanes-Oxley Act of 2002?

A price-earnings ratio.

A report on internal control.

A vertical analysis.

A common-sized statement.

ques 11:
Horizontal analysis of comparative financial statements includes the

development of common size statements.

calculation of liquidity ratios.

calculation of dollar amount changes and percentage changes from the previous to the current year.

evaluation of financial statement data

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