financial information

financial information

. Which of the following is a factor involved in communicating useful financial information? (Points : 2) Attributes of the users

Purpose for which the information will be used

Process by which the information is analyzed

All of the above

2. Which of the following is an objective of ratio analysis? (Points : 2)
Assessing past performance

Assessing the prospects for future performance

Determining whether a company is likely to be able to pay its debts on time

All of the above may be objectives of ratio analysis
3. The current ratio measures: (Points : 2)
solvency.

liquidity.

profitability.

efficiency in the use of assets.
4. What does the accounts receivable turnover ratio measure? (Points : 2)
Average balance of accounts receivables

How quickly the accounts receivable increase

How quickly accounts receivable turn into cash

The amount of uncollectible accounts
5. Common methods of financial statement analysis include all of the following except: (Points : 2)
horizontal analysis.

incremental analysis.

vertical analysis.

ratio analysis.
6. You are considering an investment in Ingram Company stock and wish to assess the company’s position in the stock market. All of the following ratios can be used for this purpose except: (Points : 2)
current ratio.

earnings per share.

dividend yield.

price-earnings ratio.
7. Select the incorrect statement regarding the information disclosed in financial statements. (Points : 2)
Financial statements should be detailed enough to answer almost any accounting question an investor might have.

Some information disclosed in financial statements may be irrelevant to some users.

The costs of providing all possible accounting information about a firm would be too prohibitive to the business.

When too much information is presented users may suffer from information overload.
8. Otteman Company reported net income of $16,700 on gross sales of $80,000. The company has average total assets of $115,200, of which $100,000 is property, plant, and equipment. What is the company’s return on investment? (Points : 2)
69.4%

18.0%

14.5%

12.5%
9. The return on investment measure is also referred to as: (Points : 2)
net margin.

return on equity.

return on assets.

return on debt.
10. Financial ratios can be used to assess which of the following aspects of firm performance? (Points : 2)
Liquidity

Solvency

Managerial effectiveness

All of the above
11. Which of following practices is considered an effective means of re-engineering business systems? (Points : 2)
Identifying the best practices used by world-class competitors

Improving the accuracy of cost allocations

Eliminating non-value added activities

All of the above
12. Which of the following transactions would cause net income for the period to be lower? (Points : 2)
Paid $1,600 cash for raw material cost

Paid administrative salaries of $2,500

Depreciated production equipment for $3,000

Purchased $5,000 of merchandise inventory
13. Which of the following statements is true with regard to product costs versus general, selling, and administrative costs? (Points : 2)
Product costs associated with unsold units appear on the income statement as general expenses.

General, selling, and administrative costs appear on the balance sheet.

Product costs associated with units sold appear on the Income Statement as cost of good sold expense.

All of the above.
14. Select the incorrect statement regarding upstream and downstream costs. (Points : 2)
Profitability analysis should consider only manufacturing and downstream costs.

Companies must recover the total cost of developing, producing, and delivering products.

Pricing decisions must consider both upstream and downstream costs.

The total cost per unit includes upstream, manufacturing, and downstream costs.
15. Which of the following is a product cost for a construction company? (Points : 2)
Cost of transporting raw materials to the job site

Selling costs

Wages paid to the company’s office manager

All of the above

16. Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and packaging are sometimes called: (Points : 2)
upstream costs.

indirect costs.

direct costs.

downstream costs.
17. Lil Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand. The costs of inventory financing, storage, supervision, and obsolescence could most likely be reduced by which of the following practices? (Points : 2)
Activity-based costing

Value chain analysis

Just in time

All of the above

18. As a Certified Management Accountant, Denton is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Denton has a responsibility to: (Points : 2)
inform subordinates they should protect confidential information.

inform the federal enforcement authorities if he discovers that someone in the firm has used confidential information for illegal purposes.

monitor the activities of subordinates to assure that confidentiality is maintained.

both A and C.
19. Select the incorrect statement regarding the relationship between type of user and type of information. (Points : 2)
Assembly line workers need more nonfinancial, or operational, data than do senior executives.

Assembly line workers need more immediate feedback on performance than do senior executives.

Senior executives use general economic information as well as financial information.

Senior executives need less aggregated information than do lower-level managers.
20. Which of the following most exemplifies the value-added principle? (Points : 2)
An ongoing process where continuous improvement is the goal

A competitive management program that emphasizes quality

Information gathering and reporting activities that are restricted to those activities that add value in excess of their cost

Managerial accounting information is measured in economic, physical, and financial terms

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