Appendix-D Practice Test | ACC 350
Question and answers correctly solved
2025
a summary of significant accounting policies and explanations of specific
items on the financial statements are included in the... - correct answer ✔the
notes to the financial statements
a quarterly reported field with the SEC is called a form 10-k - correct answer
✔FALSE | it is 10-Q
a V/A would be used if an analyst wants to see how the gross profit of a
company has changed from one year to the next - correct answer ✔FALSE
a common-size statement reports the same percentages that appear in a -
correct answer ✔vertical analysis
The formula for calculating the cash ratio is - correct answer ✔(cash + cash
equivalents ) / total current liabilities
Cash Equivalents - correct answer ✔-Will be Given
Extraordinary items are both unusual AND infrequent in nature - correct
answer ✔TRUE
the current ratio is calculated as total assets divided by total current liabilities -
correct answer ✔TRUE
,Benchmarking is the practice of comparing a company with other leading
companies - correct answer ✔TRUE
a company reports total assets of 920,000 and stockholders equity of
520,000. calculate the debt ratio - correct answer ✔43.38%
the current ratio may indicate that the company is using its assets effectively -
correct answer ✔FALSE
-**Only deals with CURRENT ASSETS**
The most widely used ratio is the current ratio. This ratio measures a
company's ability to pay its current liabilities with its current assets.
the Rate of Return on common stock holders equity shows how much income
is earned for each $1 of total stockholders equity - correct answer ✔FALSE |
reason - Common stock only deals with common stock - NOT total
stockholder equity
anytime there's a rate of return.... - correct answer ✔-looking for profit
-N/I / type of return
Coleman inc provides the following data from its income statement for 2017 -
correct answer ✔
Gross profit - correct answer ✔net sales - cost of goods sold
, benchmarking often compares a company against a key competitor or the
industry average - correct answer ✔TRUE
working capital is - correct answer ✔current assets - current liabilities
**Determining a company's working capital is a good starting place for
evaluating a company's ability to pay its current liabilities. Working capital
measures the ability to meet short-term obligations with current assets.
normally, companies with a low gross profit percentage will have low asset
turnover - correct answer ✔Gross profit is comparing sales with profit
-nothing to do with the profit
FALSE
AR turnover that is too high may indicate that credit is too tight, causing the
loss of sales to good customers - correct answer ✔TRUE
*Accounts receivable turnover—This ratio measures the number of times the
company collects the average receivables balance in a year.
*Accounts receivable turnover ratio = Net credit sales / Average net accounts
receivable
which of the following is used to determine how the sales rev of a company
has changed from 1 year to the next? - correct answer ✔horizontal analysis
of the income statement
Question and answers correctly solved
2025
a summary of significant accounting policies and explanations of specific
items on the financial statements are included in the... - correct answer ✔the
notes to the financial statements
a quarterly reported field with the SEC is called a form 10-k - correct answer
✔FALSE | it is 10-Q
a V/A would be used if an analyst wants to see how the gross profit of a
company has changed from one year to the next - correct answer ✔FALSE
a common-size statement reports the same percentages that appear in a -
correct answer ✔vertical analysis
The formula for calculating the cash ratio is - correct answer ✔(cash + cash
equivalents ) / total current liabilities
Cash Equivalents - correct answer ✔-Will be Given
Extraordinary items are both unusual AND infrequent in nature - correct
answer ✔TRUE
the current ratio is calculated as total assets divided by total current liabilities -
correct answer ✔TRUE
,Benchmarking is the practice of comparing a company with other leading
companies - correct answer ✔TRUE
a company reports total assets of 920,000 and stockholders equity of
520,000. calculate the debt ratio - correct answer ✔43.38%
the current ratio may indicate that the company is using its assets effectively -
correct answer ✔FALSE
-**Only deals with CURRENT ASSETS**
The most widely used ratio is the current ratio. This ratio measures a
company's ability to pay its current liabilities with its current assets.
the Rate of Return on common stock holders equity shows how much income
is earned for each $1 of total stockholders equity - correct answer ✔FALSE |
reason - Common stock only deals with common stock - NOT total
stockholder equity
anytime there's a rate of return.... - correct answer ✔-looking for profit
-N/I / type of return
Coleman inc provides the following data from its income statement for 2017 -
correct answer ✔
Gross profit - correct answer ✔net sales - cost of goods sold
, benchmarking often compares a company against a key competitor or the
industry average - correct answer ✔TRUE
working capital is - correct answer ✔current assets - current liabilities
**Determining a company's working capital is a good starting place for
evaluating a company's ability to pay its current liabilities. Working capital
measures the ability to meet short-term obligations with current assets.
normally, companies with a low gross profit percentage will have low asset
turnover - correct answer ✔Gross profit is comparing sales with profit
-nothing to do with the profit
FALSE
AR turnover that is too high may indicate that credit is too tight, causing the
loss of sales to good customers - correct answer ✔TRUE
*Accounts receivable turnover—This ratio measures the number of times the
company collects the average receivables balance in a year.
*Accounts receivable turnover ratio = Net credit sales / Average net accounts
receivable
which of the following is used to determine how the sales rev of a company
has changed from 1 year to the next? - correct answer ✔horizontal analysis
of the income statement
