WGU C213 Final Exam Accounting for Decision
Makers Questions and Answers ()
(Verified Answers).
External users of financial statements use financial statement analysis for - ANSWER-
Investing decisions
When analyzing financial statements, prognosis is - ANSWER-The prediction of how a
business will perform in the future
Relationships between financial statement amounts are called - ANSWER-Financial
ratios
When analyzing financial statements, diagnosis is - ANSWER-The identification of
where a business has problems
Which of the following is a measure of the liquid position of a corporation - ANSWER-
Current ratio
Which of the following is one of the purposes of financial statement analysis? -
ANSWER-Both diagnosis and prognosis
Which of the following transactions could increase a firm's current ratio - ANSWER-
Payment of accounts payable
Which of the following ratios is used to measure a firm's leverage - ANSWER-Debt ratio
Which of the following ratios represents the proportion of borrowed funds used to
acquire the company's assets - ANSWER-Debt ratio
Which of the following ratios is calculated using numbers from both the income
statement and the balance sheet - ANSWER-Return on equity
Which of the following ratios is used to measure the profit earned on each dollar of
sales in a firm - ANSWER-Return on sales
Which of the following ratios is a comparison of a financial statement number to a
market value number - ANSWER-Price-earnings ratio
In a common-size income statement, each item on the statement is expressed as a
percentage of - ANSWER-Revenue (sales revenue)
A useful tool in financial statement analysis is the common-size financial statement.
What does this tool enable the financial analyst to do - ANSWER-Compare the mix of
, revenue, and expenses, and determine efficient use of resources within a company over
time or between companies within a given industry without respect to relative size.
Which of the following below generally is the most useful in analyzing companies of
different sizes - ANSWER-Common-sized financial statements
When using common-size statements - ANSWER-Data may be selected for the same
business as of different dates, or for two or more businesses as of the same date
When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then
the company has - ANSWER-No stockholders' equity
The ratio that reflects the mix of sources of financing for a company is the - ANSWER-
Debt-to-equity ratio
Which cash flow ratio reflects a company's ability to make its interest payments from
cash generated through operations - ANSWER-Cash times interest earned
Which cash flow ratio reflects a company's ability to finance its capital expansion
through cash from operations - ANSWER-Cash flow adequacy
In general, most companies have significant noncash expenses that reduce net income
and also cause the cash flow-to-net income ratio to be - ANSWER-Greater than 1
Which of the following would be classified as a long-term asset - ANSWER-Land -
Property, plant, equipment
Owners of a corporation are referred to as - ANSWER-Accounts receivable
Owners of a corporation are referred to as - ANSWER-Stockholders
Which of the following types of accounts show how resources came into a firm -
ANSWER-Both liabilities and owners' equity
The total amount invested to acquire an ownership interest in a corporation is called -
ANSWER-Common Stock and Preferred Stock
What decreases owners' equity - ANSWER-generating a loss
Example of a current asset - ANSWER-accounts receivable
Asset accounts - ANSWER-prepaid expenses, equipment, accounts receivable
An enterprise's obligations to pay cash or other economic resources to others are called
- ANSWER-liabilities
Makers Questions and Answers ()
(Verified Answers).
External users of financial statements use financial statement analysis for - ANSWER-
Investing decisions
When analyzing financial statements, prognosis is - ANSWER-The prediction of how a
business will perform in the future
Relationships between financial statement amounts are called - ANSWER-Financial
ratios
When analyzing financial statements, diagnosis is - ANSWER-The identification of
where a business has problems
Which of the following is a measure of the liquid position of a corporation - ANSWER-
Current ratio
Which of the following is one of the purposes of financial statement analysis? -
ANSWER-Both diagnosis and prognosis
Which of the following transactions could increase a firm's current ratio - ANSWER-
Payment of accounts payable
Which of the following ratios is used to measure a firm's leverage - ANSWER-Debt ratio
Which of the following ratios represents the proportion of borrowed funds used to
acquire the company's assets - ANSWER-Debt ratio
Which of the following ratios is calculated using numbers from both the income
statement and the balance sheet - ANSWER-Return on equity
Which of the following ratios is used to measure the profit earned on each dollar of
sales in a firm - ANSWER-Return on sales
Which of the following ratios is a comparison of a financial statement number to a
market value number - ANSWER-Price-earnings ratio
In a common-size income statement, each item on the statement is expressed as a
percentage of - ANSWER-Revenue (sales revenue)
A useful tool in financial statement analysis is the common-size financial statement.
What does this tool enable the financial analyst to do - ANSWER-Compare the mix of
, revenue, and expenses, and determine efficient use of resources within a company over
time or between companies within a given industry without respect to relative size.
Which of the following below generally is the most useful in analyzing companies of
different sizes - ANSWER-Common-sized financial statements
When using common-size statements - ANSWER-Data may be selected for the same
business as of different dates, or for two or more businesses as of the same date
When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then
the company has - ANSWER-No stockholders' equity
The ratio that reflects the mix of sources of financing for a company is the - ANSWER-
Debt-to-equity ratio
Which cash flow ratio reflects a company's ability to make its interest payments from
cash generated through operations - ANSWER-Cash times interest earned
Which cash flow ratio reflects a company's ability to finance its capital expansion
through cash from operations - ANSWER-Cash flow adequacy
In general, most companies have significant noncash expenses that reduce net income
and also cause the cash flow-to-net income ratio to be - ANSWER-Greater than 1
Which of the following would be classified as a long-term asset - ANSWER-Land -
Property, plant, equipment
Owners of a corporation are referred to as - ANSWER-Accounts receivable
Owners of a corporation are referred to as - ANSWER-Stockholders
Which of the following types of accounts show how resources came into a firm -
ANSWER-Both liabilities and owners' equity
The total amount invested to acquire an ownership interest in a corporation is called -
ANSWER-Common Stock and Preferred Stock
What decreases owners' equity - ANSWER-generating a loss
Example of a current asset - ANSWER-accounts receivable
Asset accounts - ANSWER-prepaid expenses, equipment, accounts receivable
An enterprise's obligations to pay cash or other economic resources to others are called
- ANSWER-liabilities
