Foundations of Accounting for Peregrine Global Services exam questions with answers.

Foundations of Accounting for Peregrine |\ |\ |\ |\ |\




Global Services exam questions with answers |\ |\ |\ |\ |\




Financial statements - CORRECT ANSWERS ✔✔provide information
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that is useful for making investments and other economic
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decisions about business |\ |\




Horizontal analysis - CORRECT ANSWERS ✔✔Analysis of |\ |\ |\ |\ |\ |\ |\



percentage increases and decreases in financial statements across
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time.
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The amount of each line item on the most recent statement is
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compared with the related item on earlier statements, and
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expressed as a percentage change |\ |\ |\ |\




Vertical analysis - CORRECT ANSWERS ✔✔An percentage analysis
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that is used to show the relationship of each component to the
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total within a single statement.
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The balance sheet is analyzed by stating each asset item as a
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percent of total assets. Each liability and stockholders equity item
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is stated as a percent of total liabilities and stockholders equity.
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Common side statements - CORRECT ANSWERS ✔✔Horizontal and
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vertical analyses are useful in assessing trends, in relationships
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and financial conditions, and operations of a business
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Common size income statements - CORRECT ANSWERS ✔✔can
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compare to businesses or more |\ |\ |\ |\

,Solvency and profitability - CORRECT ANSWERS ✔✔The ability of a
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business to repay its debts and earn income
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Solvency analysis - CORRECT ANSWERS ✔✔Focuses on the ability
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of a business to pay, or otherwise satisfy its current and
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noncurrent liabilities |\




Current position analysis, working capital - CORRECT ANSWERS
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✔✔Using metrics to assess a business, is ability to pay its current
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liabilities


Current ratio - CORRECT ANSWERS ✔✔current assets divided by
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current liabilities
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Quick ratio - CORRECT ANSWERS ✔✔quick assets/current liabilities
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Accounts Receivable analysis - CORRECT ANSWERS ✔✔sales on
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account increase accounts receivable, whereas collections from
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customers decrease accounts receivable. It is desirable to collect
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receivables as promptly as possible. The cash generated by
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prompt collections from customers may be used to pay or avoid
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current liabilities and be used in operations for purposes, such as
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purchasing merchandise in large quantities at lower prices.
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Accounts Receivable Turnover Ratio - CORRECT ANSWERS ✔✔net
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credit sales/average net accounts receivable
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, number of days' sales in receivables - CORRECT ANSWERS
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✔✔Average Accounts Receivable / Average Daily Sales |\ |\ |\ |\ |\ |\




Inventory turnover ratio - CORRECT ANSWERS ✔✔cost of goods
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sold/average inventory |\




Ratio fixed assets to long-term liabilities - CORRECT ANSWERS
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✔✔ratio of fixed assets to long-term liabilities is a solvency
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measure that indicates the margin of safety for node holders and
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bond holders. It also indicates the ability of a business to borrow
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additional funds on a long-term basis. |\ |\ |\ |\ |\




Ratio of liabilities to stockholders equity - CORRECT ANSWERS
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✔✔Claims against the total assets of a business are divided into
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two groups, one claims of creditors and two claims of owners. The
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relationship between the total claims of the creditors and owners |\ |\ |\ |\ |\ |\ |\ |\ |\ |\



is a solvency measure that indicates the margin of safety for
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creditors.


Time Interest Earned - CORRECT ANSWERS ✔✔The higher, the
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ratio, the lower, the risk that interest payments will not be made, if
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earnings decrease. Dividing the sum of the income before taxes
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and interest expense.
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Profitability and market analysis - CORRECT ANSWERS |\ |\ |\ |\ |\ |\ |\



✔✔Profitability analysis focuses, primarily on the relationship |\ |\ |\ |\ |\ |\ |\



between operating results as reported in the income, statement
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and resources available to the business as reported on the balance
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sheet. Market analysis focuses on how well a company is doing
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from the financial markets perspective.
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