QUESTION Which of the following does Kershner assume? A) High revenues equate to a healthy income statement. B) Many factors must be taken into account to calculate the income statement. C) The company’s revenue next year will be as good as this year’s. D) Operating expenses have been relatively high this year. E) Net sales […]
QUESTION Santos needs to assess its debt situation with respect to the value of the company. Which of the following, if true, most strengthens the case that Santos’s debt is manageable? A) Santos has a high profitability ratio. B) Santos has a high inventory turnover ratio. C) Santos has a low inventory turnover ratio. D) […]
QUESTION Which of the following, if true, strengthens Kershner’s argument? A) The total operating expenses were high in the current year. B) The company’s rent went up 30 percent from the previous year. C) The cost of goods sold was low compared to net sales. D) The company is a small one compared to its […]
QUESTION What makes ratio analysis such a useful tool? What will be an ideal response? ANSWER Answer: Ratio analysis can be used to analyze a firm’s performance compared not only to its stated objectives but also to that of similar firms. Because of that, it gives a picture of how a firm stands against […]
QUESTION Which of the following does Michaels assume? A) Revenues this year were not as high as last year’s. B) Revenues are not as high as Kershner thinks they are. C) Selling expenses exceeded administrative expenses this year. D) Other factors must be taken into account to arrive at an income statement. E) Income taxes […]
QUESTION Which of the following, if true, supports the mother’s position? A) Julie has said that she wants to work for one of the Big Four accounting and professional services firms. B) The demand for government accountants is expected to grow in the near future. C) Two other recent grads in Julie’s class chose to […]
QUESTION Santos has a high level of current liabilities compared to its cash on hand. One company executive predicts that this means that Santos will not have a good acid-test ratio. Which of the following points out a flaw in his argument? A) Current liabilities are not relevant to the acid-test ratio. B) The company […]
QUESTION Which of the following, if true, supports the position that Julie should consider a specialty field in accounting? A) Julie wants to eventually pursue an MBA degree. B) Colleges have different policies on whether specialty accounting courses are required. C) Julie is interested in financial crimes. D) Julie is interested in helping a nonprofit […]
QUESTION Which of the following, if true, supports the father’s position? A) Julie has said she wants to work for one of the Big Four accounting and professional services firms. B) The demand for external auditors is expected to grow in the near future. C) Many accountants flooded the job market when the Arthur Andersen […]
QUESTION Which of the following, if true, does NOT strengthen the case that Aardvark needs to hire a full-time financial manager? A) The company needs its cash flow to be continuously monitored. B) The company needs to determine how to market its products so as to reach the largest number of customers. C) The company […]
