QUESTION Which of the following, if true, strengthens the case that an income statement would show Streeter & Sons where its problems lie? A) The company does not have enough shareholders. B) The company’s expenses are too high. C) The company’s owners’ equity is too low. D) The company needs to hire more service specialists. […]
QUESTION Which of the following, if true, weakens the case that more than one type of financial statement should be examined in order to determine a company’s financial health? A) Nowadays, many companies burnish their balance sheet by claiming inflated figures for goodwill. B) An income statement from one year may be radically different from […]
QUESTION Which of the following points out a flaw in Kershner’s reasoning? A) Kershner is not accounting for all of the possible sources of revenue for the company. B) Kershner is not including owners’ equity as part of sales revenue. C) Income statements are not as important as balance sheets in determining a company’s fiscal […]
QUESTION Which of the following, if true, strengthens Michaels’s argument? A) The company’s gross sales went up from the previous year. B) Total operating expenses were high in the current year. C) The company has only one part-time accountant. D) There were few sales returns in the current year. E) Offshoring allowed the company to […]
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 […]
