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20 Cards in this Set
- Front
- Back
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If a company has an extraordinary gain of $20,000 and a 32% tax rate, what is the effect on net income?
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NOT
Increase of $6,400. |
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Solvency is of most interest to
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long-term creditors.
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When the disposal of a significant segment occurs, the income statement should report both income from continuing operations and income (loss) from discontinued operations.
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True
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Comprehensive income includes all revenues, expenses, gains, losses, and dividends.
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False
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Cochran Corporation, Inc. has the following income statement (in millions):
COCHRAN CORPORATION, INC. Income Statement For the Year Ended December 31, 2014 Net Sales $240 Cost of Goods Sold 80 Gross Profit 160 Operating Expenses 65 Net Income $ 95 Using vertical analysis, what percentage is assigned to net income? |
40%
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In horizontal analysis, if an item has a negative amount in the base year, and a positive amount in the following year, no percentage change for that item can be computed.
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False
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In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.
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False
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In a common size financial statement, which of the following is given a percentage of 100 percent?
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Total assets
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in performing a vertical analysis, the base for sales revenues on the income statement is
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Net Sales
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Both profit margin and asset turnover affect a company's return on assets.
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True
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When preparing an income statement, which of the following is the proper order for income statement components?
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NOT
Comprehensive income, Other comprehensive income items, irregular items, Net income |
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Indian River Groves in central Florida lost about 10% of its strawberies (or $750,000) due to frost. Based on this information, how will Indian River Groves most likely report this loss?
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As a pretax ordinary loss prior to income before income taxes.
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Under which of the following cases may a percentage change be computed?
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NOT
There is no amount in the base year. |
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Assume the following sales data for a company:
2015 $960,000 2014 720,000 2013 600,000 If 2013 is the base year, what is the percentage increase in sales from 2013 to 2014? |
NOT: 120%
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Alternative accounting methods affect the quality of earnings.
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True
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An extraordinary item must meet which of the following two criteria?
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Infrequent and unusual
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The following schedule is a display of what type of analysis?
Amount Percent Current assets $100,000 25% Property, plant, and equipment 300,000 75% Total assets $400,000 100% |
Vertical analysis
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Which one of the following is not a tool in financial statement analysis?
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Circular analysis
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The following information pertains to Blue Flower Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.
Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 30,000 Inventory 15,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders' Equity Current liabilities $ 60,000 Long-term liabilities 90,000 Stockholders' equity - common 15,000 Total Liabilities and Stockholders' Equity $300,000 Income Statement Sales revenue $121,000 Cost of goods sold 66,000 Gross profit 55,000 Operating expenses 30,000 Net income $ 25,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share on common stock 0.50 Cash provided by operations $40,000 What is the current ratio for this company? |
NOT: 1.25
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Patchett Company reported income before taxes of $800,000 and an extraordinary loss of $200,000. Assume that the company's tax rate is 25%. What amounts will be reported on the income statement for income before irregular items and extraordinary items, respectively?
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NOT:$600,000 and $200,000
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