ACC 561 WileyPLUS Assignment: Week 2 Practice Quiz

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The relationship between current assets and current liabilities is important in evaluating a company's


  • solvency.
  • profitability.
  • market value.
  • liquidity.


Which of the following is a measure of liquidity?


  • Debt to equity ratio
  • Profit margin
  • Earnings per share
  • Working capital


Current assets divided by current liabilities is known as the


  • capital structure.
  • working capital
  • current ratio.
  • profit margin.


Danner Corporation reported net sales of $600,000, $680,000, and $800,000 in the years 2011, 2012, and 2013, respectively. If 2011 is the base year, what percentage do 2013 sales represent of the base?


  • 133%
  • 33%
  • 113%
  • 75%


In analyzing financial statements, horizontal analysis is a


  • principle.
  • tool.
  • theory.
  • requirement.

Comparative balance sheets


  • do not show both dollar amount and percentage changes.
  • are usually prepared for at least two years.
  • are usually prepared for at least one year.
  • do not show a comparison of total stockholders' equity.


Assume the following cost of goods sold data for a company:




If 2011 is the base year, what is the percentage increase in cost of goods sold from 2011 to 2013?


  • 50%
  • 20%
  • 67%
  • 150%

Comparisons of data within a company are an example of the following comparative basis: 


  • Intercompany.
  • Intracompany.
  • Interregional.
  • Industry averages.

The following schedule is a display of what type of analysis?


Current assets$100,000  25%    

Property, plant, and equipment300,000  75%    

Total assets$400,000  100%    


  • Horizontal analysis
  • Differential analysis
  • Vertical analysis
  • Ratio analysis

A common measure of profitability is the


  • current cash debt coverage ratio.
  • debt to total assets.
  • return on common stockholders' equity ratio.
  • current ratio.

Which one of the following would be considered a long-term solvency ratio? 


  • Return on total assets
  • Current cash debt coverage ratio
  • Receivables turnover
  • Debt to total assets ratio

The current ratio is


  • calculated by dividing current liabilities by current assets.
  • used to evaluate a company's liquidity and short-term debt paying ability.
  • used to evaluate a company's solvency and long-term debt paying ability.
  • calculated by subtracting current liabilities from current assets.


Richards, Inc. has the following income statement (in millions):


Income Statement

For the Year Ended December 31, 2012

Net Sales$180

Cost of Goods Sold60

Gross Profit120

Operating Expenses75

Net Income$ 45

Using vertical analysis, what percentage is assigned to net income?


  • A.100%
  • B.75%
  • C.25%
  • D.None of the above.



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