accounting exam 1

A company's current ratio is greater than 1. Purchasing raw materials on credit would:

decrease the current ratio

the study of percentage changes in comparative financial statements is an example of

horizontal analysis

which type of analysis compares the data of the current year to the data of the previous year in both percentage and dollar amount of increase or decrease?

horizontal analysis (over longer period of time)

the market price of Friden Company's common stock increased from $15 to $18. Earnings per share of common stock remained unchanged. The company's price-earnings ratio would:

increase

the formula to compute the rate of return on net sales is

net income/net sales

in performing a vertical analysis of an income statement, which of the following is generally used as the base amt?

net sales

in a statement of cash flows, gains or losses from sales of property, plant, and equipment are captured in which section of this financial statement?

operating activities

in the statement of cash flows, which of the following would be classified as an operating activity?

purchase of inventory

the statement of cash flows includes three sections. which of the following would NOT be included

purchasing activities

which of the following is the formula to compute inventory turnover?

cost of goods sold/average inventory

last year LaGrange company's cash account decreased by $19,000. Net cash in investing activities was $9,000. Net cash provided by financing activities was $16,000. On the statement of cash flows, the net cash flow provided by (used in) operating activities was:

$(26,000)

the net cash provided by (used in) finacing activities for the year was:

$(37)

the net cash provided by (used in) investing activities for the year was:

$(60)

The net cash provided by (used in) operating activities for the year was:

$98

the formula for the gross margin percentage is:

(sales-cost of goods sold)/sales

which of the following is considered a strong current ratio?

2.0

which of the following is the percentage change from year 2($21,000) to year 3($31,500)?

50% (new-old/old)

Spomer Corporation's inventory at the end of year 2 was $114,000 and its inventory at the end of year 1 was $120,000. Cost of goods sold amounted to $710,000 in year 2. The company's inventory turnover for year 2 is closest to:

6.07

a company that had a $500 decrease in inventory during a period would do which of the following on its statement of cash flows prepared using the indirect method?

add the $500 to net income in order to arrive at net cash provided by operating activities

a drop in the market price of a firm's common stock will immediately affect its:

dividend yield ratio

the statement of cash flows:

explains the change in the cash balance for one period of time

the gross margin percentage is most likely to be used to assess:

the overall profitability of the company's products