Reference no: EM132530125

Question 1 : Ronaldo Soccer Shop's income statement reports sales of $100,000; cost of goods sold of $46,000, operating expenses of $34,000, interest expense of $15,000, income tax expense of $2,000, and net income of $3,000. If you were to perform a vertical analysis of this income statement, you would divide each of these income statement line items by:

Multiple Choice

Option 1: $100,000

Option 2: $46,000

Option 3: $34,000

Option 4: $3,000

Question 2 : The financial statements of a firm that uses more aggressive accounting practices would be likely to report:

Multiple Choice

Option 1: Higher profitability.

Option 2: Higher dividends.

Option 3: Higher liabilities.

Option 4: Lower assets.

Question 3 : Which of the following is a conservative accounting practice?

Multiple Choice

Option 1: The use of a longer service life for depreciation.

Option 2: Waiting to record a litigation loss.

Option 3: Adjust the allowance for uncollectible accounts to a smaller amount.

Option 4: The write-down of overvalued inventory.

Question 4 : Liquidity measures:

Multiple Choice

Option 1: The company's ability to pay current obligations using current assets.

Option 2: The company's ability to efficiently collect cash from customers.

Option 3: The company's ability to generate profits on inventory sold.

Option 4: The company's ability to return cash to stockholders.