ACCT 5312 Exam 3 questions and Answers
Look forward to the day when you will have accumulated $5,000, and assume that you have
decided to invest that hard-earned money in the common stock of a publicly owned corporation.
What data about that company will you be most interested in out of:
Location of the production plant
Market price
Earnings per share
Cash dividends per share
P/E ratio
Salaries and wages paid to employees ** Answ** Market price
Earnings per share
Cash dividends per share
P/E ratio
Look forward to the day when you will have accumulated $5,000, and assume that you have
decided to invest that hard-earned money in the common stock of a publicly owned corporation.
How will you arrange those data so they are most meaningful to you?
Chart and graphic format
Tabular and chart format
Tabular and graphic format ** Answ** Tabular and graphic format
What information about the company will you want on a weekly basis, quarterly basis, and
annual basis?
Market price
Earnings trends
Dividend trends ** Answ** Market price - weekly
Earnings trends - both quarterly and annually
Dividend trends - both quarterly and annually
,How will you decide whether to sell, hold, or buy some more of the firm's stock?
Based on the wish of the corporation
Based on stock price performance
Based on quantity of stock purchased ** Answ** Based on stock price performance
Effect of:
Split the common stock 2 for 1
on:
Book value per share of common stock ** Answ** Decrease
Effect of:
Collected accounts receivable
On:
Number of days' sales in accounts recievable ** Answ** Decrease
Effect of:
Issued common stock for cash
on:
Total asset turnover ** Answ** Decrease
Effect of:
Sold Treasury Stock
on:
Return on Equity ** Answ** Decrease
Effect of:
Accrued interest on a note receivable
on:
Current Ratio ** Answ** Increase
Effect of:
,Sold inventory on account
On:
Acid test ratio ** Answ** Increase
Effect of:
Wrote off an uncollectible account
On:
Accounts receivable turnover ** Answ** None
Effect of:
Declared a cash dividend
on:
Dividend yeild ** Answ** Increase
Effect of:
Incurred operating expenses
on:
Margin ** Answ** Decrease
Effect of:
Sold equipment at a loss
on:
Earnings per share ** Answ** Decrease
Which of the following is not a category of financial statement ratios?
Financial leverage
Liquidity
Profitability
Prospectus ** Answ** Prospectus
Management's use of resources can best be evaluated by focusing on measures of:
, Liquidity
Activity
Leverage
Book Value ** Answ** Activity
An individual interested in making a judgement about the profitability of a company should:
Review the trend of working capital for several years
Calculate the company's ROI for the most recent year
Review the trend of the company's ROI for several years
Compare the company's ROI for the most recent year with the industry average ROI for the most
recent year ** Answ** Review the trend of the company's ROI for several years
An entity's current ratio will be influenced by:
The inventory cost flow assumption used
Writing off an overdue account receivable against the allowance for uncollectible accounts
The deprecation method used
Issuance of a stock dividend ** Answ** The inventory cost flow assumption used
A potential creditor's judgment about granting credit would be most influenced by the potential
customer's:
Current ratio at the end of the prior fiscal year
Most recent acid-test ratio
Trend of acid-test ratio over the past three years
Practice with respect to taking cash discounts offered by current suppliers ** Answ**
Practice with respect to taking cash discounts offered by current suppliers
The comparison of activity measures of different companies is complicated by the fact that:
Different inventory cost flow assumptions may be used
Dollar amounts of assets may be significantly different
Only one of the companies may have preferred stock outstanding
Look forward to the day when you will have accumulated $5,000, and assume that you have
decided to invest that hard-earned money in the common stock of a publicly owned corporation.
What data about that company will you be most interested in out of:
Location of the production plant
Market price
Earnings per share
Cash dividends per share
P/E ratio
Salaries and wages paid to employees ** Answ** Market price
Earnings per share
Cash dividends per share
P/E ratio
Look forward to the day when you will have accumulated $5,000, and assume that you have
decided to invest that hard-earned money in the common stock of a publicly owned corporation.
How will you arrange those data so they are most meaningful to you?
Chart and graphic format
Tabular and chart format
Tabular and graphic format ** Answ** Tabular and graphic format
What information about the company will you want on a weekly basis, quarterly basis, and
annual basis?
Market price
Earnings trends
Dividend trends ** Answ** Market price - weekly
Earnings trends - both quarterly and annually
Dividend trends - both quarterly and annually
,How will you decide whether to sell, hold, or buy some more of the firm's stock?
Based on the wish of the corporation
Based on stock price performance
Based on quantity of stock purchased ** Answ** Based on stock price performance
Effect of:
Split the common stock 2 for 1
on:
Book value per share of common stock ** Answ** Decrease
Effect of:
Collected accounts receivable
On:
Number of days' sales in accounts recievable ** Answ** Decrease
Effect of:
Issued common stock for cash
on:
Total asset turnover ** Answ** Decrease
Effect of:
Sold Treasury Stock
on:
Return on Equity ** Answ** Decrease
Effect of:
Accrued interest on a note receivable
on:
Current Ratio ** Answ** Increase
Effect of:
,Sold inventory on account
On:
Acid test ratio ** Answ** Increase
Effect of:
Wrote off an uncollectible account
On:
Accounts receivable turnover ** Answ** None
Effect of:
Declared a cash dividend
on:
Dividend yeild ** Answ** Increase
Effect of:
Incurred operating expenses
on:
Margin ** Answ** Decrease
Effect of:
Sold equipment at a loss
on:
Earnings per share ** Answ** Decrease
Which of the following is not a category of financial statement ratios?
Financial leverage
Liquidity
Profitability
Prospectus ** Answ** Prospectus
Management's use of resources can best be evaluated by focusing on measures of:
, Liquidity
Activity
Leverage
Book Value ** Answ** Activity
An individual interested in making a judgement about the profitability of a company should:
Review the trend of working capital for several years
Calculate the company's ROI for the most recent year
Review the trend of the company's ROI for several years
Compare the company's ROI for the most recent year with the industry average ROI for the most
recent year ** Answ** Review the trend of the company's ROI for several years
An entity's current ratio will be influenced by:
The inventory cost flow assumption used
Writing off an overdue account receivable against the allowance for uncollectible accounts
The deprecation method used
Issuance of a stock dividend ** Answ** The inventory cost flow assumption used
A potential creditor's judgment about granting credit would be most influenced by the potential
customer's:
Current ratio at the end of the prior fiscal year
Most recent acid-test ratio
Trend of acid-test ratio over the past three years
Practice with respect to taking cash discounts offered by current suppliers ** Answ**
Practice with respect to taking cash discounts offered by current suppliers
The comparison of activity measures of different companies is complicated by the fact that:
Different inventory cost flow assumptions may be used
Dollar amounts of assets may be significantly different
Only one of the companies may have preferred stock outstanding
