Test Bank Managerial Accounting The Cornerstone of Business Decision-Making 9th Edition By Maryanne Mowen, Don Hansen, Dan Heitger

Test Bank for Managerial
Accounting The Cornerstone of
Business Decision-Making 9th
Edition By Maryanne Mowen,
Don Hansen, Dan Heitger (All
Chapters 1-15, 100% Original
Verified, A+ Grade)
All Chapters Arranged Reverse: 15-1
This is the Only Original and
Complete Test Bank for 9th
Edition, All Other Files in the
Market are Fake/Old/Wrong
Edition.

,Name Clas Dat
: s: e:

Ch15 - Financial Statement Analysis
True / False

1. In the horizontal analysis of financial statements, the base year can be the immediately preceding period, or it can be a
period further in the past.
a. True
b. Fals
e
ANSWER: True

2. A primary purpose of the vertical analysis of financial statements is to observe and assess trends over a three-year
period.
a. True
b. Fals
e
ANSWER: Fals
e

3. Common-size analysis expresses each item in a financial statement as a percent of a base amount.
a. True
b. Fals
e
ANSWER: True

4. In the vertical analysis of an income statement, cost of goods sold is represented by 100%.
a. True
b. Fals
e
ANSWER: Fals
e

5. In the vertical analysis of a balance sheet, total liabilities are represented by 100%.
a. True
b. Fals
e
ANSWER: Fals
e

6. In the vertical analysis of a balance sheet, the base for current liabilities is total liabilities.
a. True
b. Fals
e
ANSWER: Fals
e

7. The use of the common-size analysis of financial statements makes the comparison of different-sized firms meaningful
because percentages eliminate the effects of size.
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,Name Clas Dat
: s: e:

Ch15 - Financial Statement Analysis
a. True
b. Fals
e
ANSWER: True

8. Two major forms of common-size analysis are horizontal analysis and vertical analysis.
a. True
b. Fals
e
ANSWER: True

9. Horizontal analysis involves comparing two or more years of financial data for a single company.
a. True
b. Fals
e
ANSWER: True

10. Common-size analysis is used to assess and compare companies of similar size and operations.
a. True
b. Fals
e
ANSWER: Fals
e

11. The increase in the cost of goods sold by 25% from Year 1 to Year 2 is an example of horizontal analysis.
a. True
b. Fals
e
ANSWER: True

12. For meaningful analysis, ratios should be compared with a standard.
a. True
b. Fals
e
ANSWER: True

13. Companies in the same industry may use different accounting methods, diminishing the usefulness of some industrial
averages.
a. True
b. Fals
e
ANSWER: True

14. Small sample sizes for an industrial report rarely cause a comparability problem in using standards.
a. True
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, Name Clas Dat
: s: e:

Ch15 - Financial Statement Analysis
b. Fals
e
ANSWER: Fals
e

15. Labor markets can impact industrial statistics and standards.
a. True
b. Fals
e
ANSWER: True

16. Industrial statistics should be taken as absolute norms as far as standards for comparability.
a. True
b. Fals
e
ANSWER: Fals
e

17. Terms of sale can produce statistical variations among companies within the same industry.
a. True
b. Fals
e
ANSWER: True

18. A number of online sources contain competitive information on individual company's ratios.
a. True
b. Fals
e
ANSWER: True

19. Industrial figures, standards, and statistics should be used with much care because they are not a good reference point
for comparing companies.
a. True
b. Fals
e
ANSWER: Fals
e

20. Liquidity ratios measure the ability of a company to meet its current obligations.
a. True
b. Fals
e
ANSWER: True

21. The current ratio is a measure of the ability of a company to pay its short-term liabilities out of short-term assets.

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