Question 1 of 20

The following information is available for Morgan Corporation for 2012: Market price per share of common stock is $25.00; Earnings per share on common stock is $1.25. Which of the following statements is ?

A.The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2012.

B.The price-earnings ratio is 5.0% and a share of common stock was selling for 5.0% more than the amount of earnings per share at the end of 2012.

C.The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of 2012.

D.The market price per share and the earnings per share are not statistically related to each other.

Question 2 of 20

The percent of fixed assets to total assets is an example of:

A.vertical analysis.

B.solvency analysis.

C.profitability analysis.

D.horizontal analysis.

Question 3 of 20

The independent auditor's report does which of the following?

A.Describes that the common-sized statements are covered by the audit.

B.Gives the auditor's opinion regarding the fairness of the financial statements.

C.Summarizes what the auditor did.

D.States that the financial statements are effective.

Question 4 of 20

The document authorizing the issuance of materials from the storeroom for use in manufacturing is called:

A.materials requisition.

B.purchase requisition.

C.receiving report.

D.purchase order.

Question 5 of 20

The ability of a business to earn a reasonable amount of income is referred to as the factor of:

A.leverage.

B.profitability.

C.wealth.

D.solvency.

Question 6 of 20

In computing the rate earned on total assets, interest expense is added to net income before dividing by average total assets.

A. True

B. False

Question 7 of 20

Manufacturers implement the philosophy of just-in-time processing to produce products with high quality, low cost, and instant availability.

A. True

B. False

Question 8 of 20

The percentage analysis of increases and decreases in related items in comparative financial statements is called:

A.vertical analysis.

B.solvency analysis.

C.profitability analysis.

D.horizontal analysis.

Question 9 of 20

Direct materials, work-in-process, and finished goods inventory are most likely to be reported on the balance sheet of a(n):

A.financial consultant.

B.apparel boutique.

C.automobile company.

D.insurance company.

Question 10 of 20

Activity-based costing is a method of accumulating and allocating costs by department.

A. True

B. False

Question 11 of 20

Which of the following is a characteristic of the just-in-time philosophy?

A.Increases inventory to protect against process problems

B.Tolerates defects

C.Emphasizes push manufacturing

D.Emphasizes product-oriented layout

Question 12 of 20

Which of the following statements is true of managerial accounting?

A.Reporting under managerial accounting is constrained by rules such as generally accepted accounting principles.

B.Managerial accounting is required to be reported annually, also may be reported monthly or quarterly.

C.Managerial accounting provides information to the external stakeholders of the company.

D.Managerial accounting is primarily concerned with generating information for use by managers.

Question 13 of 20

Which of the following information is not provided by job cost sheets?

A.Cost impact of materials changes

B.Cost impact of continuous improvement in the manufacturing process

C.Change in materials price or direct labor rate over time

D.Utilities, managerial salaries, and depreciation of computers in the corporate office

Question 14 of 20

Sarbanes-Oxley Act of 2002 requires which of the following reports to be prepared by the management of the company?

A.A report evaluating the probability that the company will remain in business.

B.A report showing management's assessment of internal control.

C.A report assessing the market value of the company's current stock price.

D.A report identifying the competency of the company's board of directors.

Question 15 of 20

For most profitable companies, the rate earned on total assets will be less than:

A.the rate earned on stockholders' equity.

B.the rate earned on total liabilities and stockholders' equity.

C.the rate earned on sales.

D.cannot be determined without more information.

Question 16 of 20

A job order cost system provides for a separate record of the costs for each particular quantity of product that is manufactured.

A. True

B. False

Question 17 of 20

If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as factory overhead cost.

A. True

B. False

Question 18 of 20

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 10%; therefore, the income tax expenses as a percentage of net sales must be 90%.

A. True

B. False

Question 19 of 20

Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 10%; therefore, the income tax expenses as a percentage of net sales must be 90%.

A. True

B. False

Question 20 of 20

Which of the following measures the liquidity position of a corporation?

A.Earnings per share

B.Inventory turnover

C.Current ratio

D.Number of times interest charges earned