Financial Statement Analysis Q1 Which of the following statements is true? A. It
ID: 2790346 • Letter: F
Question
Financial Statement Analysis
Q1 Which of the following statements is true?
A. It is unnecessary to analyze operating expenses over which management exercises discretion.
B. Impairment charges do not need to be analyzed since they are generally a non-recurring expense.
C. A good way to improve operating profit is to cut repairs and maintenance costs as much as possible.
D. Operating expenses can be easily analyzed by preparing a common-size income statement.
Q2 Selling and administrative expenses include which of the following income statement items?
A. Salaries, Insurance, Interest.
B. Salaries, rent, advertising.
C. Rent, interest, cost of goods.
D. Advertising, Research & development, Amortization.
Q3 How are deferred taxes recorded on the balance sheet?
A.as current or noncurrent liabilities
B. As stockholders' equity
C. As noncurrent assets or noncurrent liabilities
D. As current or noncurrent assets or liabilities
Q4Which item is not a special item that must be disclosed separately on the income statement?
A. Extraordinary gain.
B. Extraordinary loss
C. Foreign currency translation adjustments.
D. Discontinued operations
Explanation / Answer
Answer 1 Correct answer is D, Common-size analysis of the income statement can be performed by stating each line item on the income statement as a percentage of revenue.By stating operating expense as percentage of revenue we can analyse how much percentage of revenue is operating expense and we can alayse its trend over past years
Answer 2 correct answer is B, salaries rent and advertising are part of selling and administrative other options are not part of selling and adminstrative expense
Answer 3 Correct answer is D,Deferred tax assets represent taxes that have been paid but have not yet been recognized on the income statement. Deferred tax liabilities occur when financial accounting income tax expense is greater than regulatory income tax expense.deferred tax assets and liabilities are classified on the balance sheet as current and noncurrent based on the classification of the underlying asset or liability
Answer 4 Correct answer is C, Foreign currency translation adjustments. In consolidating the financial statements of foreign subsidiaries, the effects of translating the subsidiaries’ balance sheet assets and liabilities at current exchange rates are included as other comprehensive income in Shareholder's Equity
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.