1. A gain or loss from discontinued operations should _____ on the income statement.

a. be reported as part of income from continuing operations

b. be reported before income from continuing operations

c. be reported after income from continuing operations

d. not be reported

2. Generally accepted accounting principles require that unusual items be reported _____.

a. within operating income on the income statement

b. separately on the income statement

c. only in the notes to the financial statements

d. within other revenue and expenses on the income statement

3. Typical items included in the MD&A include all the following except _____.

a. managements analysis and explanations of any significant changes between the current and prior years financial statements.

b. managements assessment of the effectiveness of internal controls over financial reporting.

c. managements assessment of the companys liquidity and the availability of capital to the company.

d. All of these are correct.

4. In addition to the financial statements and the accompanying notes, corporate annual reports normally include which of the following sections?

a. Management Discussion and Analysis

b. Report on Internal Control

c. Report on Fairness of the Financial Statements

d. All of these are correct.

5. Starlight Company had the following data taken from its most recent financial statements:

Sales

$3,200,000

Interest expense

56,000

Net income

500,000

Total assets

4,000,000

Total liabilities

2,400,000

Total stockholders equity

1,600,000

Based on these data, calculate Starlight Companys return on stockholders equity.

a. 2%

b. 32.3%

c. 62.5%

d. None of these are correct.

6. Starlight Company had the following data taken from its most recent financial statements:

Sales

$3,200,000

Interest expense

56,000

Net income

500,000

Total assets

4,000,000

Total liabilities

2,400,000

Total stockholders equity

1,600,000

Based on these data, calculate Starlight Companys return on total assets.

a. 8%

b. 12.5%

c. 27.8%

d. None of these are correct.

8. Johnston & Myers Incorporated had the following balance sheet data for a recent year:

Current assets

$720,000

Property, plant, and equipment (net)

1,110,000

Current liabilities

230,000

Long-term liabilities

450,000

Common stock, $10 par

250,000

Retained earnings

1,000,000

What is Johnston & Myers Incorporateds ratio of liabilities to stockholders equity?

a. 0.5

b. 0.7

c. 0.9

d. None of these are correct.

9. Johnston & Myers Incorporated had the following balance sheet data for a recent year:

Current assets

$720,000

Property, plant, and equipment (net)

1,110,000

Current liabilities

230,000

Long-term liabilities

450,000

Common stock, $10 par

250,000

Retained earnings

1,000,000

What is Johnston & Myers Incorporateds ratio of fixed assets to long-term liabilities?

a. 0.9

b. 2.1

c. 4.1

d. 2.5