1) Assume you are using net sales as the base in vertical analysis. Cost of goods sold in20X1 is 67%, and is 70% in 20X2. This would always indicate that:A) gross margin has declinedB) cost of goods sold as a percentage of net sales has increasedC) the dollar amount of cost of goods sold has increasedD) gross margin has declined, cost of goods sold as a percentage of net sales has increased, and the dollar amount of cost of goods sold has increased2) If the assets shown on a balance sheet are subjected to vertical analysis (using total assets as the base), an increase in the figure for non-current assets from 40% to 55% would always mean that:A) total non-current assets have increased as a percentage of total assetsB) the dollar amount of current assets has decreasedC) total current assets have decreased as a percentage of total assetsD) total non-current assets have increased as a percentage of total assets and total current assets have decreased as a percentage of total assets3) If a balance sheet is subjected to vertical analysis which shows that current assets (using total assets as the base) have decreased from 53% to 36%, this would always mean that:A) the dollar amount of current assets has decreasedB) current assets have decreased as a percentage of total assetsC) the dollar amount of total assets has decreasedD) the dollar amount of total assets has increased4) Assume you are using total assets as the base in vertical analysis. Current assets in 20X1 are42%, and are 36% in 20X2. This would always indicate that:A) the current ratio has decreasedB) the dollar amount of current assets has decreasedC) total non-current assets have increased as a percentage of total assetsD) the dollar amount of non-current assets has increased5) Yukon Company has total current liabilities equal to $600,000 and working capital of $30,000. North Company has the same amount of working capital, but it has total current liabilities of $40,000. The company with the better working capital position is:A) North CompanyB) Yukon CompanyC) They both have exactly the same working capital position.D) indeterminable with the information given6) From the list below, select the ratios) that help in the analysis of working capital:A) current ratioB) quick ratioC) debt ratioD) current ratio and quick ratio7) Which of the following is a measure of a company's ability to meet short-term obligations?A) working capitalB) book value per share of common sharesC) accounts receivable turnoverD) debt ratio8) If ending inventory for the year ended December 31, 20X1, is overstated by $25,000:A) net income for 20X2 will be understated by $25,000B) net income for 20X2 will be overstated by $25,000C) ending inventory for 20X2 will be understated by $25,000D) beginning inventory for 20X2 will be understated by $25,0009) If ending inventory on December 31, 20X1, is overstated, then:A) cost of goods sold for the year ended December 31, 20X2, will be understatedB) cost of goods sold for the year ended December 31, 20X1, will be overstatedC) gross profit for the year ended December 31, 20X1, will be understatedD) gross profit for the year ended December 31, 20X2, will be understated10) If ending inventory for the year ended December 31, 20X1, is understated, this error will cause shareholders; equity to be:A) overstated at the end of 20X1 and understated at the end of 20X2B) understated at the end of 20X1 and overstated at the end of 20X2C) correctly stated at the end of 20X1 and overstated at the end of 20X2D) understated at the end of 20X1 and correctly stated at the end of 20X211) If ending inventory is overstated, then:A) cost of goods sold and ending inventory will both be overstatedB) cost of goods sold and ending inventory will both be understatedC) cost of goods sold will be overstated and ending inventory will be understatedD) cost of goods sold will be understated and ending inventory will be overstated12) Payment for the acquisition of inventory is shown on a cash flow statement as a(n):A) investing activityB) operating activityC) financing activityD) does not appear on a cash flow statement