1. Year 1 sales revenue is $240,000, and its trend index number is 120. Year 5 sales revenue (current year) is $360,000 and its trend index number is 150. Year 1 sales revenue converted to current dollars is $300,000.

A. True

B. False

2. Average check is calculated by dividing:

A. Sales revenue for a period by the number of guests served during that period and multiplying by 100.

B. Sales revenue for a period by the number of guests served during that period.

C. Sales revenue for a period into the number of guests served during that period.

D. Annual sales revenue by 365 and multiplying by number of guests served.

3. Common-size vertical income statements show each expense item as a percent of total sales revenue.

A. True

B. False

4. A restaurants average check in Year 1 is $20.00, in Year 2 is $21.00, and in Year 3 is $22.00. Using this as a basis, calculate the trend index numbers. The trend index numbers for the three years respectively, would be:

A. 120, 121, 122.

B. 100, 120, 121.

C. 100, 105, 110.

D. 100, 121, 122.

5. The average check is calculated by dividing the number of customers served during a period by the sales revenue for that period.

A. True

B. False

6. A trend index shows sales revenue has increased from Year 1 to Year 4 by 63%. During the same period the accounts receivable trend index shows an increase of 75%. This would normally be a desirable trend.

A. True

B. False

7. Sales revenue in Year 1 is $120,000 with a trend index number of 110. Sales revenue in Year 2 is $140,000 with a 121 trend index number. Year 1 sales revenue converted to current dollars is:

A. $121,000

B. $132,000

C. $151,000

D. $110,000

8. In doing comparative horizontal analysis, the two terms used to describe changes from one period to the next are absolute changes for percent differences, and relative changes for dollar differences.

A. True

B. False

9. Financial statement analysis is carried out by:

A. Stockholders for the use of management.

B. Various readers of financial statements for their own particular purposes

C. Management for the use of its employees.

D. Management for the use of the tax department.

10. Vertical analysis and trends analysis are similar forms used to conduct financial statements analysis.

A. True

B. False