16. In a vertical analysis of a balance sheet, each item is expressed as a percentage of: A. total assets or total liabilities. B. total assets or total stockholders equity. C. total assets or total liabilities and stockholders equity. D. total liabilities or total stockholders equity.

17. In horizontal analysis of the balance sheet, how is the percentage of change determined? A. Base year and current year amounts are added and total is divide by 2. B. Base year amount divided by current year amount. C. Current year minus base year divided by base year. D. Current year divided by total assets.

18. If a comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from one year to the next, the firm used: A. horizontal analysis. B. vertical analysis. C. common-size analysis. D. trend analysis.

19. What does book value per share measure? A. Current selling price of stock B. Amount shareholder would receive if assets sold for book value and the company was liquidated C. Net assets D. Total equity

20. The price-earnings ratio for common stock is computed using: A. par value. B. market value. C. book value. D. stated value.

21. Investing activities include: a. purchases of merchandise for cash. b. purchases of plant and equipment for cash. c. purchases of prepaid expense items such as supplies and insurance for cash. d. issuance of common stock.

22. An example of a financing activity is the: a. sale of merchandise for cash. b. issuance of stock for cash. c. sale of used equipment for cash. d. collection of debts acquired from the sale of long-term assets.