22. Kreig Corporation has income before taxes of $900,000 and an extraordinary gain of $300,000. If the income tax rate is 35% on all items, the income statement should show income before irregular items and extraordinary items, respectively, of A) $600,000 and $300,000. B) $600,000 and $195,000. C) $585,000 and $300,000. D) $585,000 and S195,000. 23. An extraordinary item is one that A) occurs infrequently and is uncontrollable in nature. B) occurs infrequently and is unusual in nature. C) is material and is unusual in nature. D) is material and is uncontrollable in nature. 24. Saira, Inc. has the following income statement (in millions): SAIRA, INC. Income Statement For the Year Ended December 31, 2014 Net Sales Cost of Goods Sold Gross Profit $300 180 120 Operating Expenses Net Income 45 $75 Using vertical analysis, what percentage is assigned to Net Income? A) 625% B) 40% c) 25% D) None of these answer choices are correct. 25. Each of the following is a liquidity ratio except the A) acid-test ratio. B) current ratio. C) debt to assets ratio. inventory turnover. D) 26. Inventory turnover is calculated by dividing A) cost of goods sold by the ending inventory. B) cost of goods sold by the beginning inventory. C) cost of goods sold by the average inventory. D) average inventory by cost of goods sold. 27. The current assets of Myers Company are $250,000. The current liabilities are $100,000. The current ratio expressed as a proportion is A) 250%. B) 2.5 :1 C) 25:1 D) $250,000 + $100,000. 28. A general rule to use in assessing the average collection period is that A) it should not exceed 30 days. B) it can be any length as long as the customer continues to buy merchandise. C) it should not greatly exceed the discount period. D) it should not greatly exceed the credit term period. 29. What type of ratios best measure the short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash? A) Leverage B) Solvency C) Profitability D) Liquidity 30. A liquidity ratio measures the A) income or operating success of an enterprise over a period of time. B) ability of the enterprise to survive over a long period of time. C) short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash. D) number of times interest is earned. 31. The following information is available for Oakland Company: 2014 $ 460,000 320,000 1,600,000 1,060,000 170,000 2015 $ 430,000 280,000 2,670,000 1,860,000 300,000 Accounts receivable Inventory Net credit sales Cost of goods sold Net income The accounts receivable turnover ratio for 2015 is A) 1.4 times. B) 6.2 times. C) 6.0 times. D) 5.8 times. 32. The current ratio may also be referred to as the A) short run ratio. B) acid-test ratio. C) working capital ratio. D) contemporary ratio. 33. A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is A) common size analysis. B) horizontal analysis. C) ratio analysis. D) vertical analysis. 34. Assume the following sales data for a company: $945,000 877,500 675,000 2016 2015 2014 If 2014 is the base year, what is the percentage increase in sales from 2014 to 2015? B) 30% C) 40% D) 71.4% A) 76.9% 35. The order of presentation of nontypical items that may appear on the income statement is A) Extraordinary items, Discontinued operations, Other revenues and expenses. B) Discontinued operations, Extraordinary items, Other revenues and expenses. c) Other revenues and expenses, Discontinued operations, Extraordinary items. D) Other revenues and expenses, Extraordinary items, Discontinued operations. 36. MECHE Company reports income before income taxes of $2,500,000 and had an extra-ordinary loss of $800,000. If the tax rate is 35%, A) the income before the extraordinary item is $1,190,000. B) the extraordinary loss would be reported on the income statement at $800,000. C) the income before the extraordinary item is $1,625,000. D) the extraordinary loss will be reported at $280,000
