Answer each of the following questions by selecting the answer you think is correct. Questions with more than one answer selected will be marked as incorrect.

1- Horizontal analysis is a technique for evaluating a series of financial statement data over a

period of time

a.that has been arranged from the highest number to the lowest number.

b. that has been arranged from the lowest number to the highest number

c.to determine which items are in error.

d.to determine the amount and/or percentage increase or decrease that has taken place

2- A horizontal analysis is being conducted with year one as the base year. If year one equals $900, year two equals $960, and year three equals $995, the percentage of the base period for year three is

a.89%.

b.100%

c.106%

d.111%.

3- If, over a three-year period, sales increased by 30% and cost of goods sold increased by 45%,

a. the sales trend is unfavourable, but the cost of goods sold trend is favourable.

b.the sales trend is favourable, but the cost of goods sold trend is unfavourable.

c. both trends are favourable.

d.both trends are unfavourable.

4- Short-term creditors are usually most interested in assessing

a.solvency.

b.liquidity.

c.marketability.

d.profitability.

5- Which one of the following events would not require a journal entry on a corporation's books?

a.10% stock dividend.

b.$2 per share cash dividend

c.3 for 1 stock split.

d.5% stock dividend

6- Which of the following is not true of a corporation?

a.It may buy, own, and sell property.

b.It may sue and be sued.

c.The acts of its shareholders bind the corporation.

d.It may enter into binding legal contracts in its own name.

7. The ability of a corporation to obtain capital is

a.enhanced because of limited liability and ease of share transferability.

b.less than a partnership.

c.restricted because of the limited life of the corporation.

d.about the same as a proprietorship

8-A disadvantage of the corporate form of organization is

a.its status as a separate legal entity.

b.continuous existence.

c.government regulation.

d.ease of transfer of ownership

9- Mr. Gold sold 100 shares of Delia Corp. to Mrs. Silver for $2,200. As a result of this

transaction, Delia Corp.s

a.shareholders equity did not change.

b.shareholders equity increased by $2,200.

c.shareholders equity decreased by $2,200.

d.assets increased by $2,200.

10- Which one of the following would not be considered a liquidity ratio?

a.current ratio.

b.inventory turnover ratio.

c.receivables turnover ratio.

d.return on assets ratio.

Thank You ,