Financial Statement Analysis

Q1 Which of the following statements is true?

A. It is unnecessary to analyze operating expenses over which management exercises discretion.

B. Impairment charges do not need to be analyzed since they are generally a non-recurring expense.

C. A good way to improve operating profit is to cut repairs and maintenance costs as much as possible.

D. Operating expenses can be easily analyzed by preparing a common-size income statement.

Q2 Selling and administrative expenses include which of the following income statement items?

A. Salaries, Insurance, Interest.

B. Salaries, rent, advertising.

C. Rent, interest, cost of goods.

D. Advertising, Research & development, Amortization.

Q3 How are deferred taxes recorded on the balance sheet?

A.as current or noncurrent liabilities

B. As stockholders' equity

C. As noncurrent assets or noncurrent liabilities

D. As current or noncurrent assets or liabilities

Q4Which item is not a special item that must be disclosed separately on the income statement?

A. Extraordinary gain.

B. Extraordinary loss

C. Foreign currency translation adjustments.

D. Discontinued operations