Horizontal analysis examines howanaccount, like cash for example, changesover time.

A)True B)False 2.

Principles of vertical analysisare used to prepare common size financial statements.

A)True B)False 3.

Factors such as industry trends and economic conditions should not be ignored when analyzing a company.

A)True B)False 4.

A common size income statement would reportinventory as a percentage rate, not as a dollar amount.

A)True B)False 5.

The ability of a business to pay its debt is called liquidity.

A)True B)False 6.

Assets and earnings are reported on balance sheets.

A)True B)False 7.

Working capital measures the abilty of a business to pay off itsshort term debt.

A)True B)False 8.

Current ratios are used to analyzeprofitability.

A)True B)False 9. Quick ratio calculations analyze earnings.A)True B)False 10. Liquidity, solvency, and profitability are interrelated.A)True B)False 11. All else being equal, turning receivables over more often improves liquidity.A)True B)False 12. All else being equal, the lower the inventory turnover the more days sales in inventory.A)True B)False 13.

Research suggests thatsalariespaid to CFO's are linked to meeting earnings forecasts made by financial analysts.

A)True B)False 14.

GAAP requires CPA's to express unqualified opinions when auditing financial statements.

A)True B)False 15.

By definition, all extraordinary items must be both unusual in nature and infrequent in occurence.

A)True B)False 16.

GAAP requires separate earnings per share calculations for income from continuing operations, discountinued operations, and extraordinary items.

A)True B)False 17.

In many cases, GAAP is irrelevant to the decison making needs of management.

A)True B)False 18.

For manufacturers, cost objects may be products, departments, territories, or activities.

A)True B)False 19.

Not all direct manufacturing costs can be can betraced to specific cost objects.

A)True B)False 20.

Factory overheadis a prime cost.

A)True B)False 21.

Direct labor is both a prime and converison cost.

A)True B)False 22.

Product costs are initially reported on income statements as expenses.

A)True B)False 23.

Manufacturers typicallyreportthreetypes ofinventory on their balance sheets.

A)True B)False 24.

The difference between total manufacturing costs and cost of goods manufactured is ending work in process.

A)True B)False 25.

Total manufacturing costs add up to the sum of beginning work in process and total manufacturing costs incurred.

A)True B)False 26.

Depreciation on factory equipment is a prime cost.

A)True B)False 27. Factory overhead is reported as a separate product cost on the balance sheets of manufacturers.A)True B)False 28.

Operating expenses are conversion costs.

A)True B)False 29.

In EX 18-16 on page 876,Crouching Alligator Manufacturing'sgross profit would be $453,800.

A)True B)False 30.

On a Statement of Cost of Goods Manufactured prepared for Bahadir Company inEx 18-17 on page 876, the cost of direct material Bahadirpurchased would be the same as the cost of direct materail Bahadir actually used.

A)True B)False