Question 1

The revenue of Rick's Motorcycles for the years 2009, 2010, and 2011 is $75,000, $100,000 ,and $200,000, respectively. If 2009 is the base year, the trend percentage for 2010 is:

Accepted Answer

To calculate the trend percentage for 2010, we need to use the following formula:
Trend percentage = (revenue of the current year/revenue of the base year) x 100%
Using the given data, we get:
Trend percentage for 2010 = (100,000/75,000) x 100% = 133.33%, which approximates to 133% (rounded to the nearest whole percentage). Therefore, Choice C is the correct answer.

Question 2

What type of application is required per IFRS and ASPE when changing from the application of one principle to another?

Accepted Answer

The answer of What type of application is required per...

Question 3

Patty's Baker has cost of goods sold for the years 2011, 2010, and 2009 respectively of $28,600, $26,900, and $25,600. If 2009 is the base year, the trend percentage for 2011 is:

Accepted Answer

To calculate the trend percentage, you take the amount in the target year (2011 in this case, which is $28,600) and divide it by the amount in the base year (2009, which is $25,600). Then, you multiply the result by 100 to get a percentage. So, the calculation is ($28,600 / $25,600) * 100 = 111.72%. This shows how much the cost of goods sold has increased from the base year (2009) to the target year (2011) in percentage terms.

Question 4

The most recent period in a horizontal analysis is called the __________ period.

Accepted Answer

The answer of The most recent period in a horizontal...

Question 5

Tayler Company's cash reported on the balance sheets for 2009 and 2010 was as follows: $235,000 in 2009; $245,300 in 2010. The percentage change for cash from 2009 to 2010 was __________.

Accepted Answer

The answer of Tayler Company's cash reported on the balance...

Question 6

If current assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of increase or decrease in percentage terms from 2009 to 2010? (Round to the nearest percent.)

Accepted Answer

To calculate the percentage change, we need to use the following formula:

Percentage change = ((ending value - beginning value) / beginning value) x 100

Using the formula, we get:

Percentage change = (($88,000 - $100,000) / $100,000) x 100
Percentage change = (-$12,000 / $100,000) x 100
Percentage change = -12%

Since the result is negative, it means there was a decrease. Therefore, the correct answer is D) Decrease of 12%.

Question 7

Rick's Sporting Goods reported $23,400 in A/R in 2010 and $25,100 in A/R in 2009. The percentage change for A/R from 2009 to 2010 was __________.

Accepted Answer

The answer of Rick's Sporting Goods reported $23,400 in A/R...

Question 8

Horizontal analysis is only done on the income statement.

Accepted Answer

Horizontal analysis can be done on both the income statement and balance sheet. It involves comparing financial data from different time periods to identify trends and changes in performance.

Question 9

The sales of Mark's Online for the years 2009, 2010, and 2011 are $40,000, $60,000, and $80,000, respectively. If 2009 is the base year, the trend percentage for 2010 is:

Accepted Answer

The trend percentage for 2010 is calculated by taking the sales figure for 2010, dividing it by the sales figure for the base year (2009), and then multiplying by 100. So, it's ($60,000 / $40,000) * 100 = 150%.

Question 10

Computing trend percentages over a period of years helps to indicate the direction in which the business is going.

Accepted Answer

Computing trend percentages over a period of years analyzes the changes in numbers and direction over time, making it a useful method to determine the business trajectory.

Question 11

If cash is $4,450 in 2010 and $3,670 in 2009, what is the percentage increase or decrease from 2009 to 2010?

Accepted Answer

The answer of If cash is $4,450 in 2010 and...

Question 12

A comparison of the amounts for the same item in the financial statements of two or more periods is called __________ analysis.

Accepted Answer

The answer of A comparison of the amounts for the...

Question 13

What is the formula for determining the percentage change in an account from one year to the next year?

Accepted Answer

The answer of What is the formula for determining the...

Question 14

Kacee's sales were $13,444 in 2010 and $12,898 in 2009. The percentage change in Kacee's sales from 2009 to 2010 was __________.

Accepted Answer

The answer of Kacee's sales were $13,444 in 2010 and...

Question 15

In computing trend percentages, the most recent year amounts become the base and are always set to 100%.

Accepted Answer

In computing trend percentages, the base year (not the most recent year) amounts are set to 100%, and subsequent years are compared to this base year to identify trends over time.

Question 16

Eagle Creek Outfitters sells hiking and other outdoor equipment. It also sells a few trail books and outdoor guides about the area. What would the revenue from the books and guides be recorded as in their income statement?

Accepted Answer

The answer of Eagle Creek Outfitters sells hiking and other...

Question 17

Knowing the dollar amount of change from year-to-year in an account is less relevant than knowing the percentage change.

Accepted Answer

Knowing the percentage change provides a better understanding of the growth or decline in the account value, regardless of the dollar amount.

Question 18

Determining the percentage changes in line items on financial statements for two consecutive years is called __________ analysis.

Accepted Answer

The answer of Determining the percentage changes in line items...

Question 19

Explain the difference between basic EPS and diluted EPS.

Accepted Answer

The answer of Explain the difference between basic EPS and...

Question 20

Which analysis deals with the percentage of changes in certain items over a period of years?

Accepted Answer

The answer of Which analysis deals with the percentage of...

Quiz 12: Financial Statement Analysis