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Multiple choice Questions regarding financial statements

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1. Which of the following compliance issues affects users and producers of financial statements, including pro forma financial statements?

a. editing requirements
b. auditing and legal requirements
c. ethical obligations
d. timeliness of implementation
e. responsibility for performance

2. Which of the following is not a way to evaluate a pro forma financial statement?

a. percentage change/growth analysis

b. common size financial statements

c. financial ratios

d. internal rate of return

e. none of the above

3. Which of the following ratios is calculated by dividing the cost of sales by accounts payable?

a. quick ratio

b. payables turnover ratio

c. retention ratio

d. dividend payout ratio

4. Economic value added® is a financial performance measure that compares after tax operating earnings with a firm's cost of capital to determine a theoretical measure of the amount of economic value that has accrued to the shareholders over the same accounting period.

True

False

5. DuPont analysis is a method of arranging financial ratios to decompose return on equity.

True

False

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Solution Summary

The solution has explanations for various mutliple choice and true and false questions relating to financial statements

Solution Preview

1b. auditing and legal requirements. The financial statements have to comply with the auditing and legal requirements. The financial statements have to be prepared as per the legal requirements and they have to be audited. The rest ...

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