41.Accounting numbers are useful in that they
d.help investors and creditors influence, manipulate, and monitor management’s business decisions so that future profits are high.
42.The two fundamental ways in which financial accounting numbers are useful are
prediction and influence.
control and monitoring.
prediction and monitoring.
control and prediction.
43.True value of a company is determined by
adding adjustments for the business environment, unrecorded events, and types of shareholders to the book value of a company.
adding adjustments for the business environment, unrecorded events, and cumulative profits to the book value of a company.
adding adjustments for the business environment, management bias, and cumulative profits to the book value of a company.
adding adjustments for the business environment, unrecorded events, and management bias to the book value of a company.
44.What type of audit report do most companies receive from their auditors?
standard audit reports
no report unless the company has problems
a GAAP report
a comprehensive report
45.Calculate Campbell’s current and quick ratios as of December 31, 2009 and December 31, 2010 and choose the correct answers below:
Campbell’s quick and current ratios improved from December 31, 2009 to December 31, 2010.
Campbell’s quick and current ratios worsened from December 31, 2009 to December 31, 2010.
Campbell’s quick ratio improved but the current ratio worsened December 31, 2009 to December 31, 2010.
Campbell’s quick ratio worsened but the current ratio improved from December 31, 2009 to December 31, 2010.
46.Calculate Campbell’s inventory turnover ratio and accounts receivable turnover ratio for the year ended 2010. Further, assume that in Campbell’s industry, the industry average inventory turnover ratio is 12 and the industry average receivables turnover ratio is 14.
Campbell’sinventory turnover ratio and accounts receivable turnover ratios are better than average for Campbell’sindustry.
Campbell’sinventory turnover ratio and accounts receivable turnover ratios are worse than average for Campbell’sindustry.
Campbell’sinventory turnover ratio is better but the accounts receivable turnover ratio is worse than average for Campbell’sindustry.
Campbell’sinventory turnover ratio is worse and accounts receivable turnover ratio is better than average for Campbell’sindustry.
47.Calculate Campbell’s return on equity and return on assets for the year ended December 31, 2010. Assume that the income tax rate is 30%. Also assume that in Campbell’s industry, the industry average return on equity is 19% and the average return on assets is 11%.
Campbell’sreturn on equity and return on assets are better than average for Campbell’sindustry.
Campbell’sreturn on equity and return on assets are worse than average for Campbell’sindustry.
Campbell’sreturn on equity is better but return on assets is worse than average for Campbell’sindustry.
Campbell’sreturn on equity is worse but return on assets is better than average for Campbell’sindustry.
48.Calculate Campbell’s debt to equity ratio as of December 31, 2009 and as of December 31, 2010. Also assume that in Campbell’s industry, the industry average debt to equity ratio is 2.75 as of December 31, 2009 and as of December 31, 2010.
Campbell’sdebt to equity ratio improved from 2009 to 2010.
Campbell’sdebt to equity ratio was better than average for the industry both years.
Campbell’sdebt to equity is worse than average for the industry for both years.
Both a and b above, but not c.
49.Devin Inc. has an inventory turnover ratio of 30. Devin’s average number of day’s inventory is:
Less than 10.
Between 10 and 12.
More than 12.
Unable to be determined based on this limited information.
50.Justin Company has total assets, liabilities, and shareholders' equity of $36,000, $15,000, and $21,000, respectively, at the beginning of 2010. At the end of 2010, total assets, liabilities, and shareholders' equity were reported at $32,000, $13,000, and $19,000, respectively. What is Justin’s debt to equity ratio?
a. 0.70
b. 1.17
c. 0.71
d. 1.13