Question

Question 1 1 pts Horizontal analysis A) compares beginning and ending balances within the same accounts for the same company for a stated year. B) compares beginning and ending balances within the same accounts between two companies for a stated year. C) compares only ending balances within the same accounts for the same company for a stated year. D) compares only ending balances within the same accounts between two companies for a stated year. Flag this Question

Question 2 1 pts Vertical analysis of a balance sheet A) uses net sales as the 100% "base" and compares amounts to it. B) uses total assets as the 100% "base" and compares amounts to it. C) uses total stockholders' equity as the 100% "base" and compares amounts to it. D) cannot be done -- only the income statement can be vertically analyzed. Flag this Question

Question 3 1 pts The working capital of a corporation is calculated by subtracting current liabilities from current assets. A) The resulting number determines whether fixed assets may be depreciated for the current year. B) is expressed as a fraction (or a ratio). C) is a measurement of the company's solvency. D) is a measure of the company's profitability. Flag this Question

Question 4 1 pts The earnings per share ratio is very descriptive; it tells interested parties how much each share of outstanding stock would receive if all of the current year's earnings were distributed. A) A key point about this ratio is the earnings must be changed from accrual to cash. B) it is an important factor in determining the company's ability to borrow money through the use of long-term bonds. C) it is not shown on financial reports of publicly-held companies. D) the earnings are calculated only for the common shares outstanding. Flag this Question

Question 5 1 pts Per the regulatory pronouncements of the Sarbanes-Oxley Act of 2002, a certification as to the internal controls of a corporation being in place and functioning must be made by A) The CEO and CFO only. B) the external auditor only. C) the CEO, CFO, and external auditor. D)the SEC.

Answer 1

• Note: As per guideline, the first ‘four’ questions have been answered to help you out.
• Question 1

Correct Answer is Option A
Horizontal Analysis compares beginning and ending balances of the same account of the same company for a stated year. An example can be:

	Beginning Balance	Ending Balance	Increase	%
Accounts receivables	$20000	$30000	$10000	50%

• Question 2

Correct Answer is Option A

In Income Statement, all figures are stated in % form and net Sales are used as ‘denominator’ or base for calculating percentage value.

If it’s a multiple options as ‘answer’ question, then Option B and C can also be considered as correct answer along with Option A. While calculating % in Balance sheet, Total assets and stockholder’s equity are also considered as ‘base’ for calculating some % values.

• Question 3

Correct Answer is Option C

It is one of the measure to measure solvency. If the working capital is ‘positive’, company will said to be better off so far as short term obligations are concerned.

• Question 4

Correct answer is Option D

The EPS is only calculated for common shares outstanding. It is calculated by dividing Profits available to common shares holders by weighted no of ‘’common’’ shares outstanding.