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Multiple Choice Problems 111618

This document contains 10 multiple choice questions about analyzing financial statements using various techniques such as horizontal analysis, vertical analysis, common-size analysis, and trend analysis. The questions refer to sample financial statements for a company called Merdana Trading Ltd. and ask about calculating percentages and analyzing changes in specific line items between years. The answers to each question are also provided.

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Dominic Dalton Caling
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10K views2 pages

Multiple Choice Problems 111618

This document contains 10 multiple choice questions about analyzing financial statements using various techniques such as horizontal analysis, vertical analysis, common-size analysis, and trend analysis. The questions refer to sample financial statements for a company called Merdana Trading Ltd. and ask about calculating percentages and analyzing changes in specific line items between years. The answers to each question are also provided.

Uploaded by

Dominic Dalton Caling
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Multiple Choice Problems (FABM 2) November 16, 2018

(For numbers 1 to 5) The financial statements of Merdana Trading Ltd. are given below:

1. Horizontal analysis of 2014 Merdana’s balance sheet would report


a. Cash as 9.50% of total assets.
b. 17% increase in Prepaid Expenses.
c. 19% increase in Cash.
d. All of the above

2. Vertical analysis of 2014 Merdana’s balance sheet would report


a. Cash as 9.50% of total assets.
b. 17% increase in Prepaid Expenses.
c. 19% increase in Cash.
d. All of the above

3. A common-size income statement for Merdana would report (amounts rounded)


a. Net income of 19%.
b. Sales of 100%.
c. Cost of sales at 34%.
d. All of the above

4. A common-size balance sheet for Merdana would report (amounts rounded)


a. Current liabilities as 28% of total assets.
b. Owner’s capital is 53% of total liabilities and equity
c. Receivables is 7% of total liabilities and equity
d. All of the above

5. Trend analysis will show which of the following?


a. 15% increase in Current Liabilities.
b. 33% increase in Owner’s Capital.
c. 19% increase in Long Term Liabilities
d. All of the above
6. If current assets are ₱270,000 and total assets are ₱810,000, what percentage of total assets are
current assets?
a. 3.5 percent
b. 30 percent
c. 25 percent
d. 33 percent

7. Comparing the amount of a balance sheet item in one year to the amount for the same item in a
prior year is called
a. common-size analysis.
b. vertical analysis.
c. horizontal analysis.
d. ratio analysis.

8. A firm has liabilities of ₱30,000 and owner’s capital of ₱90,000. The percentage oftotal liabilities to
total assets is
1. 25 percent.
2. 20 percent.
3. 50 percent.
4. 75 percent.

9. A firm had owner’s capital of ₱150,000 in 2013 and ₱187,500 in 2013. The increase in owner’s capital
from 2013 to 2014 is
a. 12.5 percent.
b. 20 percent.
c. 25 percent.
d. 125 percent.

10. If long-term liabilities are ₱300,000 and total assets are ₱2,100,000, what percentage of total assets
are long-term liabilities?
a. 7 percent
b. 16.7 percent
c. 12.5 percent
d. 14.3 percent

ANSWERS:
1. B
2. A
3. D
4. D
5. B
6. D
7. C
8. A
9. C
10. D

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