1. The data from comparative financial statements areuseful

a. To analyze changes in gross and net earnings over a numberaccounting periods

b. To analyze the sources of increase in assets

c. To indicate earnings trends and costs trends for thefirm,

d. In accomplishing all of the above e. In accomplishing (a) and (b)above

2. Index numbers are usedin

a. trendanalysis

b. ratioanalysis

c. verticalanalysis

d. common-sizestatements

3. "Tradingontheequity"(financialleverage)islikelyto bea goodfinancialstrategyfor shareholders of corporationswith:

a. Rapidly growing amounts of netincome

b. Steady but low amounts of netincome,

c. Widely fluctuating net income over a short period oftime

d. Steadily declining amounts of netincome,

4. Select one with the CORRECTstatement

a. An industry with a low turnover if operating assets would be expected to have alowerrateoperatingpercentageofsalesthaninindustrywithhighoperating assets turnover

b. An increase in the rate of operating earnings as a percentage of sale may accompany a decrease in operating earnings measured in absolutepesos

c. The ratio of net earnings to sales is one of best measures for comparingthe profitability of different companies without regard to the sources ofassets

d. Net earnings as a percentage of sales measures the number of centavosof net earnings on each unit of productsold

5. Comparing performance with industry norms is complicatedby

a. The existence of diversifiedcompanies

b. the use of different accounting procedures by differentcompanies

c. the fact that companies in the same industry will usually differ in somerespect

d. all of theabove

6. Which of the following would probably not be found in a companys annualreport?

a. The auditor'sreport

b. A five-or ten-year summary ofoperations11

c. Interim financialstatements

d. Analysis of the past year'soperations