1. An analysis of trend results over time is usually more useful than looking at the results for two consecutive periods only

A. True

B. False

2. Common-size vertical income statements:

A. Express total sales revenue as 100% and show all other items as a percentage of that

B. show net income as 100% and express all items as a percentage of that

C. show gross profit as 100% and express all

D. Show the change from last periods income statement to this period in percentage terms

3. If a net income of $825 was made at a banquet and 750 customers were served, average net income per guest would be $1.10

A. True

B. False

4. Comparative horizontal balance sheets show the:

A. Change in individual account balances in both dollar and percentage terms from one period to the next.

B. Change in individual account balances in dollars from one period to the next.

C. Various assets, liability, and owners’ equity account balances as a percentage of total sales revenue.

D. Change in individual account balances in percentage terms from one period to the next.

5. Average guest check has increased from $12.50 to $14.00. Average operating income per guest has increased from $1.00 to $1.50. From this information it is obvious that:

A. More total net income is being made by the restaurant.

B. Menu prices have increased.

C. Higher prices are driving away customers.

D. Total average cost per guest is greater now than before.

6. The calculation of percentage change figures for specific income statement items when viewed over multiple periods can identify the direction in which a business is going.

A. True

B. False

7. In doing comparative horizontal analysis:

A. Total assets are given the value of 100%, and all other assets are expressed relative to that.

B. Relative changes show dollar differences and absolute changes show percent differences.

C. Net income is given a value of 100%, and all other figures are expressed relative to that.

D. Absolute changes show dollar differences and relative changes show percent differences.

8. Comparative horizontal balance sheet analysis shows each individual account, subtotal and total balance changes from one balance sheet date to the next. Changes are described in both dollars and percentages.

A. True

B. False

9. Sales revenue in Period 1 is $3,000 and in Period 2 it is $4,000. The trend index figure for Period 2 (assuming Period 1 is given the value of 100) will be:

A. 104.0

B. 140.0

C. 130.0

D. 133.3

10. Sales revenue in Period 1 is $100,000 and food cost is 40%. Sales revenue in Period 2 is $104,000 and food cost is 44%. The percent change in food cost percentage from Period 1 to Period 2 is:

A. $4,400

B. 4%

C. 4% of $4,000

D. 10%

Answer rating: 100% (QA)

Ques 1 True Explanation The primary difference between vertical analysis and horizontal analysis is ... View the full answer