1)There are several fundamental purposes decision makers consider when they use
ID: 2461928 • Letter: 1
Question
1)There are several fundamental purposes decision makers consider when they use financial data. Which of the following statements is not one of those fundamental purposes?
a)Prediction of future potential of the business.
b)Measurement of past performance of the business.
c)Measurement of the current condition of the business.
d)Measurement of the book value of the assets.
2)
The base amount in preparing a common-size income statement is usually which of the following?
a)Net sales
b)Income from operations
c)Gross profit
d)Net income
3)
Trenton Company has provided the following information:
• Net income, $240,000;
• Preferred shares issued, 6,000;
• Average common shares issued, 24,000;
• Common cash dividends declared and paid, $30,000;
• Market price per share, $36
• Average treasury shares of common stock, 4,000.
What was Trenton's price earnings ratio?
a)5.1
b)3.4
c)3.0
d)4.5
a)2.5
b)1.5
c)0.5
d)0.75
Explanation / Answer
1.c. measurement of current condition of business
2.a. net sales
3.a. 5.1
4.b. 1.5
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