Acct 2020 Financial Accounting II - Final Exam

One reason that a common-size statement is a useful tool in financial performance evaluation is that it enables the user to

• A.

  Make better comparisons of two companies of different sizes in the same industry.

• B.

  Judge the relative potential of two companies of similar size in different industries.

• C.

  Determine which companies in a single industry are of the same size.

• D.

  Determine which companies in a single industry are of the same value.

Indicate on the blanks below the letter of the type of activity (O = operating activity, F = financing activity, I = investing activity, N = noncash transaction) each of the following transactions represents. _____ 1. Firm sold 8,000 shares of its own common stock for cash. _____ 2. Sold $200,000 worth of products. _____ 3. Paid $120,000 dividend. _____ 4. Received $1,500 in interest income. _____ 5. Exchanged 6,000 shares of stock for 15-year bonds. _____ 6. Paid $121,000 to the U.S. Treasury for income taxes.