17.

A company that uses the last-in, first-out (LIFO) be shown at the

method of inventory pricing finds at an interim report- actual level, and
ing date that there has been a partial liquidation of the cost of sales for
base period inventory level.The decline is considered the interim report-
temporary and the partial liquidation is expected to ing period should
be replaced prior to year end. The amount shown as include the expect-
inventory at the interim reporting date should ed cost of replace-
ment of the liqui-
dated LIFO base

18. Companies should disclose all of the following in the post-bal-

interim reports except ance-sheet events

19. The required approach for handling extraordinary charge or credit

items in interim reports is to the loss or gain in
the quarter that it
occurs

20. In the financial statements examined by an auditor qualified

lead the auditor to issue an option that contains an
exception that is not of sufficient magnitude to invali-
date the statement as a whole, the option is said to be

21. The MD&A section of a company's annual report is to liquidity, capital re-
cover the following three items sources, and re-
sults of operations

22. Which of the following best characterizes the differ- A forecast at-
ence between a financial forecast and a financial pro- tempts to pro-
jection vide information
on what is ex-
pected to happen,
whereas a pro-
jection may pro-
vide information
on what is not nec-
essarily expected
to happen

23. 23.
 A financial forecast per professional pronouncements an entity's expect-
presents to the best of the responsible party's knowl- ed financial posi-
edge and belief, tion, results of op-
erations, and cash
flows

24. Theoretically, in computing the accounts receivable net credit sales

turnover, the numerator should include

25. The return on common stock equity is calculated by net income less
dividing preferred divi-
dends by average
common stock-
holders' equity

26. The payout ratio is calculated by dividing cash dividends

by net income
less preferred divi-
dends

27. Which of the following ratios measures long-term sol- debt to assets
vency

28. The calculation of the times interest earned involves net income plus in-
dividing come taxes and in-
terest expense by
annual interest ex-
pense

29. When should an average amount be used for the nu- When a ratio con-
merator or denominator sists of an in-
come statement
item and a balance
sheet item

30. The basic limitations associated with ratio analysis All of these an-
include swers are correct