Chapter 17—Financial Statement Analysis

TRUE/FALSE

25. If the accounts receivable turnover for the current year has
decreased when compared with the ratio for the preceding year,
there has been an acceleration in the collection of receivables.

ANS: F PTS: 1 DIF: Easy OBJ: 17-02

NAT: AACSB Analytic | AICPA FN-Measurement |
ACBSP-APC-23-Financial Statement Analysis

26. An increase in the accounts receivable turnover may be due to an

improvement in the collection of receivables or to a change in the
granting of credit and/or in collection practices.

ANS: T PTS: 1 DIF: Easy OBJ: 17-02

NAT: AACSB Analytic | AICPA FN-Measurement |
ACBSP-APC-23-Financial Statement Analysis

27. The number of days' sales in receivables is one means of

expressing the relationship between average daily sales and
accounts receivable.

ANS: T PTS: 1 DIF: Easy OBJ: 17-02

NAT: AACSB Analytic | AICPA FN-Measurement |
ACBSP-APC-23-Financial Statement Analysis

28. A firm selling food should have higher inventory turnover rate than
a firm selling office furniture.

ANS: T PTS: 1 DIF: Easy OBJ: 17-02

NAT: AACSB Analytic | AICPA BB-Critical Thinking |
ACBSP-APC-23-Financial Statement Analysis