Question 1

The asset turnover is gross sales divided by total assets.

Accepted Answer

A) True 
 B)False  False

Question 2

A relationship of one number to another is a ratio.

Accepted Answer

A) True 
 B)False  True

Question 3

The acid test ratio includes:

Accepted Answer

A) Current Assets 
B) Prepaid Expenses 
C) Current Liabilities 
D) Inventory 
E) All of these 
A) Current Assets 
B) Prepaid Expenses 
C) Current Liabilities 
D) Inventory 
E) All of these E

Question 4

Given gross sales of $50,000, sales returns and allowances of $6,000, beginning inventory of $4,000, net purchases of $8,000, ending inventory of $2,000, and operating expenses of $4,500, calculate net income.

Accepted Answer

$50,000 - $6,000 = $44,000; $4

Question 5

Given gross sales of $40,000 and sales returns and allowances of $6,000, what are the net sales?

Accepted Answer

A) $50,000 
B) $46,000 
C) $34,500 
D) $34,000 
E) None of these 
A) $50,000 
B) $46,000 
C) $34,500 
D) $34,000 
E) None of these

Question 6

Cash is recorded on the income statement.

Accepted Answer

A) True 
 B)False

Question 7

The return on equity ratio looks at how effectively assets are being utilized.

Accepted Answer

A) True 
 B)False

Question 8

Match the following terms with their definitions.
-Net sales

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 9

The asset turnover of Ready Corp. is 6.7; the total assets of Ready are $45,000. What were Ready's net sales?

Accepted Answer

$45,000 ×

Question 10

When each asset is analyzed as a percent of total assets for a single period, this is known as:

Accepted Answer

A) Horizontal analysis 
B) Comparative analysis 
C) Ratio analysis 
D) Vertical analysis 
E) None of these 
A) Horizontal analysis 
B) Comparative analysis 
C) Ratio analysis 
D) Vertical analysis 
E) None of these

Question 11

Match the following terms with their definitions.
-Cost of merchandise sold

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 12

Match the following terms with their definitions.
-Income statement

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 13

Complete:
 $$\begin{array} { | c | c | c | c | } 
\hline 2017 & 2016 & \text { Decrease Amount } & \% \text { Decrease (to nearest hundredth) } \
\hline \$ 12,000 & \$ 16,000 & \text { A } & \text { B } \
\hline
\end{array}$$

Accepted Answer

The answer of Complete:
 \[\begin{array} { | c | c...

Question 14

Trend analysis expresses each number as a percent of the base year.

Accepted Answer

A) True 
 B)False

Question 15

Calculate total of (A)current assets, (B)plant assets, and (C)stockholders' equity from these selected titles: Cash $7,500, Common Stock $30,000, Retained Earnings $51,000, Prepaid Rent $12,000, Accounts Payable $1,900, Accounts Receivable $6,000, Merchandise Inventory $19,000, Land $16,000, Building $11,000.

Accepted Answer

A. 7,500 + 12,000 + 6,000 + 19

Question 16

Solve for (A)current ratio, (B)acid test (quick), (C)average day's collection (360), (D)asset turnover, and (E)profit margin on sales. Round to nearest hundredth or hundredth percent as needed.
 $$\begin{array} { | l | l | } 
\hline \text { Current Assets } & \$ 21,000 \
\hline \text { Accounts Receivable } & \$ 4,200 \
\hline \text { Current Liabilities } & \$ 16,000 \
\hline \text { Inventory } & \$ 3,500 \
\hline \text { Net Sales } & \$ 41,000 \
\hline \text { Total Assets } & \$ 32,000 \
\hline \text { Net Income } & \$ 6,000 \
\hline
\end{array}$$

Accepted Answer

A. 1.31; B

Question 17

Debt management ratios show a company how well its assets are managed.

Accepted Answer

A) True 
 B)False

Question 18

Match the following terms with their definitions.
-Trend analysis

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 19

Match the following terms with their definitions.
-Gross profit

Accepted Answer

A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total 
A) Uses a base year 
B) Inventory and prepaid expenses are subtracted 
C) A liability 
D) Net sales ÷ total assets 
E) Actual sale after returns on discounts
F)Current assets ÷ current liabilities
G)What we owe creditors
H)Data placed side by side
I)Cash, supplies
J)Obligations due within one year
K)Cost of goods for resale
L)Obligations that are not due for at least one year
M)Total this period is compared by amount of percent to same total last period
N)Part of stockholders' equity
O)What customers owe
P)Dollars not shown
Q)Paid in advance
R)Profit
S)Revenues and expense for a specific period of time
T)Prepared as of a particular date
U)Beginning inventory plus new purchases - ending inventory
V)True cost of purchases
W)Includes no plant and equipment assets
X)Sales - cost of goods sold
Y)Each liability and equity is analyzed as a percent of the total

Question 20

Sullivan Corp. earned $75,500 after taxes. The accountant calculated the return on equity as 12%. What was Sullivan's stockholders' equity? (round to the nearest cent)

Accepted Answer

$75,500 /.

The asset turnover is gross sales divided by total assets.

A relationship of one number to another is a ratio.

The acid test ratio includes:

Given gross sales of $50,000, sales returns and allowances of $6,000, beginning inventory of $4,000, net purchases of $8,000, ending inventory of $2,000, and operating expenses of $4,500, calculate net income.

Given gross sales of $40,000 and sales returns and allowances of $6,000, what are the net sales?

Cash is recorded on the income statement.

The return on equity ratio looks at how effectively assets are being utilized.

Match the following terms with their definitions. -Net sales

The asset turnover of Ready Corp. is 6.7; the total assets of Ready are $45,000. What were Ready's net sales?

When each asset is analyzed as a percent of total assets for a single period, this is known as:

Match the following terms with their definitions. -Cost of merchandise sold

Match the following terms with their definitions. -Income statement

Complete: 2017 2016 Decrease Amount \% Decrease (to nearest hundredth) \ 12,000 \ 16,000 A B

Trend analysis expresses each number as a percent of the base year.

Debt management ratios show a company how well its assets are managed.

Match the following terms with their definitions. -Trend analysis

Match the following terms with their definitions. -Gross profit

Sullivan Corp. earned $75,500 after taxes. The accountant calculated the return on equity as 12%. What was Sullivan's stockholders' equity? (round to the nearest cent)

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters

Exam 16: How to Read, Analyze, and Interpret Financial Reports

The asset turnover is gross sales divided by total assets.

A relationship of one number to another is a ratio.

The acid test ratio includes:

Given gross sales of $50,000, sales returns and allowances of $6,000, beginning inventory of $4,000, net purchases of $8,000, ending inventory of $2,000, and operating expenses of $4,500, calculate net income.

Given gross sales of $40,000 and sales returns and allowances of $6,000, what are the net sales?

Cash is recorded on the income statement.

The return on equity ratio looks at how effectively assets are being utilized.

Match the following terms with their definitions. -Net sales

The asset turnover of Ready Corp. is 6.7; the total assets of Ready are $45,000. What were Ready's net sales?

When each asset is analyzed as a percent of total assets for a single period, this is known as:

Match the following terms with their definitions. -Cost of merchandise sold

Match the following terms with their definitions. -Income statement

Complete: 2017 2016 Decrease Amount \% Decrease (to nearest hundredth) \ 12,000 \ 16,000 A B

Trend analysis expresses each number as a percent of the base year.

Debt management ratios show a company how well its assets are managed.

Match the following terms with their definitions. -Trend analysis

Match the following terms with their definitions. -Gross profit

Sullivan Corp. earned $75,500 after taxes. The accountant calculated the return on equity as 12%. What was Sullivan's stockholders' equity? (round to the nearest cent)

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters