Question 1

The income statement shows the financial condition of a business over a period of time.

Accepted Answer

A) True 
 B)False

Question 2

From the following, calculate (A)net sales, (B)gross profit, (C)total operating expenses, and (D)net income: sales returns $700, rent expense $1,288, sales discounts $950, depreciation expense $600, cost of merchandise sold $7,600, gross sales $20,900, advertising expense $1,650, salary expense $2,900, heat expense $900.

Accepted Answer

A. 20,900 - 700 - 950 = 19,250

Question 3

Complete the following trend analysis for year 4:
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 (base year) } \
\hline \$ 48,200 & \$ 50,000 & \$ 44,000 & \$ 17,560 \
\hline
\end{array}$$

Accepted Answer

The answer of Complete the following trend analysis for year...

Question 4

Cash is a liability.

Accepted Answer

A) True 
 B)False

Question 5

For Monday, John recorded gross sales of $4,000. He also noticed sales returns and sales discounts totaling $800. What are net sales for John?

Accepted Answer

$4,000 - $

Question 6

Cost of merchandise sold is equal to beginning inventory minus net purchases minus ending inventory.

Accepted Answer

A) True 
 B)False

Question 7

Complete the trend analysis for sales for year 3 (Round to nearest tenth percent): $$\begin{array} { | l | l | l | l | } 
\hline \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 (Base yr) } \
\hline \$ 782,143 & \$ 655,211 & \$ 605,000 & \$ 646,133 \
\hline
\end{array}$$

Accepted Answer

A) 103.9% 
B) 101.4% 
C) 109.3% 
D) 110.2% 
E) None of these 
A) 103.9% 
B) 101.4% 
C) 109.3% 
D) 110.2% 
E) None of these

Question 8

Alice Co. has a current ratio of 2.7. The acid test ratio is 2.2. The current liabilities of Alice Co. are $46,000. Could you calculate the dollar amount of merchandise inventory?

Accepted Answer

$46,000 × 2.7 + $46,

Question 9

Match the following terms with their definitions.
-Current assets

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 10

A ratio of 4:5:2 mean that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

Accepted Answer

A) True 
 B)False

Question 11

In using horizontal analysis, comparative reports are:

Accepted Answer

A) Always used 
B) Never used 
C) Infrequently used 
D) Often used 
E) None of these 
A) Always used 
B) Never used 
C) Infrequently used 
D) Often used 
E) None of these

Question 12

Given gross sales $75,000, sales returns and allowances $4,000, beginning inventory $5,000, net purchases $9,000, ending inventory $3,000, and operating expenses $13,900, calculate:
A. Net sales
B. Cost of merchandise (goods sold)
C. Gross profit from sales
D. Net income.

Accepted Answer

A. 75,000 - 4,000 = 71,000; B.

Question 13

In horizontal analysis the oldest year is the base.

Accepted Answer

A) True 
 B)False

Question 14

Mel King has asked you to prepare a classified balance sheet for Pad Co. as of December 31, 2017. Ending merchandise inventory was $1,800:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & \$ 1,500 & \text { Accounts Payable } & \$ 1,800 \
\hline \text { Prepaid Rent } & \$ 4,500 & \text { Salaries Payable } & \$ 2,250 \
\hline \text { Prepaid Insurance } & \$ 3,000 & \text { Notes Payable (long-term) } & \$ 1,500 \
\hline \text { Office Equipment } & \$ 4,500 & & \
\hline \text { Accum. Depreciation } & \$ 3,000 & \text { J. Pad, Capital } & \$ 9,750 \
\hline
\end{array}$$

Accepted Answer

None

Question 15

Al Flynn has gathered the following information. Could you help Al calculate his gross profit?
 $$\begin{array} { | l | l | } 
\hline \text { Gross Sales } & \$ 25,000 \
\hline \text { Sales Discounts } & \$ 3,000 \
\hline \text { Beg Inventory } & \$ 2,000 \
\hline \text { Net Purchases } & \$ 4,000 \
\hline \text { Ending Inventory } & \$ 2,800 \
\hline \text { Operating Expense } & \$ 1,800 \
\hline
\end{array}$$

Accepted Answer

The answer of Al Flynn has gathered the following information....

Question 16

Complete the following vertical analysis of a balance sheet: $$\begin{array} { | c | c | c | } 
\hline & \text { Amount } & \text { Percent } \
\hline \text { Current assets } & \$ 15,751 & \mathrm {~A} \
\hline \text { Accounts Receivable } & \$ 10,888 & \mathrm {~B} \
\hline \text { Inventory } & \$ 97,125 & \mathrm { C } \
\hline \text { PPD expenses } & \$ 11,448 & \mathrm { D } \
\hline \text { Total assets } & \$ 135,212 & 100 \% \
\hline
\end{array}$$ (Round to nearest tenth percent.)

Accepted Answer

A) 11.6%, 8.1%, 71.8%, 8.5% 
B) 11.5%, 8.0%, 72%, 11.7% 
C) 13%, 8.6%, 80%, 12.7% 
D) 15%, 10.2%, 66.1%, 12.5% 
E) None of these 
A) 11.6%, 8.1%, 71.8%, 8.5% 
B) 11.5%, 8.0%, 72%, 11.7% 
C) 13%, 8.6%, 80%, 12.7% 
D) 15%, 10.2%, 66.1%, 12.5% 
E) None of these

Question 17

Match the following terms with their definitions.
-Merchandise inventory

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 18

Complete:
 $$\begin{array} { | l | l | l | } 
\hline  { \text { Current Assets } } &  { \text { Amount } } & { \begin{array} { c } 
\text { Percent (round to hundredths } \
\% )
\end{array} } \
\hline \text { Cash } & \$ 27,000 & \text { B } \
\hline \text { Accts Receivable } & \$ 12,000 & \text { C } \
\hline \text { Prepaid Rent } & \$ 4,000 & \text { D } \
\hline \text { Merchandise Inventory } & \$ 8,000 & \text { E } \
\hline \text { Total Current Assets } & \text { A } & 100 \% \
\hline
\end{array}$$

Accepted Answer

A. $51,000; B. 52.94

The income statement shows the financial condition of a business over a period of time.

Complete the following trend analysis for year 4: Year 4 Year 3 Year 2 Year 1 (base year) \ 48,200 \ 50,000 \ 44,000 \ 17,560

Cash is a liability.

For Monday, John recorded gross sales of $4,000. He also noticed sales returns and sales discounts totaling $800. What are net sales for John?

Cost of merchandise sold is equal to beginning inventory minus net purchases minus ending inventory.

Complete the trend analysis for sales for year 3 (Round to nearest tenth percent): Year 4 Year 3 Year 2 Year 1 (Base yr) \ 782,143 \ 655,211 \ 605,000 \ 646,133

Alice Co. has a current ratio of 2.7. The acid test ratio is 2.2. The current liabilities of Alice Co. are $46,000. Could you calculate the dollar amount of merchandise inventory?

Match the following terms with their definitions. -Current assets

A ratio of 4:5:2 mean that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

In using horizontal analysis, comparative reports are:

Given gross sales $75,000, sales returns and allowances $4,000, beginning inventory $5,000, net purchases $9,000, ending inventory $3,000, and operating expenses $13,900, calculate: A. Net sales B. Cost of merchandise (goods sold) C. Gross profit from sales D. Net income.

In horizontal analysis the oldest year is the base.

Al Flynn has gathered the following information. Could you help Al calculate his gross profit? Gross Sales \ 25,000 Sales Discounts \ 3,000 Beg Inventory \ 2,000 Net Purchases \ 4,000 Ending Inventory \ 2,800 Operating Expense \ 1,800

Complete the following vertical analysis of a balance sheet: Amount Percent Current assets \ 15,751 Accounts Receivable \ 10,888 Inventory \ 97,125 PPD expenses \ 11,448 Total assets \ 135,212 100\% (Round to nearest tenth percent.)

Match the following terms with their definitions. -Merchandise inventory

Complete: Current Assets Amount Percent (round to hundredths \%) Cash \ 27,000 B Accts Receivable \ 12,000 C Prepaid Rent \ 4,000 D Merchandise Inventory \ 8,000 E Total Current Assets A 100\%

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 income statement shows the financial condition of a business over a period of time.

Complete the following trend analysis for year 4: Year 4 Year 3 Year 2 Year 1 (base year) \ 48,200 \ 50,000 \ 44,000 \ 17,560

Cash is a liability.

For Monday, John recorded gross sales of $4,000. He also noticed sales returns and sales discounts totaling $800. What are net sales for John?

Cost of merchandise sold is equal to beginning inventory minus net purchases minus ending inventory.

Complete the trend analysis for sales for year 3 (Round to nearest tenth percent): Year 4 Year 3 Year 2 Year 1 (Base yr) \ 782,143 \ 655,211 \ 605,000 \ 646,133

Alice Co. has a current ratio of 2.7. The acid test ratio is 2.2. The current liabilities of Alice Co. are $46,000. Could you calculate the dollar amount of merchandise inventory?

Match the following terms with their definitions. -Current assets

A ratio of 4:5:2 mean that out of 11 parts it is divided up as 4/11, 5/11, 2/11.

In using horizontal analysis, comparative reports are:

Given gross sales $75,000, sales returns and allowances $4,000, beginning inventory $5,000, net purchases $9,000, ending inventory $3,000, and operating expenses $13,900, calculate: A. Net sales B. Cost of merchandise (goods sold) C. Gross profit from sales D. Net income.

In horizontal analysis the oldest year is the base.

Al Flynn has gathered the following information. Could you help Al calculate his gross profit? Gross Sales \ 25,000 Sales Discounts \ 3,000 Beg Inventory \ 2,000 Net Purchases \ 4,000 Ending Inventory \ 2,800 Operating Expense \ 1,800

Complete the following vertical analysis of a balance sheet: Amount Percent Current assets \ 15,751 Accounts Receivable \ 10,888 Inventory \ 97,125 PPD expenses \ 11,448 Total assets \ 135,212 100\% (Round to nearest tenth percent.)

Match the following terms with their definitions. -Merchandise inventory

Complete: Current Assets Amount Percent (round to hundredths \%) Cash \ 27,000 B Accts Receivable \ 12,000 C Prepaid Rent \ 4,000 D Merchandise Inventory \ 8,000 E Total Current Assets A 100\%

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