Question 1

Prepare an income statement using the following information: $$\begin{array} { l l } 
\text { Gross profit margin } & 40 \% \
\text { Gross profit } & \$ 7,500 \
\text { Tax rate } & 35 \% \
\text { Operating profit } & \$ 400
\end{array}$$

Accepted Answer

The answer of Prepare an income statement using the following...

Question 2

Use the following information to analyze BobKat Equipment Sales.Calculate any profit measures deemed necessary in order to discuss the profitability of the company. BobKat Equipment Sales
Income Statement
For the Years Ended Dec. 31,2015 and 2014
$\begin{array}{lrr}&2015&2014\
\text { Net sales } & \$ 124,000 & \$ 138,000 \
\text { COGS } & 90,000 & 95,000 \
\text { Gross profit } & \$ 34,000 & \$ 43,000 \
\text { General and administrative expenses } & 31,000 & 36,000\
\text { Operating profit } & \$ 3,000 &  \$, 000 \
\text { Interest expense } & \$(1,000) &  (1,000) \
\text { Earnings before taxes } & \$ 2,000 &  \$ 6,000 \
\text { Income taxes } & 800 &  1,800\
\text { Net income }&\$1,200&\$4,200
\end{array}$

Accepted Answer

The answer of Use the following information to analyze BobKat...

Question 3

Using the single-step income statement for ABC Company prepare a multiple-step income statement. ABC Company Income Statement
$\begin{array}{lr}
\text { Income }\
\text { Net sales } & \$ 1,750 \
\text { Interest income } & 90 \
& 1,840\\
\text { Cost of goods sold } & 1,000 \
\text { Interest expense } & 70 \
\text { Depreciation expense } & 220 \
\text { Income tax expense } & 70 \
\text { Advertising expense } & 110 \
\text { General and administrative expenses } & 180 \
\hline
\text {Net earnings }&\$190
\end{array}$

Accepted Answer

The answer of Using the single-step income statement for ABC...

Question 4

Which equation represents an income statement?

Accepted Answer

A) Assets = liabilities + stockholders' equity. 
B) Cash in - cash out = net income. 
C) Revenues - expenses = net income. 
D) Beginning retained earnings + revenues - expenses = ending retained earnings.

Question 5

Discuss the following statement: "Gross profit margin should be stable for all firms."

Accepted Answer

The answer of Discuss the following statement: "Gross profit margin...

Question 6

How should companies with more than one revenue source report revenue and cost of goods sold?

Accepted Answer

A) Each revenue source should be reported separately, but all cost of goods sold should be added together and reported as a single amount. 
B) The revenues and cost of goods sold should be netted together and reported as a single line item. 
C) All revenue sources should be added together and shown as one line item and all cost of goods sold should be added together and shown as one line item. 
D) Each revenue line should be shown separately with a corresponding cost of goods sold line for each revenue source.

Question 7

Use the following information for Jett Co.to answer questions . $\begin{array}{lrr}
&2015&2014\
\text { Sales } & 1,200 & 1,000 \
\text { COGS } & 850 & 700 \
\text { Operating expenses } & 200 & 200 \
\text { Income taxes } & 30 & 35
\end{array}$
-Jett Co.'s gross profit, operating profit and net profit margins for 2015 are:

Accepted Answer

A) 50.0%, 32.5%, 22.5% respectively. 
B) 29.2%, 12.5%, 10.0%, respectively. 
C) 27.0%, 11.0%, 10.5%, respectively. 
D) 21.5%, 17.5%, 12.0%, respectively.

Question 8

Explain the possible causes of the trends in the following data:
 $$\begin{array} { | l | r | r | r | } 
\hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \
\hline \text { Gross profit margin } & 35 \% & 31 \% & 28 \% \
\hline \text { Operating profit margin } & 9 \% & 11 \% & 13 \% \
\hline \text { Net profit margin } & 4 \% & 19 \% & 7 \% \
\hline
\end{array}$$

Accepted Answer

The answer of Explain the possible causes of the trends...

Question 9

The income statement comes in two basic formats, the multiple-step and the single-step versions; however, for analysis purposes the single-step version should be used.

Accepted Answer

A) True 
 B)False

Question 10

What is amortization?

Accepted Answer

A) The process used to allocate the cost of natural resources. 
B) The process used to allocate the cost of tangible fixed assets. 
C) The process used to allocate the cost of capital leases, leasehold improvements and intangible assets. 
D) The process used to allocate the cost of oil, gas, minerals and standing timber.

Question 11

Two other terms used interchangeably with income are ________and ________.

Accepted Answer

The answer of Two other terms used interchangeably with income...

Question 12

________income is the change in equity of a company during a period from transactions, other events, and circumstances relating to nonowner sources.

Accepted Answer

The answer of ________income is the change in equity of...

Question 13

How is it possible for a U.S.firm to have increasing earnings but a lower effective tax rate?

Accepted Answer

A) The firm has expenses that are not deductible for tax purposes. 
B) Tax rates in foreign countries where the firm operates are higher. 
C) Tax rates in foreign countries where the firm operates are lower. 
D) It is not possible for a firm to have an effective tax rate different from the U.S.federal statutory tax rate.

Exam 3: Income Statement and Statement of Stockholders Equity

Prepare an income statement using the following information: $\begin{array} { l l } \text { Gross profit margin } & 40 \% \\\text { Gross profit } & \$ 7,500 \\\text { Tax rate } & 35 \% \\\text { Operating profit } & \$ 400\end{array}$