Question 1

Cost of merchandise sold equals beginning inventory:

Accepted Answer

A) Plus net purchases plus ending inventory 
B) Plus net purchases minus ending inventory 
C) Minus net purchases minus ending inventory 
D) Minus net purchases plus ending inventory 
E) None of these

Question 2

Match the following terms with their definitions.
-Balance sheet

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

Question 3

Given the following for a company: sales $80,000, beginning inventory $5,000, purchases $21,800, purchase discounts $790, ending inventory $5,100, find the company's cost of merchandise sold.

Accepted Answer

A) $21,560 
B) $20,190 
C) $20,910 
D) $21,650 
E) None of these

Question 4

From the following, prepare a balance sheet for Roe Co. as of December 31, 2017.
 $$\begin{array} { | l | l | } 
\hline \text { Salaries Payable } & 6,000 \
\hline \text { Accounts Receivable } & 9,000 \
\hline \text { Retained Earnings } & 21,000 \
\hline \text { Common Stock } & 27,000 \
\hline \text { Mortgage Note Payable } & 45,000 \
\hline \text { Prepaid Rent } & 12,000 \
\hline \text { Accounts Payable } & 19,000 \
\hline \text { Land } & 18,000 \
\hline \text { Cash } & 3,000 \
\hline \text { Merchandise Inventory } & 16,000 \
\hline \text { Building } & 60,000 \
\hline
\end{array}$$

Accepted Answer

The answer of From the following, prepare a balance sheet...

Question 5

A current ratio is calculated by current assets times current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

Calculate (A)net sales, (B)gross profit (C)total operating expenses, and (D)net income.
Sales returns $600, rent expense $1,700, sales discounts $1,800, depreciation expense $490, cost of merchandise sold $7,200, gross sales $19,900, advertising expense $650, salary expense $2,500, heat expense $850.

Accepted Answer

The answer of Calculate (A)net sales, (B)gross profit (C)total operating...

Question 7

Net purchases are the cost of purchases minus purchase discounts minus purchase returns and allowances.

Accepted Answer

A) True 
 B)False

Question 8

Jay Corporation has earned $175,900 after tax. The accountant calculated the return on equity as 12.5%. Jay Corporation's stockholders' equity to the nearest dollar is:

Accepted Answer

A) $140,720 
B) $14,720 
C) $1,407,200 
D) $140,720,000 
E) None of these

Question 9

Which one is not used to calculate net sales?

Accepted Answer

A) Purchases 
B) Sales discount 
C) Sales returns and allowance 
D) Gross sales 
E) None of these

Question 10

Assets represent things of value owed by the business.

Accepted Answer

A) True 
 B)False

Question 11

The asset turnover from the following is (round to nearest tenth): $$\begin{array} { | l | r | } 
\hline \text { Gross sales } & \$ 70,000 \
\hline \text { Sales discount } & \$ 2,500 \
\hline \text { Sales returns and allowances } & \$ 8,000 \
\hline \text { Total assets } & \$ 39,000 \
\hline
\end{array}$$

Accepted Answer

A) 1.7 
B) 1.5 
C) 1.9 
D) 1.6 
E) None of these

Question 12

Match the following terms with their definitions.
-Current ratio

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

Question 13

Given the following for a company: sales $48,000, sales returns and allowances $6,000, operating expenses $6,200, beginning inventory $900, net purchases $9,100, ending inventory $2,300, find the company's gross profit.

Accepted Answer

A) $34,000 
B) $43,000 
C) $34,003 
D) $34,300 
E) None of these

Question 14

Complete a trend analysis for sales (round to nearest whole percent and use 2014 as the base year).
 $$\begin{array} { | c | c | c | c | c | } 
\hline & 2017 & 2016 & 2015 & 2014 \
\hline \text { Sales } & \$ 620,000 & \$ 580,000 & \$ 450,000 & \$ 600,000 \
\hline & ( \mathrm { D } ) & ( \mathrm { C } ) & ( \mathrm { B } ) & ( \mathrm { A } ) \
\hline
\end{array}$$

Accepted Answer

The answer of Complete a trend analysis for sales (round...

Question 15

Match the following terms with their definitions.
-Liabilities

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

Question 16

Income statements are prepared only once a year.

Accepted Answer

A) True 
 B)False

Question 17

Complete the following vertical analysis. With cash of $15,750, accounts receivables of $10,800, inventory of $97,000, and PPD expenses of $11,000, what percent of total assets are accounts receivables?

Accepted Answer

The answer of Complete the following vertical analysis. With cash...

Question 18

Net income is equal to gross profit minus operating expenses.

Accepted Answer

A) True 
 B)False

Question 19

Match the following terms with their definitions.
-Horizontal 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

Question 20

Reductions in the selling price for early payment are called sales returns and allowances.

Accepted Answer

A) True 
 B)False

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

Cost of merchandise sold equals beginning inventory:

Match the following terms with their definitions. -Balance sheet

Given the following for a company: sales $80,000, beginning inventory $5,000, purchases $21,800, purchase discounts $790, ending inventory $5,100, find the company's cost of merchandise sold.

A current ratio is calculated by current assets times current liabilities.

Net purchases are the cost of purchases minus purchase discounts minus purchase returns and allowances.

Jay Corporation has earned $175,900 after tax. The accountant calculated the return on equity as 12.5%. Jay Corporation's stockholders' equity to the nearest dollar is:

Which one is not used to calculate net sales?

Assets represent things of value owed by the business.

Match the following terms with their definitions. -Current ratio

Given the following for a company: sales $48,000, sales returns and allowances $6,000, operating expenses $6,200, beginning inventory $900, net purchases $9,100, ending inventory $2,300, find the company's gross profit.

Match the following terms with their definitions. -Liabilities

Income statements are prepared only once a year.

Complete the following vertical analysis. With cash of $15,750, accounts receivables of $10,800, inventory of $97,000, and PPD expenses of $11,000, what percent of total assets are accounts receivables?

Net income is equal to gross profit minus operating expenses.

Match the following terms with their definitions. -Horizontal analysis

Reductions in the selling price for early payment are called sales returns and allowances.