Question 1

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

Accepted Answer

Gross profit is calculated as sales minus sales returns and allowances minus cost of goods sold (COGS). COGS is calculated as beginning inventory plus net purchases minus ending inventory. So, COGS = $900 + $9,100 - $2,300 = $7,700. Sales minus sales returns and allowances = $48,000 - $6,000 = $42,000. Therefore, gross profit = $42,000 - $7,700 = $34,300.

Question 2

The asset turnover from the following is (round to nearest tenth): $$\begin{array} { | l | r | } 
\hline \text { Gross sales } & \$ 70,000 \
\hline \text { Sales discount } & \$ 2,500 \
\hline \text { Sales returns and allowances } & \$ 8,000 \
\hline \text { Total assets } & \$ 39,000 \
\hline
\end{array}$$
A)1.7
B)1.5
C)1.9
D)1.6
E)None of these

Accepted Answer

Net sales are calculated as gross sales minus sales discounts and sales returns and allowances: $70,000 - $2,500 - $8,000 = $59,500. Asset turnover is net sales divided by total assets: $59,500 / $39,000 = 1.53, rounded to 1.5.

Question 3

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

Accepted Answer

Return on equity (ROE) = Net income / Stockholders' equity
12.5% = $175,900 / Stockholders' equity
Stockholders' equity = $175,900 / 0.125
Stockholders' equity = $1,407,200 rounded to the nearest dollar. Therefore, the best choice is (C).

Question 4

Complete the current ratio for the following: Total current assets = $12,000; current liabilities = $10,000
A)1.5
B)1.7
C)0.7
D)1.2
E)None of these

Accepted Answer

The current ratio is calculated by dividing total current assets by total current liabilities, which is $12,000 / $10,000 = 1.2.

Question 5

In analyzing the income statement of Bob Company, cost of goods sold decreased by 8.2% from 2016 to 2017. If the cost of goods sold was $19,000 in 2016, what was it in 2017? (Rounded to the nearest cent.)
A)$17,442
B)$1,558
C)$20,697.17
D)$20,796.71
E)None of these

Accepted Answer

The cost of goods sold in 2017 is calculated by reducing the 2016 cost by 8.2%. So, $19,000 - ($19,000 * 0.082) = $19,000 - $1,558 = $17,442.

Question 6

Complete the horizontal analysis below: (round to the nearest tenth percent if applicable) $$\begin{array} { | c | c | c | c | } 
\hline \text { Year 2 } & \text { Year 1 } & \text { Amount } + & \text { Percent Change } \
\hline \$ 88,338 & \$ 92,147 & ? & ? \
\hline
\end{array}$$
A)($3,809), ?4.1%
B)$3,809, 4.1%
C)$180,485, 51.1%
D)$8,300, 15%
E)None of these

Accepted Answer

To calculate the amount change: $88,338 - $92,147 = -$3,809. To calculate the percent change: (-$3,809 / $92,147) * 100 = -4.1%.

Question 7

Match the following terms with their definitions.
-Long-term liabilities
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

Accepted Answer

Long-term liabilities are obligations that are not due for at least one year, which matches definition L.

Question 8

The asset turnover of Ryan Company is 7.2. The total assets of Ryan are $88,000. Ryan's net sales were:
A)$6,336
B)$63,360
C)$633,000
D)$633,600
E)None of these

Accepted Answer

Asset turnover is calculated as Net Sales divided by Total Assets. Therefore, Net Sales = Asset Turnover * Total Assets = 7.2 * $88,000 = $633,600.

Question 9

Complete the trend analysis for sales for year 3 (Round to nearest tenth percent): $$\begin{array} { | l | l | l | l | } 
\hline \text { Year 4 } & \text { Year 3 } & \text { Year 2 } & \text { Year 1 (Base yr) } \
\hline \$ 782,143 & \$ 655,211 & \$ 605,000 & \$ 646,133 \
\hline
\end{array}$$
A)103.9%
B)101.4%
C)109.3%
D)110.2%
E)None of these

Accepted Answer

The answer of Complete the trend analysis for sales for...

Question 10

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

Accepted Answer

Cost of merchandise sold is the actual cost of purchases.

Question 11

Given gross sales of $40,000 and sales returns and allowances of $6,000, what are the net sales?
A)$50,000
B)$46,000
C)$34,500
D)$34,000
E)None of these

Accepted Answer

Net sales are calculated by subtracting sales returns and allowances from gross sales. Therefore, $40,000 - $6,000 = $34,000.

Question 12

Lee Company has a current ratio of 2.65. The acid test ratio is 2.01. The current liabilities of Lee are $45,000. The dollar amount of merchandise inventory is (assume no prepaid expenses):
A)$28,008
B)$28,800
C)$90,450
D)$90,540
E)None of these

Accepted Answer

The current ratio is calculated as Current Assets / Current Liabilities. With a current ratio of 2.65 and current liabilities of $45,000, the current assets are 2.65 * $45,000 = $119,250. The acid test ratio is calculated as (Current Assets - Inventory) / Current Liabilities. With an acid test ratio of 2.01, (Current Assets - Inventory) = 2.01 * $45,000 = $90,450. Therefore, Inventory = $119,250 - $90,450 = $28,800.

Question 13

Match the following terms with their definitions.
-Prepaid expense
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

Accepted Answer

Prepaid expenses are payments made in advance for goods or services that will be received in the future.

Question 14

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

Accepted Answer

The cost of merchandise sold can be calculated using the formula: Beginning Inventory + Purchases - Purchase Discounts - Ending Inventory = Cost of Merchandise Sold. Plugging in the given values: $5,000 + $21,800 - $790 - $5,100 = $20,910.

Question 15

Match the following terms with their definitions.
-Income statement
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

Accepted Answer

The income statement is a financial statement that shows the revenues and expenses for a specific period of time, resulting in net income or loss.

Question 16

Match the following terms with their definitions.
-Current ratio
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

Accepted Answer

The current ratio is a measure of a company's ability to pay current liabilities, as it compares current assets to current liabilities.

Answer: E
 The current ratio can also indicate instant debt-paying ability, as it shows the company's ability to pay its short-term obligations with its current assets.

Note: Although the current ratio can provide some information about a company's profitability and financial structure, it is not the best ratio to use for those purposes.

Question 17

The total debt to total assets of Logan Company was 0.71. The total of Logan's assets was $270,000. The amount of total debt is:
A)$146,700
B)$191,700
C)$119,700
D)$461,700
E)None of these

Accepted Answer

Total Debt/Total Assets=0.71
Total Debt=0.71*Total Assets
Total Debt=0.71*270,000=$191,700

Question 18

Given the following: $$\begin{array} { | c | c | c | c | } 
\hline & 2015 & 2016 & 2017 \
\hline \text { Sales } & \$ 400,000 & \$ 350,000 & \$ 470,000 \
\hline \text { Gross Profit } & - 100,000 & - 130,000 & - 140,000 \
\hline \text { Net Income } & \$ 300,000 & \$ 220,000 & \$ 230,000 \
\hline
\end{array}$$ By trend analysis (base year is 2015), sales in 2017 to the nearest percent of the base year is:
A)117%
B)116%
C)118%
D)119%
E)None of these

Accepted Answer

The section "11eb6926_6e89_086a_bb3a_2347cebe5b64" is likely a unique identifier for the dataset and is irrelevant to the question. 
The section "TB8249_00" is likely a product code or identifier and is also irrelevant to the question.

Using only the given information, we can determine the sales percentage increase from 2015 to 2017 by dividing the sales in 2017 by the sales in 2015 and multiplying by 100.

However, since we do not have the actual sales numbers for either year, we cannot calculate the percentage increase with certainty. Therefore, the answer cannot be determined from the given information and is None of these.

Question 19

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.)
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

Accepted Answer

To find the percentage for each item, divide the amount by the total assets and multiply by 100. For Current assets: (15,751 / 135,212) * 100 = 11.6%. For Accounts Receivable: (10,888 / 135,212) * 100 = 8.1%. For Inventory: (97,125 / 135,212) * 100 = 71.8%. For PPD expenses: (11,448 / 135,212) * 100 = 8.5%.

Question 20

Bill's Pizza has an asset turnover of 3.5. The total assets of Bill's were $95,000. The net sales of Bill's Pizza is:
A)$27,142.85
B)$332,500.00
C)$271,428.50
D)$33,250.00
E)None of these

Accepted Answer

Asset turnover is calculated as Net Sales divided by Total Assets. Given an asset turnover of 3.5 and total assets of $95,000, the net sales can be calculated as 3.5 * $95,000 = $332,500.

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

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.

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:

Complete the current ratio for the following: Total current assets = $12,000; current liabilities = $10,000

In analyzing the income statement of Bob Company, cost of goods sold decreased by 8.2% from 2016 to 2017. If the cost of goods sold was $19,000 in 2016, what was it in 2017? (Rounded to the nearest cent.)

Complete the horizontal analysis below: (round to the nearest tenth percent if applicable) $\begin{array} { | c | c | c | c | } \hline \text { Year 2 } & \text { Year 1 } & \text { Amount } + & \text { Percent Change } \\\hline \$ 88,338 & \$ 92,147 & ? & ? \\\hline\end{array}$

Match the following terms with their definitions. -Long-term liabilities

The asset turnover of Ryan Company is 7.2. The total assets of Ryan are $88,000. Ryan's net sales were:

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

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

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

Lee Company has a current ratio of 2.65. The acid test ratio is 2.01. The current liabilities of Lee are $45,000. The dollar amount of merchandise inventory is (assume no prepaid expenses) :

Match the following terms with their definitions. -Prepaid expense

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.

Match the following terms with their definitions. -Income statement

Match the following terms with their definitions. -Current ratio

The total debt to total assets of Logan Company was 0.71. The total of Logan's assets was $270,000. The amount of total debt is:

Bill's Pizza has an asset turnover of 3.5. The total assets of Bill's were $95,000. The net sales of Bill's Pizza is: