MA140 Exam-3

  

Question-1

A firm's __________ account is categorized as a current asset.

    

A. equipment 

B. accounts payable 

C. bonds payable 

D. merchandise inventory

Question-2

__________ accounts show the amount of money owed to the firm by customers.

    

A. Supply 

B. Prepaid 

C. Receivables 

D. Payables

Question-3

A firm has $200,000 in total assets and $120,000 in owner's equity. What are the total liabilities?

    

A. $80,000 

B. $200,000 

C. $320,000 

D. Cannot be determined from the information given

Please use the following information to answer questions 4-5: 

  

Cash

$10,000

Accounts Payable

$7,000

 

Accounts Receivable

$6,400

Mortgage Payable

$65,000

 

Supplies

$1,500

Long-term Debt

$36,000

 

Building

$150,000

Notes Payable

$9,000

 

Equipment

$80,000

Preferred Stock

$32,000

 

Merchandise Inventory

$18,000

Retained Earnings

?

 

Prepaid Rent

$3,000

 

Common Stock

$60,000

Question-4

Current Assets total:

    

A. $16,400 

B. $37,400 

C. $38,900 

D. $268,900

Question-5

Retained earnings total:

    

A. $59,900 

B. $78,100 

C. $92,000 

D. $151,900

Question-6

__________ expenses are costs incurred directly with the sale of merchandise or in the operations of business.

    

A. Purchasing 

B. Net 

C. Operating 

D. Miscellaneous

Question-7

A company develops the following information at the end of an accounting period: 

  

Inventory, 01/99

$347,500

 

Net purchases

$1,145,000

 

Cost of goods sold

$1,216,000

What is the ending inventory for the period?

    

A. $71,000 

B. $276,500 

C. $797,500 

D. Cannot be determined from the information given

Please use the following information to answer questions 8-10:

  

Gross Sales

$1,555,000

Inventory, 01/99

$356,000

 

Purchases

812,000

Inventory, 12/99

382,000

 

Purchases discount

26,000

Sales Discount

22,000

 

Sales returns & allowances

35,000

Transportation in

16,000

 

Selling expenses

210,000

Administrative salaries

240,000

 

Advertising expense

40,000

Depreciation expense

22,000

 

Supplies expense

24,000

Other general expenses

112,000

 

Interest expense

8,000

Interest income

3,000

Question-8

What are the total expenses?

    

A. $450,000 

B. $544,000 

C. $648,000 

D. $656,000

Question-9

What is the gross profit?

    

A. $696,000 

B. $722,000 

C. $776,000 

D. $1,158,000

Question-10

What is the net income?

    

A. $66,000 

B. $69,000 

C. $72,000 

D. $95,000

Question-11

The percentage analysis of changes of corresponding items in comparative financial statements is referred to as horizontal analysis.

    

A. True 

B. False

Please use the following information to answer questions 12-16:

  

Trenton   Supply Company
  Comparative Income Statement, 12/31/99 and 12/31/2000

 

2000

1999

 

Net Sales

$ 850,000

$ 780,000

 

Cost of goods sold:

 

Beginning inventory

42,000

36,000

 

Net purchases

410,000

382,000

 

Merchandise available for sale

452,000

418,000

 

Ending inventory

48,000

43,000

 

Total cost of goods sold

404,000

375,000

 

Gross profit

446,000

405,000

 

Operating expenses:

 

Supplies

7,400

6,500

 

Wages & salaries

195,000

147,000

 

Depreciation

13,000

15,000

 

Insurance

5,100

4,500

 

Advertising

8,000

6,000

 

Rent

25,000

22,000

 

Total operating expenses

253,500

201,000

 

Income before taxes

192,500

204,000

 

Provision for taxes

80,000

84,000

 

Net income

112,500

120,000

 
 

Question-12

For the year 2000, cost of goods sold represents what percentage of net sales?

    

A. 47.53% 

B. 48.1% 

C. 52.0% 

D. 52.47%

Question-13

For the year 1999, net income represents what percentage of net sales?

    

A. 13.24% 

B. 15.4% 

C. 22.65% 

D. 26.15%

Question-14

In 2000, total operating expenses increased by _____% over 1999.

    

A. 5.98 

B. 12.2 

C. 26.12 

D. 53.5

Question-15

Between 12/31/1999 and 12/31/2000, gross profit:

    

A. fell by 1.33%. 

B. fell by 7.73%. 

C. rose by 8.13%. 

D. rose by 10.12%.

Question-16

Between 12/31/1999 and 12/31/2000, net income:

    

A. rose by 5.97%. 

B. fell by 5.64%. 

C. fell by 6.25%. 

D. rose by 6.67%.

Question-17

The ratio of __________ to __________ is an example of a __________ ratio.

    

A. quick assets; current liabilities; leverage 

B. cost of goods sold; total assets; asset utilization 

C. net credit sales; average owner's equity; leverage 

D. net income after taxes; net sales; profit

Question-18

A firm's balance sheet shows the following assets: 

  

Cash

$5,000

 

Accounts Receivable

$8,000

 

Inventories

$10,000

 

Prepaid Insurance

$2,500

 

Marketable Securities

$7,000

If the firm has current liabilities totaling $15,000, what is its acid test ratio?

    

A. 0.67:1 

B. 1:1 

C. 1.33:1 

D. 1.5:1

Please use the following information to answer questions 19-20: 

Assume the balances on 12/31/99 were carried over to 01/01/2000:

  

Trenton Supply Company
  Comparative Balance Sheet, 12/31/99 and 12/31/2000

 

2000

1999

 

Current   Assets:

 

 Cash

70,000

64,000

 

 Accounts   receivable

50,000

45,000

 

 Prepaid   rent

10,000

12,000

 

 Merchandise   Inventory

120,000

135,000

 

 Total   Current Assets

250,000

256,000

 

Fixed   Assets:

 

 Equipment   (net)

200,000

164,000

 

 Building   (net)

300,000

310,000

 

 Total   Assets

750,000

730,000

 

Total   current Liabilities

120,000

100,000

 

Total   Long-term Debt

225,000

245,000

 

Owner's   Equity

405,000

385,000

 

Total   Liabilities and Owner's Equity

750,000

730,000

Question-19

From 1999 to 2000, the what is the asset turnover ratio?

    

A. 1.52 

B. 1.54 

C. 2.00 

D. 2.05

Question-20

Given a net income of $90,000, what is the return on investment for 2000?

    

A. 7.9% 

B. 22.22% 

C. 22.78% 

D. 24.8%