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Multiple Choice Quiz
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1
A balance sheet shows the assets, liabilities and equity of a business.
A)True
B)False
2
Liabilities represent things of value owned by the business.
A)True
B)False
3
Merchandise inventory is the cost of goods in stock for resale to customers.
A)True
B)False
4
Comparative statements show data for two or more successive accounting periods side by side.
A)True
B)False
5
Reductions in the selling price for early payment are called discounts.
A)True
B)False
6
Cash is a liability.
A)True
B)False
7
Which of the following is not a current asset?
A)Cash
B)Building
C)Prepaid expense
D)Accounts receivable
E)None of the above
8
When using horizontal analysis, comparative reports are:
A)Always used
B)Never used
C)Infrequently used
D)Often used
E)None of the above
9
Which one is not used to calculate net sales?
A)Purchases
B)Sales discount
C)Sales return and allowance
D)Gross sales
E)None of the above
10
Cost of merchandise sold equals beginning inventory:
A)Plus net purchases plus ending inventory
B)Plus net purchases less ending inventory
C)Less net purchases less ending inventory
D)Less net purchases plus ending inventory
E)None of the above
11
Another way to write the ratio 2:2:1 is:
A)There are 6 parts
B)2/4, 2/4, 1/4
C)2/5, 2/5, 1/5
D)2/4, 2/5, 1/4
E)None of the above
12
Royce Company has a current ratio of 2.10. The acid test ratio is 1.82. The current liabilities of Royce are $40,000. The dollar amount of merchandise inventory is: (Assume no prepaid expenses)
A)$8,400
B)$7,280
C)$11,200
D)$11,020
E)None of the above
13
Bill Corporation has earned $140,500 after tax. The accountant calculated the return on equity as 17.5 percent. Bill Corporation's stockholders' equity to nearest dollar is:
A)$24,588
B)$80,286
C)$802,857,000
D)$802,857
E)None of the above
14
Given the following: 2011 2010 2009 Sales $400,000 $450,000 $470,000 Gross Profit 100,000 130,000 140,000 Net Income $300,000 $220,000 $330,000 Conduct a trend analysis of sales in 2011 to the nearest percent. The base year is 2009.
A)95 percent
B)59 percent
C)85 percent
D)58 percent
E)None of the above
15
The asset turnover from the following is: (Round to nearest tenth)
Gross sales$60,000
Sales discount$ 3,000
Sales returns and allowances$ 7,000
Total assets$38,000
A)1.6
B)1.5
C)1.4
D)1.3
E)None of the above





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