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| 1 | |
A balance sheet shows the assets, liabilities and equity of a business. |
| | A) | True |
| | B) | False |
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| 2 | |
Liabilities represent things of value owned by the business. |
| | A) | True |
| | B) | False |
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| 3 | |
Merchandise inventory is the cost of goods in stock for resale to customers. |
| | A) | True |
| | B) | False |
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| 4 | |
Comparative statements show data for two or more successive accounting periods side by side. |
| | A) | True |
| | B) | False |
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| 5 | |
Retained earnings are part of stockholders' equity on the balance sheet. |
| | A) | True |
| | B) | False |
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| 6 | |
Salaries payable is an asset |
| | A) | True |
| | B) | False |
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| 7 | |
Which of the following is not a liability? |
| | A) | Accounts payable |
| | B) | Prepaid rent |
| | C) | Salaries payable |
| | D) | Mortgage payable |
| | E) | None of the above |
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| 8 | |
When using vertical analysis reports, total assets represent the: |
| | A) | Base |
| | B) | Portion |
| | C) | Rate |
| | D) | Stockholders' equity |
| | E) | None of the above |
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| 9 | |
Which one is not listed on an income statement? |
| | A) | Accounts receivable |
| | B) | Sales discount |
| | C) | Sales return and allowance |
| | D) | Gross sales |
| | E) | None of the above |
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| 10 | |
Owner's equity is: |
| | A) | Assets plus liabilities |
| | B) | Assets minus liabilities |
| | C) | Liabilities plus equity |
| | D) | Assets plus equity |
| | E) | None of the above |
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| 11 | |
A ratio is the relationship of one number to another. Ratios are useful for comparing with previous years and with industry standards. |
| | A) | True |
| | B) | False |
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| 12 | |
Lester Company has a current ratio of 2.05. The acid test ratio is 1.94. The current liabilities of Lester are $50,000. The dollar amount of merchandise inventory is: (Assume no prepaid expenses) |
| | A) | $1,025 |
| | B) | $10,250 |
| | C) | $5,500 |
| | D) | $5,050 |
| | E) | None of the above |
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| 13 | |
Jan Corporation has earned $130,000 after tax. The accountant calculated the return on equity as 16.2 percent. Jan Corporation's stockholders' equity to the nearest dollar is: |
| | A) | $80,246 |
| | B) | $82,246 |
| | C) | $822,460 |
| | D) | $802,469.13 |
| | E) | None of the above |
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| 14 | |
Given the following:
2008 2007 2006
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 2008 to the nearest percent. The base year is 2006. |
| | A) | 95 percent |
| | B) | 59 percent |
| | C) | 85 percent |
| | D) | 58 percent |
| | E) | None of the above |
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| 15 | |
The asset turnover from the following rounded to the nearest tenth is:
Gross sales $70,000
Sales discount $2,000
Sales returns and allowances $6,000
Total assets $40,000 |
| | A) | 1.5 |
| | B) | 1.4 |
| | C) | 1.3 |
| | D) | 1.6 |
| | E) | None of the above |
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