Assignments: 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