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%

ANSWER WILL BE SENT ON EMAIL.