Intro to Business - Chapter 14

A company that specializes in planning parties for children had $7,000 worth of inventory on January 1, 2018, and it had $5,000 worth of inventory on December 31, 2018. If its cost of goods sold for that period was $3,000, and its net profit was $9,000, what was its inventory to turnover ratio?

2 times

A kennel designed for boarding small dogs has current assets of $8,000, current liabilities of $2,000, and fixed assets of $25,000. The small company has a current ratio of:

4

_____ are debts that are to be paid within twelve months.

Current liabilities

How has the Sarbanes-Oxley Act affected accountants?

It has eliminated many nonauditing tasks they use to provide for their customers.

Which of the following is an example of an intangible asset for a manufacturer of padlocks?

a patent on titanium lock mechanism

Which of the following calculations is a formal expression of the accounting equation?

assets = liabilities + owners' equity

Which of the following is the BEST example of a current asset for a university bookstore?

credit card charges by book buyers

Profitability ratios are used to:

determine how efficiently a company is being managed

U.S. Carburetion Inc. makes natural gas and gasoline powered generators. Assume the company had $100,000 in net sales for the week of September 11th. Cost of goods sold was $42,000. On an income statement, the remaining $58,000 would be classified as:

gross profit

Gross sales for Nevada Silver, a retailer of silver jewelry was $120,000 for the month of May. Sales discounts amounted to $18,000. There were no returns. The difference, $102,000, is Nevada Silver's:

net sales

What type of expense would be shown on an income statement when the owner of a dirt racing track promoted an upcoming race by purchasing advertising time on a local radio station?

operating

Which of the following is NOT an example of a cost of goods sold for a manufacturer of electric fans?

sales commissions

After all expenses have been subtracted from revenues on an income statement, the final figure or bottom line is called the _____ when it is a negative number.

net loss

Which of the following is NOT really a financial ratio though it is often used to measure a firm's overall liquidity?

net working capital

To ensure accuracy and consistency in the way financial information is reported, accountants follow rules known as:

generally accepted accounting principles

Assume a company has inventory valued at $50,000, its total current assets, including this inventory, total $90,000. Its total current liabilities total $20,000. Its quick ratio is:

2

_____ are independent accountants who serve organizations and individuals on a fee basis.

Public accountants

Pat's Auto Detailing has purchased a new pressure washer for $18,000. Pat's Auto Detailing is allowed to charge a portion of the company's cost during its useful life against the profits it generates. This practice is called:

depreciation

_____ deals with reporting to outsiders. _____ accounting deals with the internal operations of the firm.

Financial accounting; Managerial accounting

On a statement of cash flows for a pizza restaurant, the cash flows from investment activities section would include:

the brick oven stove used to cook the pizzas