Intro. Business Ch. 15

Data are always in numerical form.

False

The total dollar amount of all goods and services sold during the accounting period is called net sales.

False

Refer to Ridgley, Cooper, and Ross. What does GAAP stand for?

Generally accdepted accounting principles

Refer to Christine's First Job. To help the owners understand how effectively the firm is transforming sales into profits, Christine should address which of the following ratios?

Return on sales

Which of the following statements about the Sarbanes-Oxley Act is incorrect?

The act was passed in 1996

The resources owned by David's Spa and Salon total $148,000. The total amount of debt that it owes to others is $87,000. Which of the following is correct?

The owners' equity in David's is $61,000.

According to the accountant for Michael's Floral Supply, the firm's assets are $124,000 and its liabilities are $31,000. Which of the following statements is correct?

The owners' equity is $93,000.

All American National Company earned $240,000 last year. The board of directors decided to pay out one-half of the firm's earnings to the stockholders. Before the board's decision, the firm's retained earnings were $740,000. Which of the following statements is true?

The value of the firm's retained earnings is now $860,000.

Debts that will be repaid in one year or less are known as current liabilities.

True

The statement of financial position presents the business firm's assets, liabilities, and owners' equity accounts at the end of an accounting period, such as on December 31, whereas the income statement summarizes operations during a specified accounting period.

True

Merchandise that has been sold and is returned to the firm by the customer is called

a sales return

The financial statement that provides information about a firm's operating, investing, and financing activities during an accounting period is the

cash flows statement

The debts of a business that will be paid in one year or less are called its

current liabilities

The number of times a firm sells and replaces its merchandise inventory in one year is known as its

inventory turnover

The specific types of information that managers need depend on their area of management and on their

level within the firm

If total liabilities were subtracted from total assets, the residual value would be

owners' equity

Ebony Jones is hired by Ruby Tuesday to help with budgeting, determining the costs of the firm's meal services, and recording transactions and creating financial statements. Ebony is a

private accountant

Ruin Company's net sales for the period were $175,000. Its cost of goods sold was $85,000. What is this firm's gross profit on sales?

$90,000

If the liabilities of a business are $85,000 and the owners' equity is $110,000, which of the following is a correct statement?

Assets equal $195,000.

What is the correct order for the balance sheet?

Assets, liabilities, owners' equity