Quiz 1 Basic Financials

Determine the cost of goods sold for a venture with the following financial information: revenues = $50,000; net profit margin = 20%; gross profit margin = 70% $35,000 $15,000 $10,000 $40,000

$15,000

Direct costs of producing a product or providing a service is called: Net profit margin Gross profit margin Cost of goods sold

Cost of goods sold

Under the accrual basis of accounting expenses are reported in the account period when the Expenses match the revenue Cash is Paid

Expenses match the revenue

If a company has an operating cycle that is longer than one year, an asset that will turn to cash within the length of its operating cycle CANNOT be considered as a current asset. True False

False

Total Assets = Total Liabilities - Owners' Equity True or False

False

Revenues minus the cost of goods sold is called Gross profit Net profit Gross profit margin

Gross profit is the difference between revenue and the cost of making a product or providing a service

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the: Income Statement Statement of Cash Flows Balance Sheet

Income Statement

Which of the following would NOT be a current asset? Land Inventories Accounts Receivable

Land

Profit left after all expenses, including financing costs and taxes have been deducted from the firm's revenues is called: Gross profit margin Cash Net profit

Net profit

Under the accrual basis of accounting, revenues are reported in the accounting period when the: Cash Received Service and goods have been delivered and the revenue is realizable

Service and goods have been delivered and the revenue is realizable

If a company's Accounts Payable account decreased, what is the likely effect this will have on Cash? The Cash account decreases The Cash account does not change The Cash account increases

The Cash account decreases

What is the effect on its Cash account when a company pays some of its Account Payable? The Cash account increases, and the liability account, Account Payable, increases. The Cash account decreases, and the liability account, Account Payable, increases. The Cash account decreases, and the liability account, Account Payable, decreases.

The Cash account decreases, and the liability account, Account Payable, decreases.

What is the effect on its Cash account when a company sells merchandise, but allows the customer to pay in 30 days? The Cash account increases, and the asset account, Account Receivable, increases. The Cash account does not change, and the asset account, Account Receivable, increases. The Cash account decreases, and the asset account, Account Receivable, increases.

The Cash account does not change, and the asset account, Account Receivable, increases.

When Inge de Groot invests her personal money into her new company, what will happen to her company's cash account? The Cash account increases; and the owner's equity account, Capital decreases. The Cash account decreases; and the owner's equity account, Capital also decreases. The Cash account increases; and the owner's equity account, Capital, also increases.

The Cash account increases; and the owner's equity account, Capital, also increases.

Break-even point is the point where revenues equal: The fixed costs only The variable costs only The total of all expenses including the cost of goods sold

The total of all expenses including the cost of goods sold

For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the beginning of the year its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year its Accounts Receivable were $86,000 and its Inventory was $110,000. On average how many days of sales were in Accounts Receivable during the year? 37 days 49 days 25 days 55 days

37 days

For a recent year startup's financial statements reported the following: Net income: 100,000; Depreciation expense: 10,000; Increase in account receivable: 30,000; Decrease in account payable: 15,000. What amount will the company report as Cash Provided by Operating Activities on the cash flow statement? 45 000 65 000 155 000 95 000 55 000

65 000

Working capital is: = Current assets plus current liabilities = Current assets minus current liabilities = Current assets divided by current liabilities

= Current assets minus current liabilities

Income statement heading will specify A point in time A period of time

A period of time

The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the: Income statement Balance Sheet Statement of Cash Flows

Balance Sheet