Hiller - Chapter 6

As Dean calculated his current assets for his used videogame store, he was sure to include which of the following? A. merchandise inventory B. accrued liabilities C. fixed assets D. notes receivable E. retained earnings

A

How is gross margin percent calculated? A. gross margin dollars divided by net sales B. add operating and interest expenses together and divide by gross sales C. net sales multiplied by gross margin dollars D. cost of goods sold divided by gross sales E. divide net profit by net sale

A

If Mohammed wanted to examine the assets and liabilities of the Silver Exchange Coin Shop for the end of the year, he should look at its _________. A. balance sheet B. financial leverage statements C. income statement D. profitability statement E. strategic profit model

A

Of the two types of assets, which one can be converted into cash within one year? A. current assets B. fixed assets C. accrued assets D. accountable assets E. substantial assets

A

The amount paid for the merchandise by the retailer is ___________. A. cost of goods sold B. gross margin C. operating expense D. fixed expense E. variable expense

A

What is net profit? A. Operating profit less interest and taxes. B. COGS less operating expenses. C. Gross sales minus net sales. D. A measurement of the liquidity of the firm. E. Net sales minus the cost of goods sold.

A

Which of the following calculations leads to gross margin dollars? A. subtract cost of goods sold from net sales B. add operating and interest expenses together and subtract the total from gross sales C. subtract cost of goods sold from gross sales D. add customer returns and customer allowances, then subtract the total from net sales E. subtract net profit from net sales

A

Which of the following refers to the total number of dollars received by a retailer after all refunds have been paid to customers for returned merchandise? A. net sales B. gross margin C. net profit D. a balanced sheet E. total assets

A

Which of the following would have the highest gross margin percent? A. Lewbob's Fine Antique Furniture B. Walmart C. Dollar General D. Sears E. Kohl's

A

Why is it important for department stores to achieve a high gross margin? A. Their operating expenses are higher than other retail formats. B. It is stated in the store's financial objectives. C. Without a high gross margin, department stores will be unable to achieve a high asset turnover. D. The strategic profit model will otherwise change the strategy of the retailer. E. A low gross margin will turn it into a discounter.

A

Why would a retailer offer an in-house credit card to their customers when proceeds of the sales are tied up as a accounts receivable? A. Offering credit is a service for the customers making purchases easier for the consumer. B. Accounts receivable is not a current asset and has no effect on what is owed to the retailer. C. By accepting only cash, assets would generate a low ROI. D. Retailers offer credit to increase their average gross margin

A

_______________ gives the retailer a measure of how much profit it is making on merchandise sales without considering the expense associated with operating the store. A. Gross margin B. Financial leverage C. General expenses D. Expenses E. Net profit

A

Which of the following ratios is included as an integral part of the strategic profit model? A. retained earnings B. net profit margin C. inventory turnover D. current liabilities E. gross margin

B

The Bookstore Café is a small restaurant located in a downtown business district. It is opened for breakfast and lunch and serves simple yet nutritious meals as well as books from the New York Times best seller list. How would you categorize the book inventory, cooking equipment, tables, chairs and the register? A. as retained earnings B. as assets C. as current liabilities D. as investor capital E. as owners' equity

B

The hosting of a website for the purpose of online retailing would be classified as a(n)_________. A. cost of goods sold B. operating expense C. promotional allowance D. profit center E. asset productivity center

B

What ratio would a retailer utilize to best compare the performance of cashmere sweaters to cotton sweaters? A. cost of goods sold percent B. gross margin percent C. operating expense percent D. fixed expense percent E. variable expense percent

B

Which of the following can be considered a current asset? A. net profit percentage B. accounts receivable C. selling expenses D. gross margin E. operating expenses

B

Which of the following is expressed as a percentage of net sales? A. accounts receivable B. net profit margin C. gross sales D. operating expenses E. total assets

B

Which of the following summarizes a firm's financial performance over a period of time? A. balance sheet B. income statement C. profitability statement D. strategic profit model E. financial leverage statement

B

Camilla purchased a corn snake as a pet while she was away from home. When she arrived at her dorm, the resident assistant reminded Camilla of the "no pets" policy and Camilla had to bring the snake back to the store. The pet store's accounting department would enter this transaction as a A. customer allowance B. fixed cost C. customer return D. net cost of doing business E. gross cost

C

Goodwill Industries frequently hires disabled people as part of the community thrift store personnel. Which objective does Goodwill Industries value by this practice? A. financial B. personal C. societal D. administrative

C

The information used to analyze a firm's profit path comes from the A. balance sheet B. profitability statement C. income statement D. strategic profit model E. financial leverage statement

C

What are net sales? A. What is remaining after operating and interest expenses. B. The combination of total customer returns and customer allowances. C. The revenues received from selling merchandise. D. The difference between gross profit and gross sales. E. The difference between cost of goods sold and gross sales.

C

What measures the profitability of products that are sold? A. accounts receivable B. asset turnover C. gross margin D. owner's equity E. shrinkage

C

Which of the following is NOT true about the strategic profit model? A. It is a method for summarizing the factors that affect a firm's financial performance. B. It indicates the impacts of factors affecting a firm's return on assets (ROA). C. It decomposes return on assets (ROA) in to net profit and operating expenses. D. It illustrates the different approaches for achieving a high return on assets (ROA). E. It suggests profit management path and asset management path.

C

Which of the following properly explains why operating expenses percentage in Costco (as a warehouse store) is lower than that of Macy's (as a department store)? A. Costco has higher selling expenses than Macy's. B. Costco operates with a larger administrative staff than Macy's. C. Costco spends less on maintaining the ambiance of its stores than Macy's. D. Costco advertises less than Macy's.

C

Which of the following would be listed as an asset on the balance sheet for a children's clothing shop? A. interest due on startup loan B. its retained earnings C. its accounts receivable D. money owed to vendors

C

What does asset turnover measure? A. return on assets B. net profit margin C. the productivity of the ROA D. the productivity of the firm's investment in its assets E. the profit margin management for the entire organization

D

Which of the following does NOT describe asset turnover? A. It is the retailer's net sales divided by its assets. B. It assesses the productivity of a firm's investments in its assets. C. It indicates how many sales dollars are generated by each dollar of asset. D. It suggests the profit management path

D

Which of the following is NOT a component which enters into the calculation of net sales? A. Gross sales B. Customer returns C. Promotional allowances D. Interest

D

Which of the following is an operating expense for Hollister? A. cost of the merchandise to be paid to the manufacturers B. shipping expenses from the manufacturer to the distribution center C. customer returns D. magazine advertisements E. employee discount

D

Which of the following would have the lowest gross margin percents? A. Macy's Department Stores B. Banana Republic C. Best Buy D. Kroger Supermarket E. Sears

D

Why would a discount store have a lower gross margin percent than a jewelry store? A. Discount stores are only beginning to explore gross margin in pricing decisions. B. Jewelry stores cannot offer the variety that discount stores offers. C. Discount stores traditionally do not profit as well as jewelry stores. D. Discount stores have a lower priced merchandise strategy.

D

Harriet's Wimsey is a bookstore for people who love mysteries. How would a complete set of P.D. James mystery novels, a first edition copy of The Maltese Falcon, the money in the cash register, and an IOU from a loyal customer who forgot her wallet one day when she came to purchase the newest Dorothy Channel book be listed on the store's balance sheet? A. as owners' equity B. as current liabilities C. as fixed assets D. as long-term liabilities E. as current assets

E

The information used to analyze a retailer's asset management path primarily comes from the _________. A. strategic profit model B. financial leverage statement C. income statement D. profitability statement E. balance sheet

E

Tony wanted to know what the net sales and the net profit after tax were last year for his nephew's business, The Big Guy Shop. Tony should look at the store's A. balance sheet B. financial leverage statements C. strategic profit model D. profitability statement E. income statement

E

Which of the following DOES NOT describe gross margin? A. It can be expressed as a percentage of net sales. B. It is the profit on the goods sold excluding the operating expenses. C. It is also referred to as gross profit. D. It is a performance measurement. E. It is a measure of return on assets

E

Which of the following is NOT an example of a retail operating expense? A. advertising B. utilities C. lease payments D. salaries for sales associates and managers E. shipping costs from the manufacturer to the retailer

E

Which of the following would NOT be listed as an asset on the balance sheet of a hardware store? A. nuts and bolts B. a set of metric wrenches C. display cabinets D. a $55 credit card charge from a store patron E. accounts payable

E