Ashford Acc206 week 2 quiz

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ACC 206 Week 2 Quiz

1. A company reports total assets of $525,000 and stockholders' equity of $395,000. Which of the following is the debt ratio? (Points : 1)
0.29
0.71
0.55
0.25
None of these is correct

2. Which of the following is NOT a true statement about the statement of cash flows? (Points : 1)
It shows where cash came from and how it was spent.
It reports why cash increased or decreased.
It covers a specific span of time the same as the income statement.
It shows how the profits or losses of the company were generated.

3. A company reports net income of $70,000 and net sales of $950,000. Which of the following is the rate of return on net sales? (Points : 1)
0.05
0.20
0.07
0.66
None of these is correct

4. Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet:

2014
2013
Increase/decrease
Cash
$ 33,000
$ 18,000
$15,000
Accounts receivable
22,000
35,000
(13,000)
Inventory
170,000
115,000
55,000
Total assets
$225,000
$168,000
$57,000

The change in inventory will be shown as a positive cash flow in the adjustments to Net income. (Points : 1)
True
False

5. The statement of cash flows explains the difference between net income and the change in cash balance. (Points : 1)
True
False

6. The investing activities section of the statement of cash flows reflects the cash flows that increase or decrease long-term assets. (Points : 1)
True
False

7. Peartree Company provides the following income statement for the year 2014:

Sales revenue
$240,000

Cost of goods sold
110,000

Gross profit

$130,000
Operating expenses


Salary expense
45,000

Depreciation expense
12,000

Other operating expenses
23,000

Total operating expenses

80,000
Operating income

50,000
Gain on sale of plant assets

5,000
Interest expense

(1,000)
Net income before income tax

$54,000
Income tax expense

5,000
Net income (loss)

$49,000

How much is the times-interest-earned ratio? (Points : 1)
0.02
49.0
50.0
0.25
None of these is correct

8. Peartree Company provides the following data:

BALANCE SHEET
Dec 31, 2014
Dec 31, 2013
Cash
$ 21,000
$ 18,000
Accounts receivable, net
31,000
35,000
Inventory
53,000
25,000
PP&E, net
120,000
90,000
Total assets
$225,000
$168,000

Accounts payable
$4,000
$ 6,000
Accrued liabilities
2,000
1,000
Long-term notes payable
84,000
90,000
Total liabilities
$ 90,000
$ 97,000

Common stock
$ 30,000
$ 2,000
Retained earnings
113,000
74,000
Treasury stock
(8,000)
(5,000)
Total stockholders’ equity
$135,000
$71,000
Total liabilities and stockholders’
equity
$225,000
$168,000

How much is the current ratio at year-end 2014? (Points : 1)
17.5
16.1
3.5
0.5
None of these is correct

9. The net income for the year ended was $300,000. The company has no preferred stock. Common stockholders’ equity was $1,400,000 at the beginning of the year and $1,600,000 at the end of the year. The return on common stockholders’ equity would be: (Points : 1)
18.75%.
20.00%.
21.43%.

87.5%
None of these is correct.

10. Zebra, Inc. has Cost of goods sold for the year of $1,900,000. The average inventory for the year is $129,000. The inventory turnover for the year is: (Points : 1)
0.1.
14.7.
33.8.
65.5.
None of these is correct