Question :
76.Beginning inventory plus net purchases is:
A.Cost of goods sold.
B.Merchandise (goods) : 1258794
76.Beginning inventory plus net purchases is:
A.Cost of goods sold.
B.Merchandise (goods) available for sale.
C.Ending inventory.
D.Sales.
E.Shown on the balance sheet.
77.The acid-test ratio:
A.Is also called the quick ratio.
B.Measures profitability.
C.Measures inventory turnover.
D.Is generally greater than the current ratio.
E.Measures return on assets.
78.Quick assets are defined as:
A.Cash, short-term investments, and inventory.
B.Cash, short-term investments, and current receivables.
C.Cash, inventory, and current receivables.
D.Cash, noncurrent receivables, and prepaid expenses.
E.Accounts receivable, inventory, and prepaid expenses.
79.KLM Corporation’s quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:
A.0.50.
B.0.68.
C.0.74.
D.1.50.
E.2.20.
Acid-Test Ratio = Quick Assets/Current LiabilitiesAcid-Test Ratio = $5,888,000/$8,000,000 = 0.74
80.A company’s current assets are $17,980, its quick assets are $11,420 and its current liabilities are $12,190. Its quick ratio equals:
A.0.94.
B.1.07.
C.1.48.
D.1.57.
E.2.40.
Acid-Test Ratio = Quick Assets/Current LiabilitiesAcid-Test Ratio = $11,420/$12,190 = 0.94
81.Liquidity problems are likely to exist when a company’s acid-test ratio:
A.Is less than the current ratio.
B.equals 1.
C.Is higher than 1.
D.Is substantially lower than 1.
E.Is higher than the current ratio.
82.The acid-test ratio differs from the current ratio in that:
A.Liabilities are divided by current assets.
B.Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio.
C.The acid-test ratio measures profitability and the current ratio does not.
D.The acid-test ratio excludes short-term investments from the calculation.
E.The acid-test ratio is a measure of liquidity but the current ratio is not.
83.Using the following year-end information for Calvin’s Clothing, Inc., calculate the current ratio and acid-test ratio for the business:
Cash$52,000
Short-term investments12,000
Accounts receivable54,000
Inventory325,000
Prepaid expenses17,500
Accounts payable106,500
Other current payables25,000
A.1.80 and 1
B.1.97 and 1.52
C.2.73 and 1.52
D.3.50 and 0.90
E.1.80 and 0.90
Current Ratio = Current Assets/Current LiabilitiesCurrent Ratio = $460,500/$131,500 = 3.50Acid-Test Ratio = Quick Assets/Current LiabilitiesAcid-Test Ratio = $118,000/$131,500 = 0.90
84.The gross margin ratio:
A.Is also called the net profit ratio.
B.Indicates the percent of sales revenue remaining after covering the cost of the goods sold.
C.Is also called the profit margin.
D.Is a measure of liquidity and should exceed 2.0 to be acceptable.
E.Should be greater than 1 for merchandising companies.
85.A company’s gross profit was $83,750 and its net sales were $347,800. Its gross margin ratio equals:
A.4.2%.
B.24.1%.
C.75.9%.
D.$83,750.
E.$264,050.
Gross Margin Ratio = Gross Profit/Net SalesGross Margin Ratio = $83,750/$347,800 = 24.1%
