89. Profit margin is defined as:
A. Revenues divided by net sales.
B. Net sales divided by assets.
C. Net income divided by net sales.
D. Net income divided by assets.
E. Net sales divided by net income.
90. A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:
A. 2%.
B. 20%.
C. 200%.
D. 500%.
E. $8,000.
91. All of the following statements regarding profit margin are true except:
A. Profit margin reflects the percent of profit in each dollar of revenue.
B. Profit margin is also called return on sales.
C. Profit margin can be used to compare a firm's performance to its competitors.
D. Profit margin is calculated by dividing net income by net sales.
E. Profit margin is not a useful measure of a company's operating results.
92. A company had $9,000,000 in net income for the year. Its net sales were $13,200,000 for the same period. Calculate its profit margin.
A. 17.5%.
B. 28.0%.
C. 62.5%.
D. 160.0%.
E. 68.2%
93. On June 30 Apricot Co. paid $7,500 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On June 30 Apricot should record:
A. A credit to an expense for $7,500.
B. A debit to an expense for $7,500.
C. A debit to a prepaid expense for $7,500.
D. A credit to a prepaid expense for $7,500.
E. A debit to Cash for $7,500.
94. On June 30 of the current calendar year, Apricot Co. paid $7,500 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 for Apricot would include:
A. A debit to an expense for $5,625.
B. A debit to a prepaid expense for $5,625.
C. A debit to an expense for $1,875.
D. A debit to a prepaid expense for $1,875.
E. A credit to a liability for $1,875.
95. Accrued revenues:
A. At the end of one accounting period often result in cash receipts from customers in the next period.
B. At the end of one accounting period often result in cash payments in the next period.
C. Are also called unearned revenues.
D. Are listed on the balance sheet as liabilities.
E. Are recorded at the end of an accounting period because cash has already been received for revenues earned.
96. An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):
A. Accrued expense.
B. Contra account.
C. Accrued revenue.
D. Intangible asset.
E. Adjunct account.
97. The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned:
A. Is referred to as depreciation expense.
B. Is referred to as accumulated depreciation.
C. Is shown on the income statement of the final period.
D. Is only recorded when the asset is disposed of.
E. Is referred to as an accrued asset.
98. The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:
A. Accumulated depreciation.
B. A contra account.
C. The matching principle.
D. Depreciation expense.
E. An accrued account.
