127.Use this information to answer the following question.
Alcorn & Zeto Company
Income Statement
For the Year Ended December 31, 20×7
Revenues
Net sales
$100,000
Dividend income
8,750
Total revenues
$108,750
Costs and expenses
Costs of goods sold
$ 33,500
Selling expenses
10,000
General and administrative expenses
10,250
Interest expense
6,250
Total costs and expenses
60,000
Income before income taxes
$ 48,750
Income taxes
19,500
Net income
$ 29,250
If the income statement were prepared in a multistep form, operating expenses would be
a.
$50,250.
b.
$20,250.
c.
$40,000.
d.
$26,500.
128.The other revenues and expenses section of a multistep income statement could include all the following, except
a.
dividend income.
b.
insurance expense.
c.
interest expense.
d.
interest income.
129.Which of the following items is not shown on a single-step income statement?
a.
Selling expenses
b.
Gross margin
c.
Interest expense
d.
Cost of goods sold
130.The multistep income statement of a service company could contain all of the following, except
a.
cost of goods sold.
b.
income taxes.
c.
operating expenses.
d.
other revenues and expenses.
131.The debt to equity ratio equals
a.
current liabilities divided by average stockholders’ equity.
b.
total liabilities divided by stockholders’ equity.
c.
stockholders’ equity divided by total liabilities.
d.
stockholders’ equity divided by long-term liabilities.
132.The profit margin equals
a.
net income divided by gross margin.
b.
net income divided by net sales.
c.
net sales divided by net income.
d.
gross margin divided by net income.
133.Asset turnover equals
a.
net income divided by average total assets.
b.
average total assets divided by total liabilities.
c.
average total assets divided by net income.
d.
net sales divided by average total assets.
134.Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.
Abner Systems, Inc.
Balance Sheet
December 31, 20×7
Assets
Liabilities
Current assets
$ 7,000
Current liabilities
$ 4,000
Investments
1,000
Long-term liabilities
1,000
Property, plant, and equipment
7,000
Total liabilities
$ 5,000
Intangible assets
5,000
Stockholder’s Equity
Common stock
$ 10,000
Retained earnings
5,000
Total stockholder’s equity
$ 15,000
Total liabilities and
Total assets
$ 20,000
stockholder’s equity
$ 20,000
Abner Systems, Inc.
Income Statement
For the Year Ended December 31, 20×7
Net sales
$ 24,000
Costs of goods sold
8,000
Gross margin
$ 16,000
Operating expenses
8,000
Income before income taxes
$ 8,000
Income taxes
3,200
Net income
$ 4,800
The total amount of working capital of Abner Systems, Inc. is
a.
$7,000.
b.
$11,000.
c.
$3,000.
d.
$0.
135.Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.
Abner Systems, Inc.
Balance Sheet
December 31, 20×7
Assets
Liabilities
Current assets
$ 10,000
Current liabilities
$ 4,000
Investments
1,000
Long-term liabilities
1,000
Property, plant, and equipment
4,000
Total liabilities
$ 5,000
Intangible assets
5,000
Stockholder’s Equity
Common stock
$ 10,000
Retained earnings
5,000
Total stockholder’s equity
$ 15,000
Total liabilities and
Total assets
$ 20,000
stockholder’s equity
$ 20,000
Abner Systems, Inc.
Income Statement
For the Year Ended December 31, 20×7
Net sales
$ 24,000
Costs of goods sold
8,000
Gross margin
$ 16,000
Operating expenses
8,000
Income before income taxes
$ 8,000
Income taxes
3,200
Net income
$ 4,800
The current ratio for Abner Systems, Inc. is
a.
1.00.
b.
0.75.
c.
1.13.
d.
2.50.
136.Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.
The profit margin of Abner Systems, Inc. is
a.
12 percent.
b.
20 percent.
c.
60 percent.
d.
25 percent.
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