Question 1 

The following information is available for Oakland Company:

                                   20142013

Accounts receivable$  360,000$  400,000

Inventory                 340,000400,000

Net credit sales               2,470,0001,400,000

Cost of goods sold1,850,0001,060,000

Net income                300,000170,000

The inventory turnover ratio for 2014 is

5.0 times.        

5.4 times. 

4.6 times. 

6.7 times.

Question 2 

Swiss Clothing Store had a balance in the Accounts Receivable account of $920,000 at the beginning of the year and a balance of $980,000 at the end of the year. Net credit sales during the year amounted to $6,650,000. The average collection period of the receivables in terms of days was

50.7 days. 

52.1 days.   

53.7 days. 

30 days.

Question 3 

Assume the following sales data for a company:

2014$1,050,000

2013950,000

2012800,000

2011650,000

If 2011 is the base year, what is the percentage increase in sales from 2011 to 2013?

100% 

61.5% 

46.2%       

68.4%

Question 4 

The current assets of Myers Company are $250,000. The current liabilities are $100,000. The current ratio expressed as a proportion is

2.5 : 1     

.25 : 1 

250%. 

$250,000 ÷ $100,000.

Question 5 

Nord Company had $375,000 of current assets and $150,000 of current liabilities before borrowing $70,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of Nord Company’s working capital?

No effect     

$70,000 decrease 

$140,000 increase 

$70,000 increase

Question 6 

If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio?

Short-term Borrowing   Collection of Receivable

Increase                  Increase 

Decrease               Decrease 

Decrease               No effect 

Increase               No effect

Question 7 

If an item meets one (but not both) of the criteria for an extraordinary item, it

is reported as an “other revenue or gain” or “other expense and loss,” net of tax. 

only needs to be disclosed in the footnotes of the financial statements. 

is reported at its gross amount as an “other revenue or gain” or “other expense or loss.” 

may be treated as sales revenue (if it is a gain) and as an operating expense (if it is a loss).

Question 8 

In ratio analysis, the ratios are never expressed as a

percentage.

simple proportion. 

negative figure. 

rate.

Question 9 

An aircraft company would most likely have

low profit margin. 

a high inventory turnover. 

high volume. 

a low inventory turnover.

Question 10 

The disposal of a significant component of a business is called

a change in accounting principle. 

an extraordinary item. 

discontinued operations. 

an other expense.