## Saturday, 3 August 2013

### The current ratio is a. used to evaluate a company's liquidity and short-term debt paying ability. b. is a solvency measure that indicated the margin of safety of a noteholder or bondholder. c. calculated by dividing current liabilities by current assets. d. calculated by subtracting current liabilities from current assets.

The current ratio is
 a. used to evaluate a company's liquidity and short-term debt paying ability. b. is a solvency measure that indicated the margin of safety of a noteholder or bondholder. c. calculated by dividing current liabilities by current assets. d. calculated by subtracting current liabilities from current assets.

 a. used to evaluate a company's liquidity and short-term debt paying ability.

### Accounts payable \$ 30,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 ____ 9. Based on the above data, what is the amount of quick assets? a. \$163,000 b. \$195,000 c. \$121,000 d. \$56,000 ____ 10. Based on the above data, what is the amount of working capital? a. \$238,000 b. \$138,000 c. \$178,000 d. \$64,000 ____ 11. Based on the above data, what is the quick ratio, rounded to one decimal point? a. 2.4 b. 3.4 c. 2.1 d. 1.5

 Accounts payable \$  30,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000

_
9.   Based on the above data, what is the amount of quick assets?
 a. \$163,000 b. \$195,000 c. \$121,000 d. \$56,000

 c. \$121,000

10.       Based on the above data, what is the amount of working capital?
 a. \$238,000 b. \$138,000 c. \$178,000 d. \$64,000

 c. \$178,000

11. Based on the above data, what is the quick ratio, rounded to one decimal point?
 a. 2.4 b. 3.4 c. 2.1 d. 1.5

 c. 2.1

### Calculate

Calculate
Write the answer in scientific notation.

Solution
= (1.44 x -3) x 105 x 10-7
=-4.32 x 105-7
=-4.32 x 10-2

### What is the solution set for |2x – 3| = 15?

What is the solution set for |2x – 3| = 15?

Solution
2x-3= 15
2x = 15 +3
2x = 18
divide by 2 both side, we have
x = 9
or
2x-3= -15
2x = -15 + 3
2x = -12
divide by 2 both side, we have
x = -6
So,
Solution Set = {(9,-6)}

### Most companies that use standards set them at (Points: 4) the normal level. a conceivable level. the ideal level. last year's level.

1. Most companies that use standards set them at
• the normal level.
• a conceivable level.
• the ideal level.
• last year's level.

• the normal level.

### An unfavorable materials quantity variance would occur if (Points: 4) more materials were purchased than were used. actual pounds of materials used were less than the standard pounds allowed. actual labor hours used were greater than the standard labor hours allowed. actual pounds of materials used were greater than the standard pounds allowed.

1. An unfavorable materials quantity variance would occur if
• more materials were purchased than were used.
• actual pounds of materials used were less than the standard pounds allowed.
• actual labor hours used were greater than the standard labor hours allowed.
• actual pounds of materials used were greater than the standard pounds allowed.

actual pounds of materials used were greater than the standard pounds allowed.

### Ideal standards (Points: 4) are rigorous but attainable. are the standards generally used in a master budget. reflect optimal performance under perfect operating conditions. will always motivate employees to achieve the maximum output.

1. Ideal standards (Points: 4)
• are rigorous but attainable.
• are the standards generally used in a master budget.
• reflect optimal performance under perfect operating conditions.
• will always motivate employees to achieve the maximum output.
• reflect optimal performance under perfect operating conditions.

### Times interest earned is also called the (Points: 4) money multiplier. interest coverage ratio. coupon coverage ratio. premium ratio.

1. Times interest earned is also called the
•  money multiplier.
•   interest coverage ratio.
• coupon coverage ratio.

interest coverage ratio.

### Waters Department Store had net credit sales of \$12,000,000 and cost of goods sold of \$9,000,000 for the year. The average inventory for the year amounted to \$2,000,000. The average number of days in inventory during the year was (Points: 4) 122 days. 81 days. 61 days. 35 days.

1. Waters Department Store had net credit sales of \$12,000,000 and cost of goods sold of \$9,000,000 for the year. The average inventory for the year amounted to \$2,000,000. The average number of days in inventory during the year was
• 122 days.
• 81 days.
• 61 days.
• 35 days.

81 days.

### The ratio that uses weighted average common shares outstanding in the denominator is the (Points: 4) price-earnings ratio. return on common stockholders' equity. earnings per share. payout ratio.

1. The ratio that uses weighted average common shares outstanding in the denominator is the
• price-earnings ratio.
• return on common stockholders' equity.
• earnings per share.
• payout ratio.

earnings per share.

### Times interest earned is also called the (Points: 4) money multiplier. interest coverage ratio. coupon coverage ratio. premium ratio.

1. Times interest earned is also called the (Points: 4)
• money multiplier.
• interest coverage ratio.
•  coupon coverage ratio.

interest coverage ratio.

### Which of the following is not a profitability ratio? (Points: 4) Payout ratio Profit margin Times interest earned Return on common stockholders' equity

1. Which of the following is not a profitability ratio? (Points: 4)
• Payout ratio Profit
• margin Times interest earned
• Return on common stockholders' equity

margin Times interest earned

### Profit margin is calculated by dividing (Points: 4) sales by cost of goods sold. gross profit by net sales. net income by stockholders' equity. net income by net sales.

1. Profit margin is calculated by dividing
• sales by cost of goods sold.
•  gross profit by net sales.
• net income by stockholders' equity.
• net income by net sales.

net income by net sales.

### Inventory turnover is calculated by dividing (Points: 4) cost of goods sold by the ending inventory. cost of goods sold by the beginning inventory. cost of goods sold by the average inventory. average inventory by cost of goods sold.

1. Inventory turnover is calculated by dividing
•  cost of goods sold by the ending inventory.
• cost of goods sold by the beginning inventory.
• cost of goods sold by the average inventory.
• average inventory by cost of goods sold.

cost of goods sold by the average inventory.

### For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing. 1. False 2. True

For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.
1. False
2. True

1. False

### Under variable costing, which of the following costs would be included in finished goods inventory?

Under variable costing, which of the following costs would be included in finished goods inventory?
1. Fixed factory overhead cost
2. Variable factory overhead cost
3. Selling costs
4. Salary of vice-president of finance

Variable factory overhead cost

### For a period during which the quantity of product manufactured exceeded the quantity sold, income from

For a period during which the quantity of product manufactured exceeded the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.
1. False
2. True