Question 1

If the following facts were known, which one would strengthen the argument that a company is profitable?
The company's sales revenue is low relative to its cost of goods sold.
The company's cost of goods sold is low relative to its sales revenue.
The number of customers has remained stable for some time.
The company has had the same owners over its lifetime.
The company's selling expenses are high compared to its administrative expenses.

Accepted Answer

The answer of If the following facts were known, which...

Question 2

Paid-in capital is
a debt that must be paid within the year.
the process of distributing the cost of an asset over its useful life.
the amount paid for an existing business above the value of its other assets.
a debt that is not due for at least one year.
additional money, above proceeds from a stock sale, paid directly to a firm by its owners.

Accepted Answer

The answer of Paid-in capital is
a debt that must be...

Question 3

Which financial statement shows the cost of obtaining materials to make products that were sold during the year?
Income statement
Balance sheet
Statement of cash flows
Operating expenses statement
Statement of retained earnings

Accepted Answer

The answer of Which financial statement shows the cost of...

Question 4

The amount of profit or loss will be reflected in the
balance sheet.
cost of goods sold.
quick ratio.
income statement.
statement of cash flow.

Accepted Answer

The answer of The amount of profit or loss will...

Question 5

Jerry wants to calculate gross profit for his business. Which formula should he use?
Operating expenses minus income taxes
Sales revenue minus income taxes
Sales revenue minus operating expenses
Sales revenue minus cost of goods sold
Operating income minus income taxes

Accepted Answer

The answer of Jerry wants to calculate gross profit for...

Question 6

If a firm has $1 000 000 in retained earnings, what does this mean?
That the firm paid out $1 000 000 this year in dividends
That the company is owed $1 000 000 by its creditors but has not yet collected the money
That the firm has $1 000 000 in the bank
That the company's net profits less its dividend payments equals $1 000 000
That the company has saved $1 000 000 during the period since the last balance sheet was made up

Accepted Answer

The answer of If a firm has $1 000 000...

Question 7

The process of distributing the cost of an asset over its life is known as
licensing.
subtracting methods.
cost averaging.
prepaid expenses.
depreciation.

Accepted Answer

The answer of The process of distributing the cost of...

Question 8

A prepaid expense is
an expense, such as rent, that is paid before the upcoming period in which it is due.
a nonphysical asset, such as a patent or trademark, that has economic value in the form of expected benefit.
an amount due from a customer who has purchased goods on credit.
an asset that can or will be converted to cash within the following year.
an asset with long-term use or value, such as land, buildings, and equipment.

Accepted Answer

The answer of A prepaid expense is
an expense, such as...

Question 9

A fixed asset is
an amount due from a customer who has purchased goods on credit.
an asset with long-term use or value, such as land, buildings, and equipment.
an expense, such as rent, that is paid before the upcoming period in which it is due.
an asset that can or will be converted to cash within the following year.
a nonphysical asset, such as a patent or trademark, that has economic value in the form of expected benefit.

Accepted Answer

The answer of A fixed asset is
an amount due from...

Question 10

Andy's line of credit with a local bank is likely a(n)
intangible asset.
prepaid expense.
current liability.
account receivable.
long-term liability.

Accepted Answer

The answer of Andy's line of credit with a local...

Question 11

A current liability is
additional money, above proceeds from a stock sale, paid directly to a firm by its owners.
the process of distributing the cost of an asset over its useful life.
the amount paid for an existing business above the value of its other assets.
a debt that is not due for at least one year.
a debt that must be paid within the year.

Accepted Answer

The answer of A current liability is
additional money, above proceeds...

Question 12

Prahbat is looking at a financial statement produced by Iron Corp. The statement lists the company's annual revenues, its expenses, and its profit. Prahbat is looking at a(n)
cash flow statement.
revenue-expense statement.
balance sheet.
budget.
income statement.

Accepted Answer

The answer of Prahbat is looking at a financial statement...

Question 13

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What are retained earnings?
$6 million
$17 million
$3 million
$2 million
It is not possible to tell with the information provided

Accepted Answer

The answer of At Lexi Corp., sales revenue is $20...

Question 14

Current liabilities consisting of bills owed to suppliers plus wages and taxes due within the upcoming year are known as
accounts receivable.
accounts payable.
prepaid expenses.
marketable securities.
net liabilities.

Accepted Answer

The answer of Current liabilities consisting of bills owed to...

Question 15

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What is the company's net income?
$6 million
$17 million
$16 million
$2 million
The answer cannot be computed with the information provided

Accepted Answer

The answer of At Lexi Corp., sales revenue is $20...

Question 16

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What is the company's gross profit?
$6 million
$17 million
$16 million
$2 million
None of these

Accepted Answer

The answer of At Lexi Corp., sales revenue is $20...

Question 17

Meredith recently bought a business. But she paid more for the business than the total of its current and fixed assets. What did she pay extra for?
Land the company owns
Equipment in the company's factory
Goodwill
The franchise fee
Accounts receivable that are on the company's books

Accepted Answer

The answer of Meredith recently bought a business. But she...

Question 18

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What is the company's operating income?
$6 million
$17 million
$3 million
$2 million
None of these

Accepted Answer

The answer of At Lexi Corp., sales revenue is $20...

Question 19

Gem Corp. has $100 million in assets and $50 million in liabilities. Last year, the company earned $10 million in net profit and paid out $5 million in dividends to shareholders. What are the retained earnings for the company?
$50 million
$5 million
$45 million
$90 million
$95 million

Accepted Answer

The answer of Gem Corp. has $100 million in assets...

Question 20

As buildings and equipment wear out or become obsolete, their value decreases. To reflect decreasing value, accountants use
prepaid expenses.
licensing.
subtracting methods.
depreciation.
all of these.

Accepted Answer

The answer of As buildings and equipment wear out or...

Quiz 11: Understanding Accounting

Which financial statement shows the cost of obtaining materials to make products that were sold during the year? Income statement Balance sheet Statement of cash flows Operating expenses statement Statement of retained earnings

The amount of profit or loss will be reflected in the balance sheet. cost of goods sold. quick ratio. income statement. statement of cash flow.

Jerry wants to calculate gross profit for his business. Which formula should he use? Operating expenses minus income taxes Sales revenue minus income taxes Sales revenue minus operating expenses Sales revenue minus cost of goods sold Operating income minus income taxes

The process of distributing the cost of an asset over its life is known as licensing. subtracting methods. cost averaging. prepaid expenses. depreciation.

Andy's line of credit with a local bank is likely a(n) intangible asset. prepaid expense. current liability. account receivable. long-term liability.

Prahbat is looking at a financial statement produced by Iron Corp. The statement lists the company's annual revenues, its expenses, and its profit. Prahbat is looking at a(n) cash flow statement. revenue-expense statement. balance sheet. budget. income statement.

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What are retained earnings? $6 million $17 million $3 million $2 million It is not possible to tell with the information provided

Current liabilities consisting of bills owed to suppliers plus wages and taxes due within the upcoming year are known as accounts receivable. accounts payable. prepaid expenses. marketable securities. net liabilities.

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What is the company's net income? $6 million $17 million $16 million $2 million The answer cannot be computed with the information provided

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What is the company's gross profit? $6 million $17 million $16 million $2 million None of these

Meredith recently bought a business. But she paid more for the business than the total of its current and fixed assets. What did she pay extra for? Land the company owns Equipment in the company's factory Goodwill The franchise fee Accounts receivable that are on the company's books

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What is the company's operating income? $6 million $17 million $3 million $2 million None of these

Gem Corp. has $100 million in assets and $50 million in liabilities. Last year, the company earned $10 million in net profit and paid out $5 million in dividends to shareholders. What are the retained earnings for the company? $50 million $5 million $45 million $90 million $95 million

As buildings and equipment wear out or become obsolete, their value decreases. To reflect decreasing value, accountants use prepaid expenses. licensing. subtracting methods. depreciation. all of these.