Stark Company's most recent balance sheet reported total assets of $1,800,000, total liabilities of $850,000, and total equity of $950,000. Its debt-to-equity ratio is:

 A company had a market price of $38.70 per share, earnings per share of $1.85, and dividends per share of $1.00. Its price-earnings ratio equals:
Multiple Choice
•    
24.1.
•    
19.1.
Incorrect
•    
1.9.
•    
20.9.
Correct
•    
26.9.
Explanation
$38.70/$1.85 = 20.9


Powers Company reported net sales of $1,230,000, average Accounts Receivable, net of $75,500, and net income of $52,300. The accounts receivable turnover ratio is:
Multiple Choice
•    
0.61 times.
•    
15.3 times.
•    
17.3 times.
Incorrect
•    
16.3 times.
Correct
•    
30.6 times.
Explanation
$1,230,000/$75,500 = 16.3 times

In preparing a company's statement of cash flows using the indirect method, the following information is available:
 
Net income    $ 60,000
Accounts payable increased by    18,800
Accounts receivable decreased by    25,800
Inventories increased by    6,600
Depreciation expense    32,400

Net cash provided by operating activities was:
Multiple Choice
•    
$130,400.
Correct
•    
$143,600.
•    
$92,000.
•    
$65,600.
Incorrect
•    
$78,800.
Explanation
Net income    $ 60,000
Depreciation expense    32,400
Decrease in Accounts Receivable    25,800
Increase in Inventories    (6,600)
Increase in Accounts Payable    18,800
Total    $ 130,400


Carducci Corporation reported net sales of $3.58 million and beginning total assets of $0.92 million and ending total assets of $1.32 million. The average total asset amount is:
Multiple Choice
•    
$0.26 million.
Incorrect
•    
$2.66 million.
•    
$2.26 million.
•    
$1.12 million.
Correct
•    
$0.36 million.
Explanation
($920,000 + $1,320,000)/2 = $1,120,000

Stark Company's most recent balance sheet reported total assets of $1,800,000, total liabilities of $850,000, and total equity of $950,000. Its debt-to-equity ratio is:
Multiple Choice
•    
0.53
•    
1.00
Incorrect
•    
1.12
•    
0.89
Correct
•    
0.47
Explanation
$850,000/$950,000 = 0.89

Zhang Company reported Cost of goods sold of $838,000, beginning Inventory of $37,800 and ending Inventory of $46,600. The average Inventory amount is:
Multiple Choice
•    
$37,800.
•    
$46,600.
•    
$8,800.
•    
$42,200.
Correct
•    
$84,400.
Explanation
($37,800 + $46,600)/2 = $42,200.

A company's sales in Year 1 were $340,000 and in Year 2 were $377,500. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:
Multiple Choice
•    
10%.
Incorrect
•    
100%.
•    
90%.
•    
11%.
Correct
•    
111%.
Explanation
[($377,500 − $340,000)/$340,000] × 100 = 11%


A corporation reported cash of $15,300 and total assets of $179,600 on its balance sheet. Its common-size percent for cash equals:
Multiple Choice
•    
8.52%.
Correct
•    
8,520.00%.
•    
0.09%.
•    
13.90%.
•    
11.74%.
Explanation
($15,300/$179,600) × 100 = 8.52%

A corporation reported cash of $28,600, total assets of $469,000, and current liabilities of $160,745 on its balance sheet. Its common-size percent for cash equals:
Multiple Choice
•    
6.10%.
Correct
•    
100.00%.
•    
61.00%.
•    
1640.00%.
•    
16.40%.
Explanation
($28,600/$469,000) × 100 = 6.10%.

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of long-term debt are reported as cash flows from:
Multiple Choice
•    
Investing activities.
•    
Operating activities.
•    
Indirect activities.
•    
Financing activities.
Correct
•    
Direct activities.



In preparing a company's statement of cash flows using the indirect method, the following information is available:
 
Net income    $ 60,000
Accounts payable decreased by    26,000
Accounts receivable increased by    33,000
Inventories increased by    13,000
Cash dividends paid    15,600
Depreciation expense    28,000

Net cash provided by operating activities was:
Multiple Choice
•    
$52,000.
•    
$144,000.
Incorrect
•    
$76,400.
•    
$38,000.
•    
$16,000.
Correct
Explanation
Net income    $ 60,000
Depreciation expense    28,000
Increase in accounts receivable    (33,000)
Increase in Inventories    (13,000)
Decrease in accounts payable    (26,000)
Total    $ 16,000



In preparing a company's statement of cash flows using the indirect method, the following information is available:
 
Net income    $ 65,000
Accounts payable increased by    31,000
Accounts receivable decreased by    51,000
Inventories decreased by    18,000
Cash dividends paid    27,000
Depreciation expense    46,000

Net cash provided by operating activities was:
Multiple Choice
•    
$50,000.
•    
$96,000.
•    
$97,000.
Incorrect
•    
$211,000.
Correct
•    
$175,000.
Explanation
Net income    $ 65,000
Depreciation expense    46,000
Decrease in accounts receivable    51,000
Decrease in Inventories    18,000
Increase in accounts payable    31,000
Total    $ 211,000


In preparing a company's statement of cash flows using the indirect method, the following information is available:
 
Net income    $ 54,000
Accounts payable decreased by    19,000
Accounts receivable increased by    26,000
Inventories increased by    6,000
Depreciation expense    32,000

Net cash provided by operating activities was:
Multiple Choice
•    
$61,000.
•    
$85,000.
•    
$73,000.
•    
$35,000.
Correct
•    
$54,000.
Explanation
Net income    $ 54,000
Depreciation expense    32,000
Increase in accounts receivable    (26,000)
Increase in Inventories    (6,000)
Decrease in accounts payable    (19,000)
Total    $ 35,000



A company reported that its bonds with a par value of $50,000 and a carrying value of $60,500 are retired for $64,200 cash, resulting in a loss of $3,700. The amount to be reported under cash flows from financing activities is:
Multiple Choice
•    
$(3,700).
•    
$(60,500).
•    
$(10,500).
•    
$10,500.
Incorrect
•    
$(64,200).
Correct




Ariel Corporation reports the following year-end balance sheet data. The company's working capital equals:
 
Cash    $ 60,000    Current liabilities    $ 95,000
Accounts receivable    75,000    Long-term liabilities    55,000
Inventory    80,000    Common stock    120,000
Equipment    165,000    Retained earnings    110,000
Total assets    $ 380,000    Total liabilities and equity    $ 380,000
Multiple Choice
•    
$95,000
•    
$215,000
•    
$230,000
Incorrect
•    
$120,000
Correct
•    
$380,000
Explanation
Current assets = ($60,000 + $75,000 + $80,000)    $ 215,000
Current liabilities    95,000
Working capital    $ 120,000


Ron Landscaping's income statement reports net income of $73,700, which includes deductions for interest expense of $12,000 and income taxes of $35,500. Its times interest earned is:
Multiple Choice
•    
0.16 times
•    
7.1 times
Incorrect
•    
10.1 times
Correct
•    
4.0 times
•    
6.1 times
Explanation
($73,700 + $12,000 + $35,500)/$12,000 = 10.1 times

A company reports basic earnings per share of $5.10, cash dividends per share of $2.05, and a market price per share of $65.55. The company's dividend yield equals:
Multiple Choice
•    
7.63%.
•    
3.33%.
Incorrect
•    
13.10%.
•    
3.13%.
Correct
•    
3.00%.
Explanation
$2.05/$65.55 = 3.13%


A machine with a cost of $160,000 and accumulated depreciation of $100,000 is sold for $52,000 cash. The amount of the loss related to the sale of this machine should be reported in the operating section under the indirect method is:
Multiple Choice
•    
$5,200.
•    
$8,000.
Correct
•    
$76,500.
Incorrect
•    
$24,500.
•    
$16,500.
Explanation
Machine book value = $160,000 − $100,000 = $60,000
Proceeds from sale = $52,000
Loss on sale = $52,000 − $60,000 = $8,000


Jones Corporation reported current assets of $201,000 and current liabilities of $141,000 on its most recent balance sheet. The working capital is:
Multiple Choice
•    
143%.
•    
$60,000.
Correct
•    
($60,000).
Incorrect
•    
43%.
•    
70%.
Explanation
$201,000 − $141,000 = $60,000.


A machine with a cost of $147,000 and accumulated depreciation of $102,000 is sold for $58,500 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
Multiple Choice
•    
$58,500.
Correct
•    
Zero. This is an operating activity.
•    
$13,500.
•    
Zero. This is a financing activity.
Incorrect
•    
$45,000.


Jones Corporation reported current assets of $198,000 and current liabilities of $139,500 on its most recent balance sheet. The current assets consisted of $60,600 Cash; $41,500 Accounts Receivable; and $95,900 of Inventory. The acid-test (quick) ratio is:
Multiple Choice
•    
1.4 : 1.
•    
0.69 : 1.
•    
0.73 : 1.
Correct
•    
1 : 1.
•    
0.52 : 1.
Explanation
Quick Assets = Cash $60,600 + Accounts Receivable $41,500 = $102,100
$102,100/$139,500 = 0.73



Investing activities do not include the:
Multiple Choice
•    
Sale of plant assets.
Incorrect
•    
Loaning of money in exchange for notes receivable.
•    
Purchase of plant assets.
•    
Issuance of common stock.
Correct
•    
Sale of investments.



A machine with a cost of $174,000, accumulated depreciation of $107,000, and current year depreciation expense of $28,000 is sold for $57,600 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
Multiple Choice
•    
$21,400.
•    
$49,400.
•    
$28,000.
•    
$57,600.
Correct
•    
$9,400.


The appropriate section in the statement of cash flows for reporting the cash payment of wages is:
Multiple Choice
•    
Investing activities.
•    
This is not reported on the statement of cash flows.
•    
Schedule of noncash investing or financing activity.
•    
Operating activities.
Correct
•    
Financing activities.


Martinez Corporation reported net sales of $779,000, net income of $128,000, and total assets of $7,774,146. The profit margin is:
Multiple Choice
•    
83.57%.
Incorrect
•    
1.64%.
•    
609.0%.
•    
16.43%.
Correct
•    
6.09%.
Explanation
$128,000/$779,000 = 16.43%.



Which of the following items is reported on the statement of cash flows under financing activities?
Multiple Choice
•    
Payment of a cash dividend.
Correct
•    
Payment for merchandise.
•    
Sale of merchandise.
•    
Purchase of an investment.
•    
Purchase of equipment for cash.




Elli Company reports the following year-end balance sheet data. The company's current ratio equals:
 
Cash    $ 53,000    Current liabilities    $ 88,000
Accounts receivable    68,000    Long-term liabilities    30,000
Inventory    73,000    Common stock    113,000
Equipment    158,000    Retained earnings    121,000
Total assets    $ 352,000    Total liabilities and equity    $ 352,000
Multiple Choice
•    
1.38
•    
0.50
•    
0.34
•    
2.20
Correct
•    
0.66
Explanation
Current ratio equals current assets divided by current liabilities
($53,000 + $68,000 + $73,000) / $88,000 = 2.20


Bagrov Corporation had a net decrease in cash of $11,000 for the current year. Net cash used in investing activities was $53,000 and net cash used in financing activities was $39,000. What amount of cash was provided (used) in operating activities?
Multiple Choice
•    
$81,000 provided.
Correct
•    
$(81,000) used.
•    
$103,000 provided.
•    
$(103,000) used.
•    
$(11,000) used.
Explanation
Operating − $53,000 investing − $39,000 financing = $11,000 cash decrease
Operating − $92,000 = − $11,000
Operating = −$11,000 + $92,000
Operating = $81,000 provided.

A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on sale of plant assets, $10,000. The company's current assets and current liabilities showed the following changes: accounts receivable decreased $10,600; merchandise inventory increased $24,000; prepaid expenses increased $7,400; accounts payable increased $4,600. Calculate the net cash provided or used by operating activities.
Multiple Choice
•    
$135,800.
Correct
•    
$150,600.
•    
$176,600.
•    
$155,400.
Incorrect
•    
$148,600.
Explanation
Net income    $ 126,000
Depreciation expense    36,000
Gain on sale of plant assets    (10,000)
Decrease in accounts receivable    10,600
Increase in merchandise inventory    (24,000)
Increase in prepaid expenses    (7,400)
Increase in accounts payable    4,600
Net cash provided by operating activities    $ 135,800


Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
 
Net income    $ 87,300
Depreciation expense    14,000
Gain on sale of land    6,300
Increase in merchandise inventory    4,050
Increase in accounts payable    8,150
Multiple Choice
•    
$18,100.
Incorrect
•    
$99,100.
Correct
•    
$17,100.
•    
$32,400.
•    
$38,700.
Explanation
Net income    $ 87,300
Depreciation expense    14,000
Gain on sale of land    (6,300)
Increase in merchandise inventory    (4,050)
Increase in accounts payable    8,150
Net cash used by operations    $ 99,100