Week 1 Quiz

Topics: Generally Accepted Accounting Principles, Balance sheet, Financial ratios Pages: 8 (1042 words) Published: August 10, 2013
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Top of Form
Week 1 Quiz| 100.0 Points|
Question 1 of 25| 4.0 Points|
The higher the profit of a firm, the higher the value the firm is assured of receiving in the market. | |
|
| A. True|
B. False|
|
Answer Key: False|
Question 2 of 25| 4.0 Points|
Which of the following is not a primary source of capital to the firm? | | |
| A. assets| |
| |
| B. common stock| |
| |
| C. preferred stock| |
| |
| D. bonds| |
Answer Key: A|
Question 3 of 25| 4.0 Points|
Consider the following information for Ball Corp.Selling and administrative expense $40,000Depreciation expense 70,000Sales 350,000Interest expense 30,000Cost of goods sold 110,000Taxes 17,500What is the Operating Profit for Ball Corp? | | |

| A. $71,450| |
| |
| B. $90,000| |
| |
| C. $130,000| |
| |
| D. None of these| |
Answer Key: C|
Question 4 of 25| 4.0 Points|
Which of the following is not subtracted out in arriving at operating income? | | |
| A. interest expense| |
| |
| B. cost of goods sold| |
| |
| C. depreciation| |
| |
| D. selling and administrative expense| |
Answer Key: A|
Question 5 of 25| 4.0 Points|
Preferred stock is excluded from stockholders equity because it does not have full voting rights. | |
|
| A. True|
B. False|
|
Answer Key: False|
Question 6 of 25| 4.0 Points|
A firm has current assets of $100,000 and total assets of $300,000. The firm's sales are $900,000. The firm's fixed asset turnover is | | |
| A. 4.5x| |
| |
| B. 12.0x| |
| |
| C. 2.4x| |
| |
| D. 5.0x| |
Answer Key: A
Feedback: Total Assets = Current assets + Fixed assets
$300,000 = $100,000 + Fixed assets
Fixed Assets = $200,000

Fixed asset turnover = Sales / Fixed Assets
$900,000 / $200,000 = 4.5|
Question 7 of 25| 4.0 Points|
Candy Company had sales of $320,000 and cost of goods sold of $112,000. What is the gross profit margin (ratio of gross profit to sales)? | | |
| A. 55%| |
| |
| B. 65%| |
| |
| C. 73.3%| |
| |
| D. None of these| |
Answer Key: B|
Question 8 of 25| 4.0 Points|
Debt utilization ratios are used to evaluate the firm's debt position with regard to its asset base and earning power. | |
|
| A. True|
B. False|
|
Answer Key: True|
Question 9 of 25| 4.0 Points|
Asset utilization ratios |
| |
| A. relate balance sheet assets to income statement sales.| | | |
| B. measure how much cash is available for reinvestment into current assets.| | | |
| C. are most important to stockholders.| |
| |
| D. measures the firm's ability to generate a profit on sales.| | Answer Key: A|
Question 10 of 25| 4.0 Points|
Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders. | |
|
| A. True|
B. False|
|
Answer Key: False|
Question 11 of 25| 4.0 Points|
Which two ratios are used in the DuPont system to create return on assets? | | |
| A. Return on assets and asset turnover| |
| |
| B. Profit margin and asset turnover| |
| |
| C. Return on total capital and the profit margin| |
| |
| D. Inventory turnover and return on fixed assets| |
Answer Key: B|
Question 12 of 25| 4.0 Points|
Ratios are used to compare different firms in the same industry. | |
|
| A. True|
B. False|
|
Answer Key: True|
Question 13 of 25| 4.0 Points|
Which of the following would not be included in the balance sheet investment account? | | |
| A....
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