True/False
Indicate whether the statement is true or
false.
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1.
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If the acceptable component percentage for cost of merchandise sold is "Not
more than 60%" and the actual component percentage is 58%, the company achieved an acceptable
component percentage.
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2.
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Corporations use the same tax form as individuals to report their income to the
Internal Revenue Service.
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3.
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The statement of stockholders' equity is used to analyze equity per share
and to determine the price earnings ratio.
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4.
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The price at which a share of stock may be sold on the stock market is called
the price-earnings ratio.
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5.
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The two sections of the statement of stockholders' equity are Paid-in
Capital and Retained Earnings.
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6.
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Recognizing a portion of an expense for intangible assets in each of several
years is known as depreciation.
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7.
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Balance sheet information is used to analyze component percentages and earnings
per share.
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8.
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The relationship between net income and average total assets is called the
accounts receivable turnover ratio.
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9.
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The accounts receivable turnover ratio equals net sales on account divided by
the average book value of inventory.
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10.
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The total selling expenses component percentage is calculated by dividing total
selling expenses by net sales.
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Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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The following information is taken from the financial statements of
EarthWorking, Inc.:
Net income$60,000.00
Dividend rate on preferred stock10%
Total value
of preferred stock $180,000.00
Number of shares of preferred stock outstanding 1,800
Total
value of common stock $368,400.00
Number of shares of common stock outstanding10,000
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1.
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Refer to the EarthWorking Inc. Scenario. The share of net income that is
assigned to preferred stock is ____.
A. | $33.33 | C. | $18,000.00 | B. | $6,000.00 | D. | $60,000.00 |
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2.
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Refer to the EarthWorking Inc. Scenario. The share of net income that is
assigned to common stock is ____.
A. | $18,000.00 | C. | $50,000.00 | B. | $42,000.00 | D. | $60,000.00 |
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3.
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Gross profit on operations appears on which financial statement?
A. | balance sheet | C. | retained earnings statement | B. | income
statement | D. | statement of
stockholders' equity |
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4.
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The second closing entry is recorded for income statement accounts with debit
balances. These accounts include ____.
A. | cost, expense, and dividend accounts | B. | cost, contra revenue, and expense
accounts | C. | revenue and expense accounts | D. | revenue and contra cost
accounts |
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5.
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Nuggets, Inc., has average total assets of $600,000.00, and its rate earned on
the average total assets is 12%. What is the company's net income after federal income
tax?
A. | $6,000.00 | C. | $72,000.00 | B. | $36,000.00 | D. | cannot be
determined |
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6.
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Total paid-in capital is found on which financial statement?
A. | balance sheet | B. | income statement | C. | retained earnings
statement | D. | statement of stockholders' equity |
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7.
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The total value of capital stock issued is shown on which financial
statement?
A. | balance sheet | C. | retained earnings statement | B. | income
statement | D. | statement of
stockholders' equity |
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The following information is taken from the financial statements of CinderBlock,
Inc. | Net income | $50,000.00 | | Dividend
rate on preferred stock | 12% | | Total value of
preferred stock | $200,000.00 | | Number
of shares of preferred stock outstanding | 2,000 | | Total value
of common stock | $752,000.00 | | Number
of shares of common stock outstanding | 100,000 | | |
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8.
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Refer to the CinderBlock, Inc. Scenario. The share of net income that is
assigned to preferred stock is ____.
A. | $2,000.00 | C. | $26,000.00 | B. | $24,000.00 | D. | $50,000.00 |
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9.
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Refer to the CinderBlock, Inc. Scenario. The earnings per share on common stock
is ____.
A. | $0.26 | C. | $2.60 | B. | $0.24 | D. | $6.00 |
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10.
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Refer to the CinderBlock, Inc. Scenario. The equity per share on preferred stock
is ____.
A. | $7.52 | C. | $60.00 | B. | $15.04 | D. | $100.00 |
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11.
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Refer to the CinderBlock, Inc. Scenario. The equity per share on common stock is
____.
A. | $7.52 | C. | $60.00 | B. | $15.04 | D. | $100.00 |
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12.
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The amount of stockholders' equity belonging to a single share of stock is
the ____.
A. | earnings per share | C. | market value per share | B. | equity per
share | D. | price-earnings
ratio |
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13.
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The price at which a share of stock may be sold on the stock market is the
____.
A. | earnings per share | C. | market value | B. | equity per share | D. | price-earnings
ratio |
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14.
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The relationship between net income and average stockholders' equity is the
____.
A. | rate earned on average stockholders' equity | B. | rate earned on
average net income | C. | rate earned on average total
assets | D. | price-earnings ratio |
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15.
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Organization costs are classified as ____.
A. | current assets | C. | intangible assets | B. | current liabilities | D. | intangible
liabilities |
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