1. In a common-size income statement, selling expenses are 55%. This means that they're 55%
A. net profit.
B. net sales.
C. gross profit.
D. net income
2. Isaiah Corporation's Accounts Receivable increased by $35,000, and its Accounts Payable
decreased by $18,000. What is the net effect on cash from operations under the indirect method?
3. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared
a 5% stock dividend. The current market price of the common stock is $7.50/share. The amount
that will be credited to common stock on the date of declaration is
4. Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has
declared a 5% stock dividend. The current market price of the common stock is $7.50/share.
The amount that will be debited to retained earnings on the date of declaration is
5. Rick Company has declared a $40,000 cash dividend to shareholders. The company has
5,000 shares of $20 par, 6% preferred stock, and 10,000 shares of $15 par common stock. The
preferred stock is noncumulative. How much will be distributed to the preferred and common
stockholders on the date of payment?
A. $40,000 preferred; $0 common
B. $0 preferred; $40,000 common
C. $6,000 preferred; $34,000 common
D. $34,000 preferred; $6,000 common
6. Brandon Company had extraordinary losses of $150,000. If its corporate tax rate is 30%, at
which amount will the losses be shown on the income statement?
D. Not enough information is given to answer the question
7. Casey Company reported net income of $35,000; depreciation expenses of $20,000; an
increase in accounts payable of $2,000; and an increase in current notes receivable of $3,000.
Net cash flows from operating activities under the indirect method is
8. The Isaiah Corporation Stockholders' Equity section includes the following information:
Preferred Stock $22,000
Paid-in Capital in Excess of Par—Preferred 2,980
Common Stock 48,000
Paid-in Capital in Excess of Par—Common 3,400
Retained Earnings 7,350
Total par value of the preferred and common stock is
9. The records of Ashley Boutique showed a net loss of $30,000; depreciation expense of
$25,000; and an increase in supplies on hand of $5,000. The amount of net cash flow from
operating activities using the indirect method is
10. Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73
days, and an accounts receivable turnover of 82 days. Ryan's cash conversion cycle is _______
11. Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77
days, and an accounts payable turnover of 40 days. Casey's cash conversion cycle is _______
12. Casey Company has 5,000 shares of treasury cost that it purchased for $13 per share. It
later resold 2,000 of those shares for $17 per share. The amount to be credited to Paid-in
Capital—Treasury Stock is
13. Operating expenses—other than depreciation—for the year were $335,000. Prepaid
expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash
flow statement using the direct method would be
14. If Rick's net sales increased from $40,000 to $80,000 and its operating expenses increased
from $30,000 to $50,000, then vertical analysis based on net sales would show which of the
following for operating expenses for the two periods (to the nearest tenth of a percent)?
A. 160.0% and
B. 133.3% and
C. 75.0% and
D. 62.5% and
15. What are the rate of return on stockholders' equity and the rate of return on common
stockholders' equity (rounded to the nearest one-tenth of a percent) given the following
Net Income $350,000
Preferred Dividends 20,000
Common Stock 48,000
Common Stockholders’ Equity 1/1/2011 4,400,000
Total Stockholders’ Equity 1/1/2011 5,300,000
Total Stockholders’ Equity 12/31/2011 5,500,000
A. Return on Stockholders' Equity: 6.5 %; Return on Common Stockholders' Equity: 7.6%
B. Return on Stockholders' Equity: 8.1 %; Return on Common Stockholders' Equity: 9.2%
C. Return on Stockholders' Equity: 5.6 %; Return on Common Stockholders' Equity: 6.7%
D. Return on Stockholders' Equity: 7.8 %; Return on Common Stockholders' Equity: 8.9%
16. The Amanda Corporation Stockholders' Equity section includes the following information:
Preferred Stock $12,000
Paid-in Capital in Excess of Par— Preferred 2,700
Common Stock 15,000
Paid-in Capital in Excess of Par— Common 4,100
Retained Earnings 8,200
What was the total selling price of the preferred stock?
17. A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term
investments; and $100,000 in merchandise inventory. The company also has $60,000 in current
liabilities. The company's quick ratio is