Question 1

A balance sheet can be expressed as:

Accepted Answer

A)  profit = sales - reductions. 
B)  net worth = operating profit - operating expenses. 
C)  net worth = assets - expenses. 
D)  assets = liabilities + net worth. 
E)  assets = sales - expenses. 
A)  profit = sales - reductions. 
B)  net worth = operating profit - operating expenses. 
C)  net worth = assets - expenses. 
D)  assets = liabilities + net worth. 
E)  assets = sales - expenses.

Question 2

_____ are those expenses that a retailer incurs in running the business other than the cost of the merchandise.

Accepted Answer

A)  Total assets 
B)  Return expenses 
C)  Current assets 
D)  Operating expenses 
E)  Prepaid expenses 
A)  Total assets 
B)  Return expenses 
C)  Current assets 
D)  Operating expenses 
E)  Prepaid expenses

Question 3

_____ are the dollar amount by which a physical inventory value is smaller than the value that the book inventory records indicate.

Accepted Answer

A)  Inventory reductions 
B)  Discounts to cost 
C)  Cost allocations 
D)  Shortages 
E)  Overages 
A)  Inventory reductions 
B)  Discounts to cost 
C)  Cost allocations 
D)  Shortages 
E)  Overages

Question 4

A stock/sales ratio of 2.5:1 suggests that a retailer should have $2.50 in inventory (at retail price)for every $1 of forecasted sales.

Accepted Answer

A) True 
 B)False

Question 5

A retailer purchases a building next door for possible expansion; in the meantime,the retailer rents the store to others.The rent the retailer collects would be considered other income and expenses.

Accepted Answer

A) True 
 B)False

Question 6

When comparing the financial statements of different retailers,it is important to know how each retailer treats their expenses.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an advantage of using the retail method of inventory valuation versus the cost method?

Accepted Answer

A)  Physical inventories using retail prices are subject to more error 
B)  Inventories need to be taken in order to prepare the accounting statements 
C)  Physical inventories take long periods of time to complete 
D)  It provides an automatic, conservative valuation of ending inventory 
E)  Heavy reliance on bookkeeping activities 
A)  Physical inventories using retail prices are subject to more error 
B)  Inventories need to be taken in order to prepare the accounting statements 
C)  Physical inventories take long periods of time to complete 
D)  It provides an automatic, conservative valuation of ending inventory 
E)  Heavy reliance on bookkeeping activities

Question 8

Sabriya's Hats has a gross margin of $100,000 and operating expenses of $75,000.Operating profit equals $25,000.

Accepted Answer

A) True 
 B)False

Question 9

Your boss indicates that the store's stock/sales ratio is 5:1.This means that _____ should be invested in inventory for every $1 of forecasted sales.

Accepted Answer

A)  $.20 (at retail price) 
B)  $5 (at cost price) 
C)  $5 (at retail price) 
D)  $.20 (at cost price) 
E)  $50 (at cost price) 
A)  $.20 (at retail price) 
B)  $5 (at cost price) 
C)  $5 (at retail price) 
D)  $.20 (at cost price) 
E)  $50 (at cost price)

Question 10

An excess of physical inventory over book inventory is usually caused by:

Accepted Answer

A)  customer shoplifting. 
B)  markdowns. 
C)  bookkeeping errors. 
D)  too high of markups. 
E)  employee discounts. 
A)  customer shoplifting. 
B)  markdowns. 
C)  bookkeeping errors. 
D)  too high of markups. 
E)  employee discounts.

Question 11

Cost of goods sold is the cost of merchandise that has been sold during the period.

Accepted Answer

A) True 
 B)False

Question 12

If the planned sales for the month are $70,000,the merchandise budget calls for a planned stock-to-sales ratio of 2.3,and the financial leverage is 1.1,then the planned BOM inventory should be:

Accepted Answer

A)  $77,000 
B)  $84,000 
C)  $161,000 
D)  $177,100 
E)  $194,100 
A)  $77,000 
B)  $84,000 
C)  $161,000 
D)  $177,100 
E)  $194,100

Question 13

Which of the following items would NOT be included on the balance sheet but would BE on the income statement?

Accepted Answer

A)  Noncurrent assets 
B)  Cost of goods sold 
C)  Current liabilities 
D)  Net worth 
E)  Accounts receivable 
A)  Noncurrent assets 
B)  Cost of goods sold 
C)  Current liabilities 
D)  Net worth 
E)  Accounts receivable

Question 14

A retailer's beginning-of-the-month (BOM)inventory for one month is always equal to the end-of-the month (EOM)inventory for the previous month.

Accepted Answer

A) True 
 B)False

Question 15

The LIFO method cushions the impact of rising or falling prices by matching current costs against current revenues.

Accepted Answer

A) True 
 B)False

Question 16

Suppose last year's sales were $100,000; inflation is 3 percent and you expect your market share to increase by 6 percent.What are your projected sales for this year?

Accepted Answer

A)  $103,000 
B)  $106,000 
C)  $109,000 
D)  $109,180 
E)  $118,000 
A)  $103,000 
B)  $106,000 
C)  $109,000 
D)  $109,180 
E)  $118,000

Question 17

Which of the following figures is NOT found on a six-month merchandise budget?

Accepted Answer

A)  Planned sales percentage 
B)  Planned retail purchases 
C)  Inventory depreciation 
D)  Planned gross margin dollars 
E)  Planned EOM stock 
A)  Planned sales percentage 
B)  Planned retail purchases 
C)  Inventory depreciation 
D)  Planned gross margin dollars 
E)  Planned EOM stock

Question 18

Which of the following is an example of a cash inflow?

Accepted Answer

A)  Paying for merchandise 
B)  Rent expense 
C)  Utilities expense 
D)  Paying dividends 
E)  Sale of fixed assets 
A)  Paying for merchandise 
B)  Rent expense 
C)  Utilities expense 
D)  Paying dividends 
E)  Sale of fixed assets

Question 19

_____ are amounts owed to vendors for goods and services.

Accepted Answer

A)  Notes payable 
B)  Payroll payable 
C)  Mortgage payable 
D)  Accounts payable 
E)  Taxes payable 
A)  Notes payable 
B)  Payroll payable 
C)  Mortgage payable 
D)  Accounts payable 
E)  Taxes payable

Question 20

A advantage of the cost method of inventory valuation is that it is difficult to cost out each sale.

Accepted Answer

A) True 
 B)False

A balance sheet can be expressed as:

_____ are those expenses that a retailer incurs in running the business other than the cost of the merchandise.

_____ are the dollar amount by which a physical inventory value is smaller than the value that the book inventory records indicate.

A stock/sales ratio of 2.5:1 suggests that a retailer should have $2.50 in inventory (at retail price)for every $1 of forecasted sales.

A retailer purchases a building next door for possible expansion; in the meantime,the retailer rents the store to others.The rent the retailer collects would be considered other income and expenses.

When comparing the financial statements of different retailers,it is important to know how each retailer treats their expenses.

Which of the following is an advantage of using the retail method of inventory valuation versus the cost method?

Sabriya's Hats has a gross margin of $100,000 and operating expenses of $75,000.Operating profit equals $25,000.

Your boss indicates that the store's stock/sales ratio is 5:1.This means that _____ should be invested in inventory for every $1 of forecasted sales.

An excess of physical inventory over book inventory is usually caused by:

Cost of goods sold is the cost of merchandise that has been sold during the period.

If the planned sales for the month are $70,000,the merchandise budget calls for a planned stock-to-sales ratio of 2.3,and the financial leverage is 1.1,then the planned BOM inventory should be:

Which of the following items would NOT be included on the balance sheet but would BE on the income statement?

A retailer's beginning-of-the-month (BOM)inventory for one month is always equal to the end-of-the month (EOM)inventory for the previous month.

The LIFO method cushions the impact of rising or falling prices by matching current costs against current revenues.

Suppose last year's sales were $100,000; inflation is 3 percent and you expect your market share to increase by 6 percent.What are your projected sales for this year?

Which of the following figures is NOT found on a six-month merchandise budget?

Which of the following is an example of a cash inflow?

_____ are amounts owed to vendors for goods and services.

A advantage of the cost method of inventory valuation is that it is difficult to cost out each sale.

Perspectives on Retailing

Retail Strategic Planning and Operations Management

Retail Customers

Evaluating the Competition in Retailing

Managing the Supply Chain

Legal and Ethical Behavior

Market Selection and Retail Location Analysis

Merchandise Buying and Handling

Merchandise Pricing

Advertising and Promotion

Customer Service and Retail Selling

Store Layout and Design

Managing People

Filters

Exam 8: Managing a Retailer’s Finances

A balance sheet can be expressed as:

_____ are those expenses that a retailer incurs in running the business other than the cost of the merchandise.

_____ are the dollar amount by which a physical inventory value is smaller than the value that the book inventory records indicate.

A stock/sales ratio of 2.5:1 suggests that a retailer should have $2.50 in inventory (at retail price)for every $1 of forecasted sales.

A retailer purchases a building next door for possible expansion; in the meantime,the retailer rents the store to others.The rent the retailer collects would be considered other income and expenses.

When comparing the financial statements of different retailers,it is important to know how each retailer treats their expenses.

Which of the following is an advantage of using the retail method of inventory valuation versus the cost method?

Sabriya's Hats has a gross margin of $100,000 and operating expenses of $75,000.Operating profit equals $25,000.

Your boss indicates that the store's stock/sales ratio is 5:1.This means that _____ should be invested in inventory for every $1 of forecasted sales.

An excess of physical inventory over book inventory is usually caused by:

Cost of goods sold is the cost of merchandise that has been sold during the period.

If the planned sales for the month are $70,000,the merchandise budget calls for a planned stock-to-sales ratio of 2.3,and the financial leverage is 1.1,then the planned BOM inventory should be:

Which of the following items would NOT be included on the balance sheet but would BE on the income statement?

A retailer's beginning-of-the-month (BOM)inventory for one month is always equal to the end-of-the month (EOM)inventory for the previous month.

The LIFO method cushions the impact of rising or falling prices by matching current costs against current revenues.

Suppose last year's sales were $100,000; inflation is 3 percent and you expect your market share to increase by 6 percent.What are your projected sales for this year?

Which of the following figures is NOT found on a six-month merchandise budget?

Which of the following is an example of a cash inflow?

_____ are amounts owed to vendors for goods and services.

A advantage of the cost method of inventory valuation is that it is difficult to cost out each sale.

Perspectives on Retailing

Retail Strategic Planning and Operations Management

Retail Customers

Evaluating the Competition in Retailing

Managing the Supply Chain

Legal and Ethical Behavior

Market Selection and Retail Location Analysis

Merchandise Buying and Handling

Merchandise Pricing

Advertising and Promotion

Customer Service and Retail Selling

Store Layout and Design

Managing People

Filters