Shaffer Company presents the following data for 2012. $\begin{array}{lr} \text { Net Sales, } 2012 & \$ 3,007,124 \\ \text { Net Sales, } 2011 & 93,247 \\ \text { Cost of Goods Sold, } 2012 & 2,000,326 \\ \text { Cost of Goods Sold, } 2011 & 1,000,120 \\ \text { Inventory, beginning of } 2012 & 341,165 \\ \text { Inventory, end of } 2012 & 376,526 \end{array}$ The merchandise inventory turnover for 2012 is:

A) 5.6. B) 15.6. C) 7.5. D) 7.7. E) 5.2. A) 5.6. B) 15.6. C) 7.5. D) 7.7. E) 5.2.

Abbott Company presents the following data for 2012. $\begin{array}{llcc} \text { Receivables, end of year, less allowances for losses and discounts of} & \\ \text { \( \$ 115,960 $ } &\$2,370,100\\ \text { Receivables, beginning of year, less allowance for losses and discounts of } &\\ \text { $ \$ 102,330 $ } &2,443,140\\ \text { \text { Net Sales } } &24,417,090\\ \end{array}\) The accounts receivable turnover in times per year is:

A) 6.9. B) 7.9. C) 10.7. D) 9.7. E) 11.0. A) 6.9. B) 7.9. C) 10.7. D) 9.7. E) 11.0.

Exam 6: Liquidity of Short-Term Assets;related Debt-Paying Ability

Which of the following ratios does not represent some form of comparison between accounts in current assets and accounts in current liabilities?

(Multiple Choice)

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Question 21

The days' sales in receivables ratio gives an indication of the length of time that the receivables have been outstanding at the end of the year.This indication can be misleading if sales are seasonal and/or the company uses a natural business year.

(True/False)

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Question 22

Which of the following is not an acceptable inventory costing method?

(Multiple Choice)

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Question 23

Even an entity on a very profitable course will find itself bankrupt if it fails to meets its obligations to short-term creditors.

(True/False)

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Question 24

Compensating balances reduce the amount of cash available to the borrower to meet obligations and they decrease the effective interest rate for the borrower.

(True/False)

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Question 25

If days' sales in receivables are materially longer than the credit terms,this indicates a collection problem.

(True/False)

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Question 26

The ability of an entity to maintain its short-term,debt-paying ability is important to all users of financial statements.

(True/False)

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Question 27

Liquidity problems with receivables and/or inventory means that the current ratio needs to be much higher than when there are no such liquidity problems.

(True/False)

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Question 28

Shaffer Company presents the following data for 2012. Net Sales, 2012 \ 3,007,124 Net Sales, 2011 93,247 Cost of Goods Sold, 2012 2,000,326 Cost of Goods Sold, 2011 1,000,120 Inventory, beginning of 2012 341,165 Inventory, end of 2012 376,526 The merchandise inventory turnover for 2012 is:

(Multiple Choice)

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Question 29

Prepayments should be reported in the:

(Multiple Choice)

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Question 30

A low sales to working capital ratio tentatively indicates an unprofitable use of working capital.

(True/False)

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Question 31

The LIFO inventory costing method results in the acid-test ratio being overstated.

(True/False)

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Question 32

Which of the following would not be a reasonable conclusion when comparing LIFO-FIFO under an inflationary condition?

(Multiple Choice)

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Question 33

The LIFO inventory costing method usually results in working capital being overstated.

(True/False)

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Question 34

Under the allowance method,the charge off of a specific account receivable does not influence the income statement nor the net receivable on the balance sheet at the time of the charge off.

(True/False)

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Question 35

Which of the following does not bear on the quality of receivables?

(Multiple Choice)

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Question 36

By reporting marketable equity securities under current assets,management picks up a liquidity advantage.

(True/False)

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Question 37

Customer concentration can be an important consideration in the quality of receivables.

(True/False)

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Question 38

Under inflationary conditions,FIFO generally results in a lower profit than does LIFO,and this difference can be substantial.

(True/False)

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Question 39

Abbott Company presents the following data for 2012. Receivables, end of year, less allowances for losses and discounts of \ 115,960 \2 ,370,100 Receivables, beginning of year, less allowance for losses and discounts of \ 102,330 2,443,140 Net Sales 24,417,090 The accounts receivable turnover in times per year is:

(Multiple Choice)

4.9/5

(88)

Question 40

Showing 21 - 40 of 62

Which of the following ratios does not represent some form of comparison between accounts in current assets and accounts in current liabilities?

The days' sales in receivables ratio gives an indication of the length of time that the receivables have been outstanding at the end of the year.This indication can be misleading if sales are seasonal and/or the company uses a natural business year.

Which of the following is not an acceptable inventory costing method?

Even an entity on a very profitable course will find itself bankrupt if it fails to meets its obligations to short-term creditors.

Compensating balances reduce the amount of cash available to the borrower to meet obligations and they decrease the effective interest rate for the borrower.

If days' sales in receivables are materially longer than the credit terms,this indicates a collection problem.

The ability of an entity to maintain its short-term,debt-paying ability is important to all users of financial statements.

Liquidity problems with receivables and/or inventory means that the current ratio needs to be much higher than when there are no such liquidity problems.

Shaffer Company presents the following data for 2012. Net Sales, 2012 \ 3,007,124 Net Sales, 2011 93,247 Cost of Goods Sold, 2012 2,000,326 Cost of Goods Sold, 2011 1,000,120 Inventory, beginning of 2012 341,165 Inventory, end of 2012 376,526 The merchandise inventory turnover for 2012 is:

Prepayments should be reported in the:

A low sales to working capital ratio tentatively indicates an unprofitable use of working capital.

The LIFO inventory costing method results in the acid-test ratio being overstated.

Which of the following would not be a reasonable conclusion when comparing LIFO-FIFO under an inflationary condition?

The LIFO inventory costing method usually results in working capital being overstated.

Under the allowance method,the charge off of a specific account receivable does not influence the income statement nor the net receivable on the balance sheet at the time of the charge off.

Which of the following does not bear on the quality of receivables?

By reporting marketable equity securities under current assets,management picks up a liquidity advantage.

Customer concentration can be an important consideration in the quality of receivables.

Under inflationary conditions,FIFO generally results in a lower profit than does LIFO,and this difference can be substantial.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

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