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    Largest expenses for retailers explained

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    Question 12
    The largest expense on a retailer's income statement is typically:

    Salaries and wages.

    Cost of goods sold.

    Income tax expense.

    Depreciation expense.

    Question 13
    Net accounts receivable (net realizable value) is:

    A. gross accounts receivable minus cost of goods sold.

    B. also known as net pretax income.

    C. gross accounts receivable minus allowance

    Question 15
    The factor which determines whether or not goods should be included in a physical count of inventory is:

    A. physical possession.

    B. legal title.

    C. management's judgment.

    D. whether or not the purchase price has been paid.

    Question 16 1 points Save

    Today Thomas deposited $100,000 in a three-year, 12% CD that compounds quarterly. What is the maturity value of the CD?

    A. $109,270

    B. $119,410

    C. $142,576

    D. $309,090

    Question 17
    Frankenstein Enterprises received two notes from customers for sales that Frankenstein made to them in 2011. The notes included:
    Note A: Dated 5/31/11, principal of $120,000 and interest due 3/31/12.
    Note B: Dated 7/1/11, principal of $200,000 and interest at 8% annually, due on 4/1/12.
    Frankenstein had accrued interest receivable from these notes of $14,400 in its 12/31/11 balance sheet. What is the annual interest rate on Note A?

    A. 9.14%

    B. 8%

    C. 9.74%

    D. 9.44%

    Question 18
    Inventories affect:

    only the balance sheet.

    only the income statement.

    both the balance sheet and the income statement.

    neither the balance sheet nor the income statement.

    Question 19
    Journal entries are required by the depositor for all of the following except:

    A. collection of a note receivable.

    B. bank errors.

    C. bank service charges.

    D. an NSF check.

    Question 20
    In a period of rising prices, the inventory method which tends to give the highest reported net income is:

    A. base stock.

    B. first-in, first-out.

    C. last-in, first-out.

    D. weighted-average.

    Question 21
    ATC reported the following financial data for 2011 and 2010:
    2011 2010
    Sales $305,000 $284,000
    Sales returns and allowances 9,000 6,000
    Net Sales 296,000 278,000
    Cost of Goods Sold:
    Inventory, 1/1 43,000 36,000
    Net purchases 152,000 146,000
    Goods available for sale 195,000 182,000
    Inventory, 12/31 57,000 43,000
    Cost of Goods Sold 138,000 139,000
    Gross Profit $158,000 $139,000
    The average days inventory for ATC (rounded) for 2011 is:

    A. less than 100 days.

    B. 114 days.

    C. 132 days.

    D. 151 days.

    Question 22
    Goods in transit which are shipped f.o.b. destination should be:

    A. included in the inventory of the seller.

    B. included in the inventory of the buyer.

    C. included in the inventory of the shipping company.

    D. none of these.

    Question 23
    Which of the following is recorded by a credit to Accounts receivable?

    A. Sale of inventory on account.

    B. Estimating the annual allowance for doubtful accounts.

    C. Estimating annual sales returns.

    D. Write-offs of bad debts.

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    Solution Preview

    Q12: The largest expenses are usually the cost of what you sell for retailers. Select COGS.

    Q13: Net Realizable AR = Gross AR less the allowance for doubtful accounts = C

    Q14: missing

    Q15: Inventory that should be included in your count are all the items that you own (legal title), even if they are at another location, like consignment items. = B

    Q16: 100,000 x factor 3% 12 periods ...

    Solution Summary

    A sentence or two explains the choice.