1- Tom&Dick made $25,000 operating income in year 2006. After paying interest and taxes, their net income was $5,000. The total assets employed were $75,000. Equity at the end of the year was $20,000. Tom&Dicks return on assets ratio was

a) 125.00%

b) 33.33%

c) 25.00%

d) 6.67%

e) none of the above

2- The income statement reports the

a) change in wealth over a period of time

b) assets and liabilities of the organization

c) cash inflows, outflows and balances over a year

d) owners investment in the organization

e) none of the above

3- Revenues, less cost of goods sold and expenses (but not interest expense or tax expense) is called

a) net income/net profit

b) operating income/operating profit

c) earnings for shareholders

d) asset turnover

e) none of the above

4- Digman Co. had retained earnings of $200,000 on January 1st. It made a net income of $300,000 in the year. The maximum amount of dividend they would be allowed to pay would be

a) $100,000

b) $400,000

c) $500,000

d) $700,000

e) none of the above

5- Mississauga Mining Co. made a net income of $25 million in 2007, after the deduction of amortization expense of $8 million, interest of $5 million and taxes of $10 million. During 2007, it issued new shares for $15 million and used the proceeds to repay loans of $10 million; the remainder went into the banks current account. The retained earnings brought forward at the start of 2007 were $60 million. There were 125,000 ordinary shares in issue at the end of 2007. The earnings per share were

a) $520

b) $480

c) $400

d) $200

e) none of the above

6- Blackfly Ltd. had an outstanding current liability for unpaid labour at the start of year 2007 of $10,000. During the year the company paid $300,000 for direct labour. At the end of the year the company still owed a $2,000 performance bonus to one employee. The amount the company would report as labour expense for 2007 is

a) $312,000

b) $302,000

c) $300,000

d) $292,000

e) none of the above

7- Accounts receivable should be valued in the balance sheet at

a) the expected collectible amount

b) the face value of the invoiced goods

c) the cost of the goods sold

d) the cost of the goods sold, plus a standard markup percentage

e) none of the above

8- An asset that the company owns, but that has no physical form, is

a) a waste of money

b) an intangible asset

c) a goodwill

d) not an asset; it is a liability

e) none of the above

9- Marissas Modes is a retail outlet for ladies fashion goods. At the year-end inventory on 31/12/2007, Marissas Modes found that it had goods on hand that had cost $50,000, which it expects to sell in 2008 for approximately $125,000 in total. The inventory in the balance sheet as at 31/12/2007 would be valued at

a) $125,000

b) $ 62,500

c) $ 50,000

d) $ 25,000

e) none of the above

10- Pearls Pizza has cash of $5,000, inventory of $100,000, and accounts receivable of $45,000. Current liabilities are $50,000, and long-term liabilities are $25,000. Annual sales revenue is $750,000, and operating profit is $50,000. Pearls Pizzas inventory turnover ratio is *

a) 7.5 X

b) 5.0 X

c) 2.5X

c) 2.0X

e) none of the above

11- Profilo Co. has the following assets and liabilities: Assets: cash, $100; accounts receivable, $150; Inventory, $240; land, $200; plant, net of accumulated amortization, $300.Liabilities: short-term bank loan, $60; accounts payable, $160; long-term mortgage loan, $160. Profilo Co.s long-term assets total was *

a) $990

b) $880

c) $500

d) $490

e) none of the above