$1.$ With Gary$$s help, Claude has purchase, installed, and set up his new accounting software program. In fact, he has just printed his first income statement and balance sheet, reproduced below.

Basic Industries

Income Statement

for year ending $12/31/20$XX

Sales revenue $356,428$

Less cost of goods sold $105,200$

Gross margin $251,228$

Less operating expenses

Marketing $30,000$

Sales and administrative $30,000$

Depreciation $10,000$

Total operating expenses $70,000$

Operating income $181,228$

Less interest expense $6,000$

Income before taxes $175,228$

Income tax expense $40,000$

Net income $135,228$

Basic Industries

Balance Sheet

for $12/31/20$XX

Assets

Current Assets

Cash $$52,400\mathrm{.}00$

Accounts receivable $ $11,300\mathrm{.}00$

Inventory $ $15,600\mathrm{.}00$

Total current assets $ $79,300\mathrm{.}00$

Fixed assets

Property, plant and equipment $ $80,000\mathrm{.}00$

Accumulated depreciation $ $(10,000\mathrm{.}00)$

Net fixed assets $ $70,000\mathrm{.}00$

Total assets $ $149,300\mathrm{.}00$

Liabilities and Owner's Equity

Current liabilities

Accounts payable $ $5,300\mathrm{.}00$

Note payable to bank $ $2,700\mathrm{.}00$

Deposits from customers $ $6,000\mathrm{.}00$

Total current liabilities $ $14,000\mathrm{.}00$

Long term mortgage $ $50,000\mathrm{.}00$

Total liabilities $ $64,000\mathrm{.}00$

Owner's Equity

Retained earnings $ $85,300\mathrm{.}00$

Total Owners' Equity $ $85,300\mathrm{.}00$

Total liability and equities $ $149,300\mathrm{.}00$

To see whether he really understands what$$s going on$,$ Gary asked Claude the following questions. Claude answered most of them correctly, can you?

a$.$ What is meant by the term revenue? How much revenue did the business produce?

b$.$ What costs did the business have for financing?

c$.$ What can you turn into cash in $1$ year?

d$.$ What did it cost to make your product?

e$.$ What is the value of everything the company owns?

f$.$ How much profit did the company make?

g$.$ How much is the business worth to Claude?

h$.$ How much does the business need for its continuing operation?

i$.$ What debts will take longer than a year to pay?

j$.$ Can this business be considered liquid?