18. Investors and creditors look at the balance sheet to see whether the company:

A. can maintain its existing product line.

B. has had a positive cash flows from operating activities.

C. is profitable.

D. owns enough assets to pay all that it owes to creditors.

19. A company has $72,500 of inventory at the beginning of the year and $65,500 at the end of the year. Sales revenue is $986,400, cost of goods sold is $572,700, and net income is $124,200 for the year. The inventory turnover ratio is closest to:

A. 14.3.

B. 6.0.

C. 8.3.

D. 1.8.

20. Which of the following statements is not correct?

A. An "A" rating is the best credit rating a company can earn.

B. Standard and Poor's, Fitch, and Moody's are the names of credit rating agencies.

C. A credit rating agency indicates a company's ability to pay its debts on a timely basis.

D. Credit ratings below BB are called "junk."

24. Assume that the direct method is used to prepare the operating activities section of the statement of cash flows. Which of the following statements is correct concerning a decrease in Accounts Payable?

A. Since the cash payments were more than credit purchases, the decrease must be subtracted from purchases to cash payments to suppliers.

B. Since the cash payments were less than credit purchases, the decrease must be added to purchases to calculate cash payments to suppliers.

C. Since the cash payments were less than credit purchases, the decrease must be subtracted from purchases to calculate cash payments to suppliers.

D. Since the cash payments were more than the credit purchases, the decrease must be added to purchases to calculate cash payments to suppliers.

25. If the company's accountant mistakenly recorded a $70 deposit as $109, the error would be shown on the bank reconciliation as a(n):

A. $39 addition to the book balance.

B. $39 deduction from the book balance.

C. $109 addition to the book balance.

D. $109 deduction from the book balance.