1.Which of the following defines gross profit?

A) Net sales revenue less sales discounts

B) Net sales revenue less cost of goods sold

C) Sales revenue less sales returns and allowances

D) Sales revenue less operating expenses

2. FOB shipping means that the:

A) Seller normally pays the transportation cost

B) Buyer normally pays the transportation costs

C) Buyer and seller split the costs

D) The product will be shipped immediately

3. Jones, Inc. borrowed $5,000 for 3 months at an APR of 10%. The amount of interest paid on this loan was:

A) $240

B) $120

C) $125

D) $500

4. If current assets are $250,000 and current liabilities are $125,000, what is working capital?

A) $375,000

B) $125,000

C) $150,000

D) $250,000

5. When calculating total asset turnover, one should divide ___________ by average total sales.

A) Net Income

B) Liabilities

C) Sales

D) Assets

6. Global Co. Inc. has a current market price per share of $35.00 and earnings per share of $2.20. What is the price/earnings ratio?

A) 77

B) 15.9

C) $35

D) 12

7. Cidco has a current market price of $54.00 per share and an annual dividend per share of $2.60. What is the dividend yield?

A) 2%

B) 20.7%

C) 4.8%

D) 10%

8. Mike sells Melissa his grand piano and wishes to avoid the cost and liability of shipping the piano. He should send the piano:

A) FOB Shipping Point

B) FOB Destination point

C) FOB Liability

D) FOB Cost

9. Extraordinary items include all of the following except:

A) Earthquake losses

B) Hurricane losses

C) Litigation settlements

D) Standard accounts receivable write-off

10. Which of the following is not one of the three broad categories presented in the statement of cash flows?

A) Financing Activities

B) Operating Activities

C) Income Activities

D) Investing Activities

11. Which of the following is NOT a stockholders equity account?

A) Common Stock

B) Preferred Stock

C) Retained Earnings

D) Accumulated Depreciation

12. Retained earnings represents

A) cash that is available for dividends

B) total net income

C) cumulative net income of the firm since its beginning that has not been distributed to stockholders in the form of dividends

D) net income plus gains on treasury stock

13. The main reason for a company having a common stock split it to: increase the total cash dividends paid to stockholders capitalize retained earnings decrease total stockholders equity decrease market value per share

14. A company should recognize revenue when: an order is received from a customer cash is received an unearned revenue account is credited a product is delivered or a service is provided

15. Which of the following accounts are not ever included in the calculation for gross profit? revenues cost of goods sold net sales general and selling expenses

16. The most powerful corporate governance legislation to date has been:

A) The Sarbanes-Oxley Act of 2002

B) the creation of the AICPA

C) Corporate Ethics Code of 2007

D) the regulation of inventory management practices by the SEC

17.Which of the following is not a category of financial statement ratios?

A) financial leverage

B) liquidity

C) profitability

D) prospectus

18.The dividend payout ratio describes:

A) the proportion of earnings paid as dividends

B) the relationship of dividends per share to market price per share

C) the percentage change in dividends this year compared to last year

D) dividends as a percentage of the price/earnings ratio

19. Which of the following is NOT typically classified as a current liability?

A) Accounts Payable

B) Bonds Payable

C) Interest Payable

D) Unearned Revenue

20. Assume that you own 1,500 shares of common stock and company has a 3 for 1 stock split. How many shares of common stock will you own after the stock split?

A) 3,000

B) 1,500

C) 4,500

D) 2,000