A companys acid-test ratio was 1:1 in 2013; 1.5:1 in 2014; 1.75:1 in 2015. This would seem to indicate that:

a. The companys profitability seems to be improving.

b. The companys liquidity seems to be improving.

c. The companys long-term solvency seems to be improving.

d. All of the above.

The accounts receivable turnover was 25 days in 2013, 34 days in 2014 and 36 days in 2015. This would seem to indicate that:

a. Sales are increasing.

b. Profits are increasing.

c. It is taking less time to collect accounts receivable.

d. It is taking more time to collect credit sales.

Cost of goods sold:

a. Is another term for merchandise sales.

b. Is the cost of all of the merchandise inventory purchased or acquired.

c. Is another term for gross profit.

d. None of the above.

The account Equipment appears on the balance sheet at $300,000 less accumulated depreciation of $100,000.

a. The equipments book value is $200,000.

b. The equipments book value is $300,000.

c. The equipments book value is $400,000.

d. The equipments market value is $200,000.

The cost of the equipment in the prior question was most likely:

a. $200,000.

b. $300,000.

c. $400,000.

d. Some undeterminable amount.

A truck was purchased at a cost of $23,000. The estimated useful life and salvage value was 8 years and $3,000. After 4 years of straight-line depreciation, the asset's useful life was revised to 6 years with no change in the estimated salvage value. The depreciation expense in year 5 is:

a. $2,875.

b. $5,000

c. $5,750.

d. $11,500.

_. The gross margin ratio:

a. Is also called the net profit ratio.

b. Indicates the percent of sales revenue remaining to cover operating expenses.

c. Indicates the % of sales revenue needed to cover all expenses.

d. Indicates the margin of safety below which the firm cannot be profitable.

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

a. $0.

b. $75.

c. $225

d. Some other amount.

A company has a payroll of $100,000. Social security is 7.65%.

a. The employees will have $7,650 withheld from their paycheck.

b. The company will record an expense of $7,650.

c. Both a and b.

d. Only the employees will have an expense.

If a company withholds $25,000 of Federal Income tax from salaries:

a. The employer will have an expense until the funds are remitted.

b. The employer will have a liability until the funds are remitted

c. Both a and b.

d. Only the employees will have an expense.

The general ledger shows Accounts Receivable $100,000 and the Allowance for Doubtful Accounts $ 5,000. Sales were $1,000,000 which included credit sales of $800,000. The following three questions are independent of each other:

If the company wrote off an account as uncollectible for $500, the accounts receivable net realizable value after the write-off would be:

a. $94,500.

b. $95,000.

c. $99,500.

d. Some other amount.

If the determination of bad debts was based on 1% of credit sales, the bad debt expense for the year would be:

a. $10,000.

b. $ 8,000.

c. $ 1,000.

d. Some other amount.

If the determination of bad debts was based on 10% of accounts receivable, the bad debt expense for the year would be:

a. $10,500.

b. $10,000.

c. $ 5,000.

d. Some other amount.

A company records a charge to warranty expense in the year it makes the sale. This is in accordance with:

a. The cost principle.

b. The matching principle.

c. The disclosure principle.

d. All of the above.