ECBA 202 3.3.2 XYZ Financial Statements_

1. Sales revenue earned from the sale of products is $______________.

COGS is $_____________.

2.XYZ's income tax provision rate is_______%.

3.Income statement accounts are listed in order of ______________________.

4. If XYZ purchases 10 widgets for $215 and sells them for $460 each to customers; how much is reported as sales? How much is reported as cost of goods sold? Gross profit?

5.Using Accrual Accounting, if XYZ processes payroll on September 1 for an August 31 payroll, what month is the payroll recorded as an expense?

6.Calculate the Return on Sales ratio for 2017.Does the ratio indicate a higher or lower profitability?

7.Calculate the Gross Profit Margin for 2017.

8.What would be a reason for gross profit to be greater in 2015 than in 2014 when sales revenue is less?

9.What accounts are included in total operating expenses?

10. What accounts are included in nonoperating revenues and expenses?

11. Explain how a corporation reporting a taxable loss can be an income tax benefit?

(Questions 12 - 15; 5 points each)

12.What is the difference between revenue, a gain and net income?

13.Using 2014 as the base year, compute the trend index for each year for:

2014201520162017

Sales revenue________________

Cost of goods sold________________

Gross profit________________

14.Using 2014 as the base year, compute the trend index for each year for:

2014201520162017

15.Explain the Revenue Recognition Principle and the Matching Principle in Accrual Accounting.

(Question 16; 10 points)

16. What information from the income statement is an investor most interested in?Support your answer with at least three observations.