Unlock the essentials of business and financial management with our comprehensive quiz on key accounting concepts! Dive into a range of topics including multiple-step income statements, liquidity ratios, and the operating cycle. This quiz is meticulously crafted to test and enhance your understandi...
Circle the letter of the Answer that corresponds to the displayed Question.
1
Question: Multiple-Step Income Statement
a) This statement shows a step-by-step calculations of net sales, cost of goods sold, gross profit,
operating expenses, income from operations, other revenues and expenses, and net income.
b) The number of times the accounts receivable turned over, or were collected, during the accounting
period. When 365 is divided by the turnover, this measure can be expressed in terms of average number
of days required to collect receivables.
c) Assets that are expected to be used for more than one year in the operation of the business.
d) Refers to the speed with which an asset can be converted to cash.
Correct Answer: a) This statement shows a step-by-step calculations of net sales, cost of goods sold,
gross profit, operating expenses, income from operations, other revenues and expenses, and net income.
Explanation: The multiple-step income statement provides detailed information by breaking down
revenues, expenses, and profits through various stages, making it easier to analyze financial
performance.
2
Question: Inventory Turnover
a) Assets that are expected to be used for more than one year in the operation of the business.
b) Current assets divided by current liabilities.
c) Compares the relationship between certain amounts in the income statement and balance sheet.
d) The number of times the merchandise inventory turned over, or was sold, during the accounting
period. When 365 is divided by the turnover this measure can be expressed in terms of the average
number of days required to sell inventory.
Correct Answer: d) The number of times the merchandise inventory turned over, or was sold, during
the accounting period. When 365 is divided by the turnover this measure can be expressed in terms of
the average number of days required to sell inventory.
Explanation: Inventory turnover measures how often inventory is sold and replaced over a period.
This can be converted into the average days to sell inventory by dividing 365 by the turnover ratio.
3
Question: Operating Income
a) The number of days in the year (365) divided by the inventory turnover. Provides an indication of
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