Chapter Quiz: BA118ch08 Started: Apr 22 at 6:52pm Quiz Instructions Flag this Qu
ID: 334995 • Letter: C
Question
Chapter Quiz: BA118ch08
Started: Apr 22 at 6:52pm
Quiz Instructions
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Question 12 pts
1. One of the major objectives of financial plans is to build traffic.
2. Which of the following is a type of financial statement fraud?
3. The income statement includes which of the following?
4. Which is a category of assets?
5. Blockbuster Video and the Borders Group, Inc. are companies that have successfully reorganized after declaring bankruptcy.
6. If current assets are $50,000 and current liabilities are $68,000 then the current ratio is .27 to 1.
7. Gross profit is the difference between the retailer’s net sales and the cost of goods sold.
8. Primary statements or reports found in a retail accounting system include which of the following?
9. A retail accounting system
10. Liquidity ratios reflect management’s control of
TrueExplanation / Answer
ANSWER TO QUESTION 1 :
The key objectives of Financial Planning are :
Therefore , it is FALSE that One of the major plans of financial plans is to buildtraffic
ANSWER : FALSE
ANSWER TO QUESTION 3 :
Income statement is also known as Profit & Loss Statement of a company .
Income statement usually calculates following :
Gross profit = Total revenue – cost of goods sold
Operating profit = Gross profit _- Operating expenses
Net income = Operating profit – Interest – Depreciation /amortisation – Income tax
Therefore , correct answer would be “ all of the answers are correct “
ANSWER : ALL OF THE ANSWERS ARE CORRECT
ANSWER TO QUESTION 4 :
The two main types of assets are current assets and non-current assets. These classifications are used to aggregate assets into different blocks on the balance sheet, so that one can discern the relative liquidity of the assets of an organization.
Current assets are expected to be consumed within one year, and commonly include the following line items:
Non-current assets are also known as long-term assets, and are expected to continue to be productive for a business for more than one year. The line items usually included in this classification are:
Therefore, correct answer would be “long term assets and current assets”
ANSWER : LONG TERM ASSETS AND CURRENT ASSETS
ANSWER TO QUESTION 5 :
On January 12, 2012, Borders Group, Inc. went out of business as per its Chapter 11 liquidation filing under bankruptcy. Borders Group, Inc., through its subsidiaries, engages in the operation of book, music, and movie superstores, as well as mall-based bookstores
Blockbuster LLC, formerly Blockbuster Entertainment, Inc.,[4] and also known as Blockbuster Video[5] or simply Blockbuster, was an American-based provider of home movie and video game rental services through video rental shops, DVD-by-mail, streaming, video on demand, and cinema theater. It went into bankruptcy and became defunct in 2013
Therefore , answer to given question is “ FALSE “
ANSWER : FALSE
ANSWER TO QUESTION 6 :
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the current total assets of a company (both liquid and illiquid) relative to that company’s current total liabilities. The formula for calculating a company’s current ratio is:
Current Ratio = Current Assets / Current Liabilities
Therefore , current ratio in this case = 50,000/68,000 = 0.735
Therefore, current ratio is within range 0.27 and 1
Therefore , correct answer is “ TRUE”
ANSWER : TRUE
ANSWER TO QUESTION 7 :
Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit will appear on a company's income statement, and can be calculated with this formula:
Gross profit = Revenue - Cost of Goods Sold
Therefore , correct answer will be “TRUE “
ANSWER : TRUE
ANSWER : FALSE
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