The business operating cycle of a retail company

1. The business operating cycle of a retail company begins when a company receives goods to be sold, it continues as the company pays for the goods, and sells them to customers. The operating cycle ends when the company collects the cash due from it customers. A)TrueB)False2. Typically, the largest, continuous cash inflow for a business will come from? A)Sale of our stock to investorsB)Bank loansC)Cash collected from customers D)Cash interest received on our investments3. In 2001, Boeing Company reported total assets of $48,343 million and net sales of $58,198 million. In 2000, they reported total assets of $42,677 million and net sales of $51,321 million. Their 2001 asset turnover ratio was A)1.20B)1.28C)1.25D)None of the above.4. Two basic accounting principles determine when revenues and expenses are to be recorded under accrual basis accounting. They are A)revenue principle and matching principle.B)revenue recognition and measurement principles.C)cost and matching principles.D)none of the above.5. Which of the following businesses would least likely report cost of goods sold on their income statement? A)A large accounting firmB)An automobile dealershipC)A pizza restaurant chainD)A computer chip manufacturer6. Which of the following liability accounts is likely to be reduced by an action other than payment of cash? A)Wages payableB)Deferred subscriptions revenue C)Accounts PayableD)All the above will be satisfied by cash payment7. On March 15, a company receives a $25,000 cash advance deposit from a customer. However, the company does not deliver the goods until April 20. Which of the following statements is true? A)Cash will be reported on the statement of cash flows for the month of MarchB)Revenue will be recorded and reported on the income statement for AprilC)A liability will be reported on the balance sheet at the end of MarchD)All of the above are true E)None of the above is true8. Which of the following would most likely have the longest operating cycle? A)Taco Bell restaurantsB)Aeronautical manufacturer Boeing C)Motorcycle manufacturer Harley-DavidsonD)Safeway grocery stores9. On December 31, 20D, the effect of recording an adjustment for interest of $1,200, which had accrued on a note payable would be A)a decrease in stockholders’ equity and decrease in an asset.B)a decrease in liabilities and increase in stockholders’ equity.C)a decrease in stockholders’ equity and an increase in liabilities.D)an increase in stockholders’ equity and increase in an asset.E)none of the above is correct.10. On October 1, 2009, Ethan Company borrowed $20,000 on a 6-month note with an annual interest rate of 10 percent. How much interest expense should be reported on December 31, 2009? A)$333.B)$500.C)$2,000.D)$ -0-.E)None of the above is correct.11. On July 1, 20A, Goode Company borrowed $10,000. The company signed a note payable with interest at 12 percent per year. The note and interest are due on December 31, 20A. On December 31, 20A, Goode paid $10,600 to settle the debt in full. Transaction analysis of the $10,600 cash payment on December 31, 20A, should reflect the following (before any adjusting entries are made): A)decrease assets, $10,600; decrease liabilities, $10,600.B)decrease assets, $10,000; decrease stockholders’ equity, $600; and decrease liabilities, $10,600.C)decrease stockholders’ equity, $10,000; decrease liabilities, $600; and decrease assets, $10,600.D)decrease liabilities, $10,000; decrease stockholders’ equity, $600; and decrease assets, $10,600. E)None of the above is correct.12. In 2001, Coca Cola reported net operating revenues of $20,092 million, gross profit of $14,048 million, operating income of $5,352 million, income before taxes of $5,670 million and net income of $2,183 million. Their net profit margin for 2001 is A)69.6%B)10.9%C)28.2%D)26.6%E)none of the above13. An income statement reports A)revenues, expenses, assets, and liabilities during an accounting period.B)resources, liabilities, and stockholders’ equity of a business at a point in time.C)net income of a business at a point in time.D)net income of a business for a period of time. E)sources and uses of cash during a period.14. At the end of 20D, Washington Inc. made the following adjusting entry to record $10,000 of accrued and unpaid wages:Wages Expense: 10,000Wages Payable: 10,000At the end of the first week of January 20E, Washington Inc. paid $40,000 in wages for the pay period including the $10,000 accrued in the December 31, 20D adjustment above. The entry to record the payment of this payroll in January 20E should include a A)$40,000 debit to wages expense and a $10,000 debit to wages payable.B)$30,000 debit to wages expense and a $10,000 debit to wages payable.C)$50,000 debit to wages expense and a $10,000 debit to wages payable.D)$10,000 debit to wages expense and a $30,000 debit to wages payable.E)none of the above is correct.15. On January 1, 2007, the ledger of Global Corporation correctly showed supplies inventory of $1,000. During 2007, supplies purchases amounted to $5,000. A count (inventory) of supplies on hand at December 31, 2007, showed $1,200. The 2007 income statement should report supplies expense amounting to A)$6,000.B)$5,200.C)$4,800. D)$4,600.E)None of the above is correct.


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