ch05
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ch05

Course Number: ACCTG 507, Spring 2013

College/University: Harvard

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To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com ch05 Student: ___________________________________________________________________________ 1. 2. 3. 4. 5. Merchandise inventory consists of products that a company acquires to resell to customers. True False A service company earns net income by...

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download To more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com ch05 Student: ___________________________________________________________________________ 1. 2. 3. 4. 5. Merchandise inventory consists of products that a company acquires to resell to customers. True False A service company earns net income by buying and selling merchandise. True False Gross profit is also called gross margin. True False Cost of goods sold is also called cost of sales. True False A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers. True False A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers. True False Cost of goods sold represents the cost of buying and preparing merchandise for sale. True False A company had sales and cost of goods sold of $350,000 and $200,000, respectively. Its gross profit equals $150,000. True False A company had net sales and cost of goods of $545,000 and $345,000, respectively. Its gross margin equals $890,000. True False 6. 7. 8. 9. 10. A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000. True False 11. A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale. True False 12. Merchandise inventory is reported in the long-term assets section of the balance sheet. True False 13. Cash sales shorten the operating cycle for a merchandiser; credit sales lengthen operating cycles. True False 14. Assets tied up in inventory are not productive assets. True False 15. A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period. True False 16. A perpetual inventory system continually updates accounting records for inventory transactions. True False To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 17. Beginning merchandise inventory plus the net cost of purchases is the merchandise available for sale. True False 18. The acid-test ratio is also called the quick ratio. True False 19. Quick assets include cash, inventory, and current receivables. True False 20. The acid-test ratio is defined as current assets divided by current liabilities. True False 21. A common rule of thumb is that a company's acid-test ratio should be at least 2 or a company may face near-term liquidity problems. True False 22. Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio. True False 23. A company's quick assets are $147,000 and its current liabilities are $143,000. This company's acid-test ratio is 1.03. True False 24. A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems. True False 25. The gross margin ratio is defined as gross margin divided by net sales. True False 26. The profit margin ratio is gross margin divided by total assets. True False 27. A company had net sales of $340,500, its cost of goods sold was $257,000, and its net income was $13,750. The company's gross margin ratio equals 24.5%. True False 28. The Merchandise Inventory account balance at the end of the current period is equal to the amount of beginning merchandise inventory for the next period. True False 29. Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller. True False 30. Purchase returns refer to merchandise a buyer acquires but then returns to the seller. True False 31. Purchase allowances refer to merchandise a buyer acquires but then returns to the seller. True False 32. Under the perpetual inventory system, the cost of merchandise purchased is recorded in the Merchandise Inventory account. True False 33. Credit terms of 2/10, n/30 imply that the seller offers the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date. Otherwise, the full amount is due in 30 days. True False 34. Sellers always offer a discount to buyers for prompt payment toward purchases made on credit. True False To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 35. Purchase discounts are the same as trade discounts. True False 36. If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days. True False 37. The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination. True False 38. If goods are shipped FOB shipping point, the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point. True False 39. A buyer records the costs of shipping goods in a Delivery Expense, or transportation-out account when the buyer is responsible for these costs. True False 40. A buyer did not take advantage of a supplier's credit terms of 2/10, n/30, and instead paid the invoice in full at the end of 30 days. By not taking the discount the buyer lost the equivalent of 18% annual interest on the amount of the purchase. True False 41. FOB shipping point (or FOB factory) implies that ownership of goods transfers to the buyer at the buyer's place of business. True False 42. Each sales transaction for a seller that uses a perpetual inventory system involves recognizing both revenue and cost of merchandise sold. True False 43. Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts. True False 44. Sales discounts is a contra revenue account, meaning that the Sales Discounts account is added to the Sales account when computing a company's net sales. True False 45. A credit memorandum from a seller informs a buyer of the seller's credit to its Accounts Payable account arising from a sales return or allowance. True False 46. When a credit customer returns merchandise to the seller, under a perpetual inventory system, the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold. True False 47. Because sellers assume that their customers will pay within the discount period, the seller usually records the discount at the time of the sale. True False 48. A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment. True False 49. Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000. True False To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 50. A perpetual inventory system is able to directly measure and monitor inventory shrinkage and there is no need for a physical count of inventory. True False 51. Sales Discounts and Sales Returns and Allowances are credited to close the accounts during the closing process. True False 52. Cost of Goods Sold is debited to close the account during the closing process. True False 53. In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period. True False 54. The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense. True False 55. A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items. True False 56. Operating expenses are classified into two categories: selling expenses and cost of goods sold. True False 57. A merchandiser's classified balance sheet reports merchandise inventory as a current asset. True False 58. Selling expenses support a company's overall operations and include expenses related to accounting, human resource management, and financial management. True False 59. When a company has no reportable nonoperating activities, its income from operations is simply labeled net income. True False 60. A single-step income statement includes cost of goods sold as another expense, and shows only one subtotal for total expenses. True False 61. Under a periodic inventory system, purchases, purchases returns and allowances, purchase discounts, and transportation in transactions are recorded in separate temporary accounts True False 62. The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of both the goods available and the goods sold. True False 63. In a periodic inventory system, cost of goods sold is recorded as each sale occurs. True False 64. Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period. True False 65. Delivery expense is reported as part of general and administrative expense in the seller's income statement. True False To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 66. A merchandising company: A. Earns net income by buying and selling merchandise. B. Receives fees only in exchange for services. C. Earns profit from commissions only. D. Earns profit from fares only. E. Buys products from consumers. 67. Cost of goods sold: A. Is another term for merchandise sales. B. Is the term used for the cost of buying and preparing merchandise for sale. C. Is another term for revenue. D. Is also called gross margin. E. Is a term only used by service firms. 68. A company had sales of $695,000 and cost of goods sold of $278,000. Its gross margin equals: A. $(417,000). B. $695,000. C. $278,000. D. $417,000. E. $973,000. 69. A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals: A. $(217,000). B. $375,000. C. $157,500. D. $217,500. E. $532,500. 70. The following statements regarding gross profit are true except: A. Gross profit is also called gross margin. B. Gross profit less other operating expenses equals income from operations. C. Gross profit is not calculated on the multiple-step income statement. D. Gross profit must cover all operating expenses to yield a return for the owner of the business. E. Gross profit equals net sales less cost of goods sold. 71. The following statements regarding merchandise inventory are true except: A. Merchandise inventory is reported on the balance sheet as a current asset. B. Merchandise inventory refers to products a company owns and intends to sell. C. Merchandise inventory can include the cost of shipping the goods to the store and making them ready for sale. D. Merchandise inventory does not appear on the balance sheet of a service company. E. Merchandise inventory purchases are not considered part of the operating cycle for a business. 72. The following statements are true regarding the operating cycle of a merchandising company except: A. The operating cycle begins with the purchase of merchandise. B. The operating cycle is shortened by credit sales. C. The operating cycle ends with the collection of cash from the sale of merchandise. D. The operating cycle can vary in length among different merchandising companies. E. The operating cycle sometimes involves accounts receivable. 73. Merchandise inventory: A. Is a long-term asset. B. Is a current asset. C. Includes supplies. D. Is classified with investments on the balance sheet. E. Must be sold within one month. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 74. The operating cycle for a merchandiser that sells only for cash moves from: A. Purchases of merchandise to inventory to cash sales. B. Purchases of merchandise to inventory to accounts receivable to cash sales. C. Inventory to purchases of merchandise to cash sales. D. Accounts receivable to purchases of merchandise to inventory to cash sales. E. Accounts receivable to inventory to cash sales. 75. The current period's ending inventory is: A. The next period's beginning inventory. B. The current period's cost of goods sold. C. The prior period's beginning inventory. D. The current period's net purchases. E. The current period's beginning inventory. 76. Beginning inventory plus net purchases is: A. Cost of goods sold. B. Merchandise available for sale. C. Ending inventory. D. Sales. E. Shown on the balance sheet. 77. The acid-test ratio: A. Is also called the quick ratio. B. Measures profitability. C. Measures inventory turnover. D. Is generally greater than the current ratio. E. Measures return on assets. 78. The quick assets are defined as: A. Cash, short-term investments, and inventory. B. Cash, short-term investments, and current receivables. C. Cash, inventory, and current receivables. D. Cash, noncurrent receivables, and prepaid expenses. E. Accounts receivable, inventory, and prepaid expenses. 79. ABC Corporation's total quick assets were $5,888,000, its current assets were $11,700,000 and its current liabilities were $8,000,000. Its acid-test ratio equals: A. 0.50. B. 0.68. C. 0.74. D. 1.50. E. 2.20. 80. A company's current assets were $17,980, its quick assets were $11,420 and its current liabilities were $12,190. Its quick ratio equals: A. 0.94. B. 1.07. C. 1.48. D. 1.57. E. 2.40. 81. Liquidity problems are likely to exist when a company's acid-test ratio: A. Is less than the current ratio. B. Is 1 to 1. C. Is higher than 1 to 1. D. Is substantially lower than 1 to 1. E. Is higher than the current ratio. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 82. The acid-test ratio differs from the current ratio in that: A. Liabilities are divided by current assets. B. Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio. C. The acid-test ratio measures profitability and the current ratio does not. D. The acid-test ratio excludes short-term investments from the calculation. E. The acid-test ratio is a measure of liquidity but the current ratio is not. 83. Using the following year-end information for Breanna Boutique, calculate the current ratio and acid-test ratio for the boutique: A. 1.8 and 1 B. 1.97 and 1.52 C. 2.73 and 1.52 D. 3.50 and 0.90 E. None of these 84. The gross margin ratio: A. Is also called the net profit ratio. B. Measures a merchandising firm's ability to earn a profit from the sale of inventory. C. Is also called the profit margin. D. Is a measure of liquidity. E. Should be greater than 1. 85. A company's gross profit was $83,750 and its net sales were $347,800. Its gross margin ratio equals: A. 4.2%. B. 24.1%. C. 75.9%. D. $83,750. E. $264,050. 86. A company's net sales were $676,600, its cost of good sold was $236,810 and its net income was $33,750. Its gross margin ratio equals: A. 5%. B. 9.6%. C. 35%. D. 65%. E. 285.7%. 87. A company had net sales and cost of goods sold of $752,000 and $543,000, respectively. Its net income was $17,530. The company's gross margin ratio equals: A. 18.9% B. 24.5% C. 27.8% D. 34.7% E. 35.2% 88. Peg had net sales of $28,496 million, its cost of goods sold was $19,092 million, and its net income was $997 million. Its gross margin ratio equals: A. 3.5%. B. 5.2%. C. 33%. D. 67%. E. 149.3%. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 89. The credit terms 2/10, n/30 are interpreted as: A. 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days. B. 10% cash discount if the amount is paid within 2 days, or the balance due in 30 days. C. 30% discount if paid within 2 days. D. 30% discount if paid within 10 days. E. 2% discount if paid within 30 days. 90. A trade discount is: A. A term used by a purchaser to describe a cash discount given to customers for prompt payment. B. A reduction in price below the list price. C. A term used by a seller to describe a cash discount granted to customers for prompt payment. D. A reduction in price for prompt payment. E. Also called a rebate. 91. The amount recorded for merchandise inventory includes all of the following except: A. Purchase discounts. B. Returns and allowances. C. Freight costs paid by the buyer. D. Freight costs paid by the seller. E. Trade discounts. 92. A company uses the perpetual inventory system and recorded the following entry This entry reflects a: A. Purchase of merchandise on credit. B. Return of merchandise. C. Sale of merchandise on credit. D. Payment of the account payable and recognition of a 2% cash discount taken. E. Payment of the account payable and recognition of a 1% cash discount taken. 93. A debit memorandum is: A. Required whenever a journal entry is recorded. B. The source document for the purchase of merchandise inventory. C. Required when a purchase discount is granted. D. The document a buyer issues to inform the seller of a debit made to the seller's account in the buyer's records. E. Not necessary in a perpetual inventory system. 94. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals: A. $200. B. $1,564. C. $1,568. D. $1,600. E. $1,800. 95. A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is: A. $3,725.00. B. $3,925.00. C. $3,995.00. D. $4,000.50. E. $4,075.00. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 96. A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the buyer lost the equivalent of ____________ annual interest on the amount of the purchase. A. 12.2% B. 16.2% C. 18.9% D. 24.3% E. 24.5% 97. Sales returns: A. Refer to merchandise that customers return to the seller after the sale. B. Refer to reductions in the selling price of merchandise sold to customers. C. Represent cash discounts. D. Represent trade discounts. E. Are not recorded under the perpetual inventory system until the end of each accounting period. 98. All of the following statements regarding sales returns and allowances are true except: A. Sales returns and allowances can include a reduction is the selling price because of damaged merchandise. B. Sales returns and allowances do not reflect the possibility of lost future sales. C. Sales returns and allowances are recorded in a separate contra-revenue account. D. Sales returns and allowances are rarely disclosed in published financial statements. E. Sales returns and allowances are closed to the Income Summary account. 99. A debit to Sales Returns and Allowances and a credit to Accounts Receivable: A. Reflects an increase in amount due from a customer. B. Recognizes that a customer returned merchandise and/or received an allowance. C. Requires a debit memorandum to recognize the customer's return. D. Is recorded when a customer takes a discount. E. Reflects a decrease in amount due a supplier. 100.Sales less sales discounts less sales returns and allowances equals: A. Net purchases. B. Cost of goods sold. C. Net sales. D. Gross profit. E. Net income. 101.Herald Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Herald Company's net sales equals: A. $5,200. B. $129,800. C. $133,000. D. $135,000. E. $140,200. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 102.On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is: A. B. C. D. Choice A Choice B Choice C Choice D 103.On October 1, Whaley Company sold merchandise in the amount of $5,800 to Lee Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Whaley uses the perpetual inventory system. Lee pays the invoice on October 8, and takes the appropriate discount. The journal entry that Whaley makes on October 8 is: A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 104.On October 1, Mutch Company sold merchandise in the amount of $5,800 to Carr Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Mutch uses the perpetual inventory system. On October 4, Carr returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Mutch must make on October 4 is: A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 105.A company records the following journal entry: debit Cash $1,470, debit Sales Discounts $30, and credit Accounts Receivable $1,500. This means that a customer has taken a ___ cash discount for early payment. A. 1% B. 2% C. 5% D. 10% E. 15% 106.All of the following statements regarding inventory shrinkage are true except: A. Inventory shrinkage refers to the loss of inventory. B. Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts. C. Inventory shrinkage is recognized by debiting an operating expense. D. Inventory shrinkage is recognized by debiting Cost of Goods Sold. E. Inventory shrinkage can be caused by theft or deterioration. 107.Which of the following accounts would be closed with a debit? A. Sales Discounts. B. Sales Returns and Allowances. C. Cost of Goods Sold. D. Operating Expenses. E. Sales. 108.An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a: A. Balanced income statement. B. Single-step income statement. C. Multiple-step income statement. D. Combined income statement. E. Simplified income statement. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 109.Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called: A. Cost of goods sold. B. Selling expenses. C. Purchasing expenses. D. General and administrative expenses. E. Nonoperating activities. 110.Benson Company had cash sales of $94,275, credit sales of $83,450, sales returns and allowances of $1,700, and sales discounts of $3,475. Benson's net sales for this period equal: A. $94,275. B. $172,550. C. $174,250. D. $176,025. E. $177,725. 111.Multiple-step income statements: A. Are required by the FASB. B. Contain more detail than a simple listing of revenues and expenses. C. Are required for the perpetual inventory system. D. List cost of goods sold as an operating expense. E. Can only be used in perpetual inventory systems. 112.Expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers are: A. General and administrative expenses. B. Cost of goods sold. C. Selling expenses. D. Purchasing expenses. E. Nonoperating activities. 113.A company has net sales and cost of goods sold of $752,000 and $543,000, respectively. Its net income is $17,530. The company's gross margin and operating expenses are ________ and ___________, respectively. A. $209,000; $191,470 B. $191,470; $209,000 C. $525,470; $227,000 D. $227,000; $525,470 E. $734,000; $191,470 114.An account used in the periodic inventory system that is not used in the perpetual inventory system is A. Merchandise Inventory B. Sales C. Sales Returns and Allowances D. Accounts Payable E. Purchases 115.When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is: A. The ending inventory amount. B. The beginning inventory amount. C. Equal to the cost of goods sold. D. Equal to the cost of goods purchased. E. Equal to the gross profit. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 116.On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. The journal entry or entries that Courtland will make on October 1 is: A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 117.On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is: A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 118.On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. On October 4, Carter returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Courtland must make on October 4 is: A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 119.On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. On October 4, Carter returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is: A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E 120.Brig Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals: A. $150,000. B. $450,000. C. $800,000. D. $350,000. E. $200,000. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 121.Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Gross profit equals: A. $770,000. B. $115,000. C. $390,000. D. $402,000. E. $408,000. 122.Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Net income equals: A. $770,000. B. $402,000. C. $390,000. D. $115,000. E. $408,000. 123.A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals: A. $8,924. B. $9,700. C. $10,000. D. $9,800. E. $8,724. 124.A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge was $500. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals: A. $9,224. B. $10,200. C. $10,500. D. $10,300. E. $9,424. 125.A company's current assets are $23,420, its quick assets were $13,890 and its current liabilities were $12,220. Its acid-test ratio equals: A. 0.88. B. 1.91. C. 1.14. D. .52. E. 1.41. 126.Using the following year-end information for Brim, LLC, calculate the current ratio and acid-test ratio: A. 3.01 and 1.21 B. 3.16 and .97 C. 3.04 and 1.21 D. 1.09 and 4.77 E. None of these To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 127.A company's net sales are $775,420, its costs of goods sold are $413,890, and its net income is $117,220. Its gross margin ratio equals: A. 46.6%. B. 53.4%. C. 28.3%. D. 31.5%. E. 40.5%. 128.All of the following statements related to U.S. GAAP and IFRS are true except: A. Accounting for basic inventory transactions is the same under the two systems. B. The closing process for merchandisers is the same under both systems. C. U.S. GAAP offers little guidance about the presentation order of expenses. D.Neither system requires separate disclosure of items when their size, nature, or frequency are important for proper interpretation. E. Neither system defines operating income. 129.A company purchases merchandise with a catalog price of $20,000. The company receives a 35% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made on time, what is the net cost of the merchandise? A. $13,720. B. $19,600. C. $6,860. D. $13,000. E. $12,740. 130.A company has net sales and cost of goods sold of $825,000 and $547,000, respectively. Its net income is $98,500. The company's gross margin and operating expenses are ________ and ___________, respectively. A. $209,000; $191,470 B. $278,000; $179,500 C. $278,000; $98,500 D. $179,500; $98,500 E. $645,500; $179,500 To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 131.Match the following definitions and terms by placing the letter for the terms a through j in the blank space next to the best definition. 1. Selling A ratio used to assess a company's ability to pay its _ expenses current liabilities; defined as quick assets divided by current__ liabilities. _ 2. FOB An income statement format that shows only one subtotal _ for total expenses. __ _ 3. General and The abbreviation for free on board; refers to the point _ administrative when ownership of goods passes to the buyer. __ expenses _ 4. Acid-test Products a company owns and intends to sell. _ ratio __ _ 5. SingleExpenses that support overall operations and includes _ step income expenses related to accounting, human resource management__ statement and financial management. _ 6. List price The abbreviation for end-of-month; used to describe _ credit terms for some transactions. __ _ 7. Merchandise Inventory losses that can occur as a result of theft or _ inventory deterioration. __ _ 8. EOM An income statement format that shows detailed _ computations of net sales and other costs and expenses, and__ reports subtotals for various classes of items. _ 9. MultipleThe catalog price of an item before any trade discount is _ step income deducted. __ statement _ 10. Inventory The expenses of promoting sales by displaying and _ shrinkage advertising merchandise, making sales, and delivering goods__ to customers. _ To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 132.Match the following terms with the appropriate definition. 1. Credit An accounting method that continually updates _ memorandum accounting records for merchandise transactions. __ _ 2. Selling An accounting method that updates the accounting _ expenses records for merchandise transactions only at the end of a__ period. _ 3. Credit The time period in which a cash discount is available and _ period a reduced payment can be made by the buyer. __ _ 4. Debit A notification that the sender has debited the recipient's _ memorandum account kept by the sender. __ _ 5. Credit The expenses of promoting sales, by displaying and _ terms advertising merchandise, sales, making and delivering goods__ to customers. _ 6. Discount A notification that the sender has credited the recipient's _ period account kept by the sender. __ _ 7. Gross A cash discount granted to customers for paying within _ profit the discount period. __ _ 8. Periodic Net sales less cost of goods sold. _ inventory __ system _ 9. Sales The description of the amounts and timing of payments _ discount from a buyer to a seller. __ _ 10. Perpetual The amount of time allowed before full payment is due. _ inventory __ system _ 133.Identify and explain the key components of income for a merchandising company. 134.Describe the difference between wholesalers and retailers. 135.Describe the key attributes of inventory for a merchandising company. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 136.List the steps of the operating cycle for a merchandiser with credit sales. 137.What is the difference between the periodic and perpetual inventory systems? 138.Explain the cost flows and operating activities of a merchandising company. 139.What is the acid-test ratio? How does it measure a company's liquidity? 140.What is gross margin ratio? How is it used as an indicator of profitability? 141.What does FOB stand for? Differentiate between FOB shipping point (or FOB factory) and FOB destination. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 142.Describe the recording process (including costs) for purchasing merchandise inventory using a perpetual inventory system. 143.Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system. 144.What is inventory shrinkage? How do managers account for shrinkage? 145.How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company? 146.Explain the difference between the single-step and multiple-step income statements. 147.Distinguish between selling expenses and general and administrative expenses. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 148.What are the difference(s) between the periodic and the perpetual inventory systems? 149.Describe how tracking inventory activities were necessary for Heritage Link Brands. 150.Nichole Company had net sales of $500,000 and cost of goods sold of $350,000. Calculate Nichole's gross profit. 151.Harriet's Toy Shop had net sales of $852,000. The gross profit was $230,000. Calculate Harriet's cost of goods sold. 152.Fill in the blanks (a) through (g) for the Hendricks Company for each of the income statements for 2009, 2010, and 2011. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 153.The following information is available for Trico and its two main competitors in the industry (Duco and Unico): The industry standard for the current ratio is 1.8 and the industry standard for the acid-test ratio is 1. Required: 1. Calculate the current ratio and acid-test ratio for each firm. 2. Rank the firms in decreasing order of liquidity. 3. Comment on Trico's relative liquidity position. 154.The following information refers to Annie's Attic and its competitors in the antiques business. Required: Comment on the relative liquidity positions of these companies. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 155.A company reported the following year-end information: Required: 1. Explain the purpose of the acid-test ratio. 2. Calculate the acid-test ratio for this company. 3. What does the acid-test ratio reveal about this company? 156.Calculate the gross margin ratio for each of the following separate cases A through D: 157.A company reported the following information for the month of November: Required: Calculate this company's gross margin ratio. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 158.The following information is for Trico and its competitor Unico. Required: 1. Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent, for each company for both years. 2. Which company had the more favorable ratio for each year? 3. Which company had the more favorable change in the gross margin ratio over this 2-year period? 159.A company that uses the perpetual inventory system purchased $8,500 on September 25. Terms of the purchase were 2/10, n/30. The invoice was paid in full on October 4. Prepare the journal entries to record these merchandise transactions. 160.Roller Blade Company uses the perpetual inventory system and had the following transactions during October: Prepare journal entries to record each of the preceding transactions. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 161.Ceres Computer Sales uses the perpetual inventory system and had the following transactions during December. Required: Prepare the general journal entries to record these transactions. 162.Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions. 163.Maia's Bike Shop uses the perpetual inventory system and had the following transactions during the month of May: Prepare the required journal entries that Maia's Bike Shop must make to record these transactions. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 164.Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year. 165.The year-end adjusted trial balance of ABC Supply for the current year, is shown below: Prepare Closing entries at December 31 for the current year. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 166.From the adjusted trial balance for Worker Products Company given below, prepare a multiple-step income statement in good form. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 167.From the adjusted trial balance for Worker Products Company given below, prepare the necessary closing entries. 168.Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron: To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 169.Steve's Skateboards uses the periodic inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions. 170.Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May: Prepare the required journal entries that Maia's Bike Shop must make to record these transactions. 171.Sam's Wholesale shows the following account balances in its ledger on June 30, its fiscal year-end. Sam's Wholesale uses the perpetual inventory system. A physical count of its June 30 year-end inventory discloses that the cost of the merchandise inventory still available is $57,160. Prepare the entry to record any inventory shrinkage. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 172.Prepare journal entries to record the following merchandising transactions of Dean Company, which applies the perpetual inventory system. Dean Company offers all of its credit customers credit terms of 2/ 10, n/30. To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 173.From the adjusted trial balance given below for the Mirror Company, prepare a multiple-step income statement in good form. Salaries expense and depreciation expense on the building are equally divided between selling activities and the general and administrative activities. 174.Shock Company purchased merchandise from Mee Company with an invoice price of $300,000 and credit terms of 2/10, n/30. The merchandise had cost Mee Company $200,000. Shock Company paid within the discount period. Assume that both buyer and seller use a perpetual inventory system. 1. Prepare entries that the buyer should record for (a) the purchase and (b) the cash payment. 2. Prepare entries that the seller should record for (a) the sale and (b) the cash collection. 3. Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 9% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy. (Assume a 365-day year and round dollar amounts to the nearest cent.) To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 175.Prepare journal entries to record the following merchandise transactions of Geo Company, which applies the perpetual inventory system. 176.A ___________ is an intermediary that buys products from manufacturers and sells to retailers. ________________________________________ 177.A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales. ________________________________________ 178.________________________ refers to products that a company owns and intends to sell. ________________________________________ 179.A ___________ inventory system updates the accounting record for inventory only at the end of a period. ________________________________________ 180.The __________________ inventory system continually updates accounting records for merchandise transactions for the amounts of inventory available for sale and inventory sold. ________________________________________ 181.Beginning inventory plus the net cost of purchases is the ____________________. ________________________________________ 182.A period's ___________________ becomes the next period's beginning inventory. ________________________________________ 183.The acid-test ratio reflects the ___________ of a company. ________________________________________ 184.The gross margin ratio equals net sales less ___________ divided by net sales. ________________________________________ 185.The amounts and timing of payment from a buyer to a seller are the ___________________. ________________________________________ 186.A _______________________ is a document the buyer issues to inform the seller of a debit made to the seller's account in the buyer's records. ________________________________________ 187.FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business. The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit. ________________________________________ To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 188.FOB _________________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business. The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit. ________________________________________ 189.____________________ refer to merchandise that customers return to the seller after a sale. ________________________________________ 190.___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price. ________________________________________ 191.A seller usually prepares a ____________________ to confirm a buyer's return or allowance, and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books. ________________________________________ 192.Sales discounts can benefit a seller by decreasing the delay in receiving cash, and __________. ________________________________________ 193.Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts. ________________________________________ 194.___________ expenses are those expenses that support a company's overall operations and include expenses related to accounting, human resource management, and financial management. ________________________________________ 195.A _____________________ income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items. ________________________________________ 196.A ______________________ income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses. ________________________________________ 197._______________________ are nonoperating activities that include interest, dividend, and rent revenues, and gains from asset disposals. ________________________________________ 198.______________________ are nonoperating activities that include interest expense, losses from asset disposals, and casualty losses. ________________________________________ 199.When a company has no reportable nonoperating activities, its income from operations is reported as ___________________. ________________________________________ 200.Under the ___________ system, each purchase, purchase return and allowance, purchase discount, and transportation-in transaction is recorded in a separate temporary account. ________________________________________ To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com ch05 Key 1. TRUE 2. FALSE 3. TRUE 4. TRUE 5. FALSE 6. FALSE 7. TRUE 8. TRUE 9. FALSE 10. FALSE 11. FALSE 12. FALSE 13. TRUE 14. TRUE 15. FALSE 16. TRUE 17. TRUE 18. TRUE 19. FALSE 20. FALSE 21. FALSE 22. TRUE 23. TRUE 24. FALSE 25. TRUE 26. FALSE 27. TRUE 28. TRUE 29. TRUE 30. TRUE 31. FALSE 32. TRUE 33. TRUE 34. FALSE 35. FALSE 36. FALSE To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 37. TRUE 38. FALSE 39. FALSE 40. FALSE 41. FALSE 42. TRUE 43. TRUE 44. FALSE 45. FALSE 46. TRUE 47. FALSE 48. FALSE 49. TRUE 50. FALSE 51. TRUE 52. FALSE 53. FALSE 54. FALSE 55. TRUE 56. FALSE 57. TRUE 58. FALSE 59. TRUE 60. TRUE 61. TRUE 62. TRUE 63. FALSE 64. FALSE 65. FALSE 66. A 67. B 68. D 69. D 70. C 71. E 72. B 73. B 74. A To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 75. A 76. B 77. A 78. B 79. C 80. A 81. D 82. B 83. D 84. B 85. B 86. D 87. C 88. C 89. A 90. B 91. D 92. D 93. D 94. C 95. D 96. D 97. A 98. B 99. B 100. C 101. B 102. D 103. E 104. A 105. B 106. C 107. E 108. B 109. D 110. B 111. B 112. C To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 113. A 114. E 115. B 116. C 117. E 118. B 119. C 120. B 121. C 122. D 123. A 124. E 125. C 126. B 127. A 128. D 129. E 130. B 131. Acid-test ratio :: A ratio used to assess a company's ability to pay its current liabilities; defined as quick assets divided by current liabilities. and Single-step income statement :: An income statement format that shows only one subtotal for total expenses. and FOB :: The abbreviation for free on board; refers to the point when ownership of goods passes to the buyer. and Merchandise inventory :: Products a company owns and intends to sell. and General and administrative expenses :: Expenses that support overall operations and includes expenses related to accounting, human resource management and financial management. and EOM :: The abbreviation for end-of-month; used to describe credit terms for some transactions. and Inventory shrinkage :: Inventory losses that can occur as a result of theft or deterioration. and Multiplestep income statement :: An income statement format that shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items. and List price :: The catalog price of an item before any trade discount is deducted. and Selling expenses :: The expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers. 132. Perpetual inventory system :: An accounting method that continually updates accounting records for merchandise transactions. and Periodic inventory system :: An accounting method that updates the accounting records for merchandise transactions only at the end of a period. and Discount period :: The time period in which a cash discount is available and a reduced payment can be made by the buyer. and Debit memorandum :: A notification that the sender has debited the recipient's account kept by the sender. and Selling expenses :: The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers. and Credit memorandum :: A notification that the sender has credited the recipient's account kept by the sender. and Sales discount :: A cash discount granted to customers for paying within the discount period. and Gross profit :: Net sales less cost of goods sold. and Credit terms :: The description of the amounts and timing of payments from a buyer to a seller. and Credit period :: The amount of time allowed before full payment is due. Feedback: The basic components of income begin with net sales. Cost of goods sold is subtracted from net sales to get gross profit (also called gross margin). Operating expenses are then subtracted from gross margin to determine net income. 133. Answers will vary Feedback: A wholesaler is an intermediary that buys products from manufacturers and sells to retailers or other wholesalers. A retailer is an intermediary that buys products from manufacturers or wholesalers and sells them to consumers. 134. Answers will vary Feedback: Merchandise inventory is a current asset that represents products a company owns and intends to sell. Its costs include all necessary expenses to buy the inventory, ship it to the store, and make it ready for sale. 135. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: The steps are: (1) cash purchases of merchandise; (2) inventory for sale; (3) credit sales (4) accounts receivable; (5) cash collection. 136. Answers will vary Feedback: A periodic inventory system updates the inventory account only at the end of a period. A perpetual inventory system continually updates accounting records for merchandise transactions. The perpetual inventory system is increasing in popularity due to technological advances and competitive pressures. 137. Answers will vary Feedback: Beginning inventory plus the net cost of purchases is the merchandise available for sale. As inventory is sold, its cost is recorded in cost of goods sold on the income statement. What remains is the ending inventory on the balance sheet. A period's ending inventory becomes the next period's beginning inventory. 138. Answers will vary Feedback: The acid-test ratio is calculated by dividing quick assets (cash, current receivables, and short-term investments) by current liabilities. The acid-test measures the ability of a firm to pay its current liabilities. As a rule of thumb an acid test ratio less than 1 means that current liabilities exceed quick assets and the company is likely to face near-term liquidity problems. 139. Answers will vary Feedback: The gross margin ratio is calculated by dividing gross margin (or net sales less cost of goods sold) by net sales. The gross margin ratio measures a firm's profitability in selling its inventory. The gross margin must be large enough to cover operating expenses and provide sufficient net income to the owner(s). 140. Answers will vary If goods are shipped FOB destination, ownership transfers to the buyer when the goods arrive at the buyer's place of business. The seller is responsible for paying shipping costs and bears the risk of damage or loss in transit. The seller does not record revenue until the goods arrive at the destination because the transaction is not complete before that point. Feedback: FOB stands for free on board. If goods are shipped FOB shipping point, ownership transfers to the buyer when the goods depart the seller's place of business, and the seller records revenue at that time. The buyer is then responsible for paying shipping costs and bearing the risk of damage or loss when goods are in transit. 141. Answers will vary Feedback: Purchases, net of trade discounts, are added (debited) to the Merchandise Inventory account. Purchases discounts and purchases returns and allowances are subtracted (credited) from Merchandise Inventory. Transportation-in costs are added (debited) to Merchandise Inventory. The accounting procedures are recorded each time merchandise purchases occur. In this way, merchandise inventory reflects all net purchases on a timely basis. 142. Answers will vary Feedback: Sales are recorded at list price less any trade discounts. The cost of items sold is transferred from Merchandise Inventory to Cost of Goods Sold. Refunds or credits for returned merchandise are recorded (debited) to Sales Returns and Allowances. When cash discounts from the sales price are taken, the seller records (debits) the amount of the discounts to Sales Discounts. These accounting processes are recorded each time sales transactions occur. In this way, merchandise inventory, cost of sales, sales and receivables (or cash) reflect sales transactions on a timely basis. 143. Answers will vary Feedback: Inventory shrinkage is the loss of merchandise inventory due to theft or deterioration or similar phenomena. Inventory shrinkage is typically added (debited) to the cost of goods sold and Merchandise Inventory is reduced (credited) for the amount of the shrinkage. 144. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: Merchandising companies have some accounts that must be closed that service companies do not have. Generally, the revenue account for merchandising companies is called Sales rather than Fees Earned. It is closed with a debit, as are other revenues. Service companies do not have Sales Discounts, Sales Returns and Allowances, and Cost of Goods Sold that all appear in the accounts of merchandising companies. Each of these accounts must be closed with a credit. The remaining closing entries - closing Income Summary to Owner's Capital, and closing Withdrawals to Owner's Capital - are identical whether the firm is a merchandising firm or a service firm. 145. Answers will vary Feedback: A single-step income statement format includes cost of goods sold as another expense, and shows only one subtotal for total expenses. A multiple-step income statement format shows detailed computation of net sales and other costs and expenses, and reports subtotals for various classes of items. 146. Answers will vary Feedback: Selling expenses include the expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers. General and administrative expenses support a company's overall operations and include expenses related to accounting, human resource management, and financial management. Some expenses can relate to both areas and are allocated between them. 147. Answers will vary Feedback: Under a perpetual system each purchase, purchase return and allowance, purchase discount, and transportation-in is recorded in the merchandise inventory account. Under a periodic system, a separate temporary account is set up for each of these items. The perpetual inventory system yields more timely information for managers to better monitor and control inventory costs and levels. 148. Answers will vary Feedback: Tracking merchandise activities was necessary to set prices and to manage discounts, allowances and returns of both sales and purchases. A perpetual inventory system enabled the business to stock the right type and amounts of merchandise and to avoid the costs of being out-of-stock and carrying excess inventory. Khary understood the importance of managing inventory costs to get the most profit and in calculating working capital. 149. Answers will vary Feedback: $500,000 - $350,000 = $150,000 150. Answers will vary Feedback: $852,000 - $230,000 = $622,000 151. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com (g) 5,200 - 2,500 = 2,700 (f) 5,000 + 5,200 = 10,200 (e) 6,750 - 3,750 = 3,000 (d) 10,000 - 6,750 = 3,250 (c) 980 + 3,750 = 4,730 (b) 375, the beginning inventory for 2010 is the ending inventory for 2009 (a) 2,770 + 375 - 2400 = 745 Feedback: 152. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Part 3: Trico's current ratio lags behind Duco's but is ahead of both Unico and the industry average. Trico's acid test ratio is behind both Unico and Duco but is ahead of the industry average. Overall, Trico appears reasonably strong on liquidity. Part 2: Rank order: Part 1 Feedback: 153. Answers will vary Both Chisolm's Collectibles and Bart's Basement have acceptable levels of liquidity. However, even though Annie's Attic and Martin's Marbles have acceptable current ratios, their quick ratios indicate a potential liquidity problem. We should attempt to collect additional information to support or refute the evidence of a potential liquidity problem. Feedback: 154. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 3. This company does not have enough quick assets to be considered in a strong liquidity position. The company may have too much money tied up in inventory or other less liquid current (or noncurrent) assets. Additional analyses should be undertaken to verify or refute this apparent liquidity concern. 2. Feedback: 1. The acid-test ratio measures the ability of a firm to pay its current liabilities. It is a more stringent test of liquidity as compared to the current ratio. 155. Answers will vary Feedback: 156. Answers will vary Feedback: 157. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 3. Unico's gross margin ratio is increasing, while Trico's is decreasing. Moreover, these changes appear significant and warrant further analysis. 2. Trico had the more favorable ratio for each year. 1. Feedback: 158. Answers will vary Feedback: 159. Answers will vary Feedback: 160. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 161. Answers will vary Feedback: 162. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 163. Answers will vary Feedback: 164. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Closing entries: Feedback: 165. Answers will vary Feedback: 166. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 167. Answers will vary Feedback: 168. Answers will vary Feedback: 169. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 170. Answers will vary Feedback: 171. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 172. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 173. Answers will vary Interest expense ($294,000x.09x20/365) 1,449.86 Amount saved $4,550.14 Discount taken $6,000.00 3. By borrowing the money on the last day of the discount period and repaying it on the last day of the credit period, the loan would be outstanding for 20 days (30-10). Interest on the loan is calculated at 9% for 20 days. The amount saved is the difference between the discount received for paying on time and the amount of interest expense that would be paid to the bank. Feedback: 174. Answers will vary To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com Feedback: 175. Answers will vary 176. Wholesaler 177. Operating Cycle 178. Merchandise Inventory 179. Periodic 180. Perpetual 181. Merchandise available for sale 182. Ending Inventory 183. Liquidity 184. Cost Of Goods Sold 185. Credit Terms 186. Debit Memorandum 187. Shipping Point, Or Factory 188. Destination 189. Sales Returns 190. Sales Allowances 191. Credit Memorandum 192. Reducing Future Collection Efforts 193. Physical Count (Or Count) 194. General And Administrative 195. Multiple-Step 196. Single-Step To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com 197. Other Revenues And Gains 198. Other Expenses And Losses 199. Net Income 200. Periodic To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http://downloadslide.blogspot.com ch05 Summary Category AACSB: Analytic AACSB: Analytic, Communications AACSB: Communications AICPA BB: Critical Thinking AICPA BB: Global AICPA BB: Industry AICPA FN: Decision Making AICPA FN: Measurement AICPA FN: Reporting AICPA FN: Risk Analysis Blooms: Apply Blooms: Remember Blooms: Understand Difficulty: Easy Difficulty: Hard Difficulty: Medium Fundamental - Chapter 05 Learning Objective: A1 Compute the acid-test ratio and explain its use to assess liquidity. Learning Objective: A2 Compute the gross margin ratio and explain its use to assess profitability. Learning Objective: C1 Describe merchandising activities and identify income components for a merchandising company. Learning Objective: C2 Identify and explain the inventory asset and cost flows of a merchandising company. Learning Objective: P1 Analyze and record transactions for merchandise purchases using a perpetual system. Learning Objective: P2 Analyze and record transactions for merchandise sales using a perpetual system. Learning Objective: P3 Prepare adjustments and close accounts for a merchandising company. Learning Objective: P4 Define and prepare multiplestep and single-step income statements. Learning Objective: P5 Appendix 5A-- Record and compare merchandising transactions using both periodic and perpetual inventory systems. # of Questions 71 1 128 3 1 196 101 46 22 31 65 70 65 70 65 65 200 22 14 23 26 39 30 15 30 15

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always results in a larger etched region[110]Boundary ofRectangular Pit50 misalignmentImage by MIT OpenCourseWare.Figure 3.25 in: Senturia, Stephen D. Microsystem Design.Boston, MA: Kluwer Academic Publishers, 2001, p. 65. ISBN: 9780792372
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ters in its operations (e.g., TCP keepalivetimer). Since the TCP/IP protocols are used in many applications, a set ofdefault values may not be optimal for different situations. In addition, thenetwork administrator may wish to turn on (or off) som
Harvard - ACCTG - 507
To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.comch04Student: _1. 2. 3. 4.Accounts that appear in the balance sheet are often called te
Harvard - ACCTG - 507
To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.comch03Student: _1. 2.A company's fiscal year must correspond with the calendar year. Tru
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To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.comch02Student: _1. 2. 3. 4. 5.The first step in the processing of a transaction is to an
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To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.com To download more ebooks, slides, SM and TB visit: http:/downloadslide.blogspot.comch01Student: _1.Accounting is an information and measurement system that identifies, r
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ContentsChapter 12Debt Financing.1Chapter 13Equity Financing.39Chapter 14Investments in Debt and Equity Securities.78Chapter 15Leases.115Chapter 16Income Taxes.148Chapter 17Employee CompensationPayroll, Pensions,and Other Compensation Is
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TO THE INSTRUCTORThis Test Bank is intended to accompany Intermediate Accounting, 16th Edition, by James D.Stice, Earl K. Stice, and K. Fred Skousen. The Test Bank includes examination questions andproblems appropriate for instructors to use in testing
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Chapter 12Debt FinancingMULTIPLE CHOICE1. For a liability to exist,a. a past transaction or event must have occurred.b. the exact amount must be known.c. the identity of the party owed must be known.d. an obligation to pay cash in the future must ex
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210CHAPTER16Problem1611.C2.D3.D4.D5.BProblem162Land BuildingCashpaidforlandandoldbuilding1,000,000Removalofoldbuilding50,000Paymenttotenantsofoldbuildingtovacatepremises 15,000Architectfee200,000Buildingpermit30,000Feefortitlesearch10,
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139CHAPTER11Problem111Problem1121.A2.C3.C4.A5.D1.B2.D3.B4.A5.C6.A7.C8.A9.D10.BProblem1131.D2.D3.C4.A5.CProblem114 1.B2.C3.D 4.A5.AProblem115Equitymethod1.InvestmentinassociateCashAcquisitioncostNetassetsacquired(20%x8,0
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72CHAPTER6Problem611.C2.C3.C4.A5.C6.B7.C8.B9.A10.CProblem62Problem631.C 6.A2.D 7.B3.C8.B4.C 9.B5.B 10.DMarch1CashNotepayablebankApril1Cash SalesdiscountAccountsreceivableJune1CashAccountsreceivableSept.1Notepayablebank Interest
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SOLUTIONMANUALFinancialAccountingValixandPeraltaVolumeOne2008Edition1CHAPTER1Problem111.D2.C3.D4.D5.C6.C7.B8.C9.D10.AProblem12Problem13Problem141.A2.A3.D4.B5.D6.B7.D8.C9.C1.C2.D3.D4.A5.D1.A2.C3.A4.A5.D 6.A7.D8.B9.
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SOLUTIONMANUALFinancialAccountingValixandPeraltaVolumeOne2008Edition1CHAPTER1Problem11Problem12Problem13Problem141.A2.A3.D4.B5.D6.B7.D8.C9.C10.D1.C2.D3.D4.A5.D1.A2.C3.A4.A5.D 6.A7.D8.B9.D10.DProblem15Problem16Problem17
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CHAPTER17DepreciationTableServiceHoursMethodProblem171Problem1721.A2.D3.B4.D5.D6.D7.D8.C9.C10.B1.C2.A3.D4.D5.D6.B7.C8.B9.A 10. AAccumulatedYearParticular Depreciationdepreciation BookvalueAcquisitioncost635,000200814,000x10
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This file is from study4smart.blogspot.com. This is not intended for re-distribution and solely for review purposes. It is not intended to infringe copyright by the owner, we strongly recommend to buy original ones. Thank you. Request more? Just contact u
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This file is from study4smart.blogspot.com. This is not intended for re-distribution and solely for review purposes. It is not intended to infringe copyright by the owner, we strongly recommend to buy original ones. Thank you. Request more? Just contact u
Harvard - ACCTG - 507
This file is from study4smart.blogspot.com. This is not intended for re-distribution and solely for review purposes. It is not intended to infringe copyright by the owner, we strongly recommend to buy original ones. Thank you. Request more? Just contact u
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173 CHAPTER10Problem101 Bookvaluepershare(8,800,000/50,000) Problem102 Excess a.Balances 12%x1,000,000x2 12%x4,000,000 Balanceforparticipation Total Dividebysharesoutstanding Bookvaluepershare b.Balances 12%x1,000,000x2 15%x4,000,000 Balanceforparticipat
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71CHAPTER4Problem41 1.C 2.A 3.D 4.D 5.A Problem42 1.Incometaxexpense Incometaxpayable(35%x1,500,000) 2.Incometaxexpense Deferredtaxliability(35%x500,000) 3.Incometaxpayable Cash Currenttaxexpense Deferredtaxexpense Totalincometaxexpense Problem43 1.Inco
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18CHAPTER2Problem21Problem221.A2.B3.A4.C5.A1.A2.D3.A4.D5.B6.D7.A8.D9.D10.BProblem23Requirement12008April1Oct.1Dec.3131Cash(7,000,000x106%)BondspayablePremiumonbondspayable7,420,000Interestexpense(7,000,000x12%x6/12)Cash420,
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112CHAPTER10Problem101 1.C 2.B 3.B 4.A 5.A 6.B 7.C 8.C 9.D 10.A Problem102 1.C 2.B 3.C 4.D 5.AProblem103 2007 Netincome Overstatementofinventory: 2007 2008 Understatementofaccruedadvertising: 2007 2008 Understatementofaccruedinterestincome: 2007 2008 O
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74 CHAPTER8Problem81 1.Salesonaccount Add:Accountsreceivable,January1 Total Less:Accountsreceivable,December31 Collectionsoncreditsales Cashsales Totalsalescashbasis Salesonaccount Cashsales Totalsalesaccrual 2.Purchasesonaccount Add:Accountspayable,Janu
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53CHAPTER5Problem 5-1 1.C 2.B 3.B 4.C 5.D 6.A 7.C 8.B 9.D 10.D Problem 5-2 1.C 2.C 3.A 4.B 5.A Problem 5-3 1.B 6.A 2.A 7.B 3.A 8.B 4.D 9.B 5.A 10.CProblem 5-4 Answer A Cost Accumulateddepreciation(3,000,000/6x3) BookvalueJanuary1,2008 Depreciationfor20
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28CHAPTER3Problem31 1.C 2.C 3.A 4.B 5.C Problem32 1.A 2.B 3.B 4.A 5.C Problem33AnswerD CapitalDecember31 Add:Withdrawalsmerchandiseatcost Total Less:CapitalJanuary1 Additionalinvestment(1,000,000+120,000) Netloss 2,500,000 200,000 2,700,000 2,000,00
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CONTENTSPREFACEMajor Changes in this EditionvRevised Structure of the Test BankviDifficulty LevelviTime Requirements and Financial CalculatorsviDebugging the QuestionsviiComputerized Test BanksviiStudent Preparation for a Test Bank ExamThe
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Exam Code:ADate _DR. DANA PAULISBUSINESS FINANCESPRING 2003, FIRST MIDTERM EXAMEXAM INSTRUCTIONSAll questions are multiple choice.In each question there is only onecorrect answer. Select the answer you believe to be most correct.ANSWERS
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This Accounting Materials are brought to you by www.everything.freelahat.comCHAPTER 4 VARIABLE COSTING [Problem 1] 1. Direct materials Direct labor Var OH FxOH (P4,000,000/1,000) Unit product costs 2. AC P1,200 1,400 500 4,000 P7,100 VC P1,200 1,400 500
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This Accounting Materials are brought to you by www.everything.freelahat.comCHAPTER 3 COSTS CONCEPTS and CLASSIFICATION [Problem 1] 1. Direct labor Variable factory overhead Fixed factory overhead Unit conversion cost 2. Direct materials Direct labor Uni
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This Accounting Materials are brought to you by www.everything.freelahat.comManagement Advisory Services by Franklin T. Agamata, MBA, CPA Suggested Key Answers Multiple Choice Questionnaires 2007 Edition Chapter 1 Multiple Choice Basic Concepts 1. C 2. D
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CostVolumeProfitAnalysisMODULE 4 COST-VOLUME-PROFIT ANALYSIS THEORIES: 1. To which function of management is CVP analysis most applicable? A. Planning C. Directing B. Organizing D. Controlling Bobadilla 2. The systematic examination of the relationships
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ActivityCostandAnalysisMODULE 3 ACTIVITY COST AND COST ANALYSIS THEORIES: 1. Cost behavior analysis is a study of how a firm's costs A. relate to competitors' costs. B. relate to general price level changes. C. respond to changes in activity levels withi
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MANAGEMENT ACCOUNTING (VOLUME II) - Solutions ManualCHAPTER 17 APPLICATION OF QUANTITATIVE TECHNIQUES IN PLANNING, CONTROL AND DECISION MAKING II. Questions 1. a. Decision tree analysis provides a systematic framework for analyzing a sequence of interre
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 16 STANDARD COSTS AND OPERATING PERFORMANCE MEASURESI. Questions 1. Standard costs are superior to past data for comparison with actual costs because they ask the question "Is present performanc
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 15 FUNCTIONAL AND ACTIVITYBASED BUDGETING I. Questions 1. No. Planning and control are different, although related, concepts. Planning involves developing objectives and formulating steps to ach
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 13 COSTVOLUMEPROFIT RELATIONSHIPSI. Questions 1. The total "contribution margin" is the excess of total revenue over total variable costs. The unit contribution margin is the excess of the unit
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 12 VARIABLE COSTINGI. Questions 1. The variable costing technique does not consider fixed costs as unimportant or irrelevant, but it maintains that the distinction between behaviors of different
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 10 SYSTEMS DESIGN: JOBORDER COSTING AND PROCESS COSTINGI. Questions 1. Job-order costing is used in those manufacturing situations where there are many different products produced each period. E
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 9 COST BEHAVIOR: ANALYSIS AND USEI. Questions 1. a. Variable cost: A variable cost is one that remains constant on a per unit basis, but which changes in total in direct relationship to changes
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 8 COST CONCEPTS AND CLASSIFICATIONSI. Questions 1. The phrase "different costs for different purposes" refers to the fact that the word "cost" can have different meanings depending on the contex
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 7 GROSS PROFIT VARIATION ANALYSIS AND EARNINGS PER SHARE DETERMINATIONI. Problems Problem I The Dawn Mining Company Gross Profit Variation Analysis For 2006 Increase in Sales: Quantity Factor [(
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 6 CASH FLOW ANALYSISI. Questions 1. Purposes of the Statement of Cash Flows a. To predict future cash flows b. To evaluate management decisions c. To determine the ability to pay dividends to sh
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 5 FINANCIAL STATEMENTS ANALYSIS III. Questions1.By looking at trends, an analyst hopes to get some idea of whether a situation is improving, remaining the same, or deteriorating. Such analyses
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 4 FINANCIAL STATEMENTS ANALYSIS II. Questions 1. The objective of financial statements analysis is to determine the extent of a firm's success in attaining its financial goals, namely: a. To ear
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 3 UNDERSTANDING FINANCIAL STATEMENTSI. Questions 1. A financial statement is a means of communicating information about an enterprise in financial (i.e., peso) terms. It represents information t
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MANAGEMENT ACCOUNTING (VOLUME I) - Solutions ManualCHAPTER 2 MANAGEMENT ACCOUNTING AND THE BUSINESS ENVIRONMENTI. Questions 1. Managerial accounting information often brings to the attention of managers important issues that need their managerial experi
Harvard - LAW - 505
Sec. 2. What constitutes certainty as to sum. - The sum payable is a sum certain within the meaning of this Act, although it is to be paid: (a) with interest; or (b) by stated installments; or (c) by stated installments, with a provision that, upon defaul
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What is a Negotiable Instrument? A written contract for the payment of money which complies with the requirements of Sec. 1 of the NIL, which by its form and on its face, is intended as a substitute for money and passes from hand to hand as money, so as t
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MANAGEMENT ACCOUNTING (VOLUME II) - Solutions ManualCHAPTER 18 APPLICATION OF QUANTITATIVE TECHNIQUES IN PLANNING, CONTROL AND DECISION MAKING III. Questions 1. PERT is superior to Gantt Charts in complex projects because: a. PERT charts are flexible an
Cornell - CHEME - 6640
AJHunterEnergy EconomicsChemE6640Task 4 Energy and Information as factors of production In recent lectures I have talked about production functions. They connect input variables called "factors of production" with the output that they create. Tradition
Cornell - CHEME - 6640
AJHunterEnergy EconomicsChemE6640Task 3 Refinery LP Production functions take various forms. One is the Linear Program (LP) where a set of linear equations define the system under study. The coefficients of the equations can vary but are limited by con
Cornell - CHEME - 6640
1/21/13Lecture 2 ChemE 664011/21/13Lecture 2 ChemE 664021/21/13Lecture 2 ChemE 664031/21/13Lecture 2 ChemE 664041/21/13Lecture 2 ChemE 664051/21/13Lecture 2 ChemE 664061/21/13Lecture 2 ChemE 664071/21/13Lecture 2 ChemE 664081/21/13
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1/21/13Lecture 5 ChemE 66401Coalbed Thickness (inches) Underground Surface Total<7 7-12 13-18 19-24 25-30 31-36 37-42 43-48 49-54 55-60 61-66 67-72 73-78180 824 5,528 17,250 29,966 37,986 27,459 38,365 34,773 61,717 7,041 19,961 8,14038 3,107 6,576
Cornell - CHEME - 6640
Task 1This task asks you to model a coal strip mine and its transportation to the nearest coal transfer "hub". You will work in teams of 4. There is nothing that you cannot imagine, even if you have never seen a coal mine. So you can collectively setup a
Cornell - CHEME - 6640
Platt's Coal Outlook1/21/13Lecture 7 ChemE 6640 -1Platt's Coal Outlook1/21/13Lecture 7 ChemE 6640 -2Platt's Coal Outlook1/21/13Lecture 7 ChemE 6640 -3Platt's Coal Outlook1/21/13Lecture 7 ChemE 6640 -4World Gas Intelligence1/21/13Lecture
Cornell - CHEME - 6640
01/21/13Lecture 8 ChemE 6640 - Crude oil story101/21/13Lecture 8 ChemE 6640 - Crude oil story201/21/13Lecture 8 ChemE 6640 - Crude oil story301/21/13Lecture 8 ChemE 6640 - Crude oil story401/21/13Lecture 8 ChemE 6640 - Crude oil story501/21
Cornell - CHEME - 6640
Typical Loads Control System1/21/13ChemE 6640 Ref:11/21/13ChemE 6640 Ref:2Overhead Cable1/21/13ChemE 6640 Ref:Cable Material1/21/13ChemE 6640 Ref:1/21/13ChemE 6640 Ref:5Conversion1/21/13ChemE 6640 Ref:61/21/13ChemE 6640 Ref:71/21/13
Cornell - CHEME - 6640
Champlain Hudson Power ExpressChamplain Hudson Power ExpressCommercialization Generator Push2Champlain Hudson Power ExpressDelivering Clean, Reliable Power3Champlain Hudson Power ExpressCreating Jobs and Fueling Economic GrowthNote: Economic stud