39 which of the following is an account that is shown

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Financial Accounting: The Impact on Decision Makers
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Chapter 2 / Exercise 1
Financial Accounting: The Impact on Decision Makers
Norton/Porter
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39) Which of the following is an account that is shown on the balance sheet for a merchandiser but not on the balance sheet of a service business? A) Unearned Revenue B) Sales Discounts Forfeited C) Estimated Returns Inventory D) Cost of Goods Sold Answer: C 5.6 Learning Objective 5-6 1) The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold. Answer: TRUE 2) A small increase in the gross profit percentage may indicate an important rise in income. Answer: TRUE 3) Gross profit percentage reflects a business's ability to raise selling prices. Answer: FALSE 4) In general, to remain competitive in an industry, a low gross profit percentage is desired. Answer: FALSE 5) Which of the following is the correct formula for calculating gross profit percentage? A) Net profit / Net sales revenue B) Gross profit / Net sales revenue C) Net sales revenue / Net profit D) Net sales revenue / Gross profit Answer: B 6) The gross profit percentage is one of the most carefully watched measures of ________. A) profitability B) liquidity C) solvency D) marketability Answer: A 7) Which of the following is true of the gross profit percentage? A) Gross profit percentage is the same for companies in all industries. B) Gross profit percentage is used to measure the solvency of a company. C) The gross profit percentage is one of the most carefully watched measures of profitability. D) A service company must show its gross profit percentage in its income statement. Answer: C
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Financial Accounting: The Impact on Decision Makers
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Chapter 2 / Exercise 1
Financial Accounting: The Impact on Decision Makers
Norton/Porter
Expert Verified
8) A company made net sales revenue of $500,000, and cost of goods sold totaled $300,000. Calculate its gross profit percentage. A) 40% B) 60% C) 125% D) 325% Answer: A 9) Carpenter, Inc. generated sales revenues of $1,400,000 in 2019. Its cost of goods sold amounted to Calculate Carpenter's gross profit percentage. A) 40% B) 60% C) 167% D) 250% Answer: B 10) What does the gross profit percentage measure? How is it computed? Answer: The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold. Gross profit percentage equals gross profit divided by net sales revenue. 11) The gross profit percentage for Fran's Clothing Retailer was 37.7% for the year ended December 31, 2018 and 42.5% for the year ended December 31, 2019. The industry average gross profit percentage, for both years, is 45.7%. Briefly discuss these findings. Answer: The gross profit percentage for Fran's Clothing Retailer has improved from 37.7 percent for 2018 to 42.5 percent for 2019. This shows that the gross profit earned from merchandise inventory has increased and is providing more to cover the remaining operating expenses and provide for net income. This increase is a good step in reaching the industry average. Fran's Clothing Retailer should work to continue this increase and to keep operating expenses under control. These two actions will improve net income. \ 12) Bridgeport Enterprises reported the following figures from its adjusted trial balance for its first year of business, which ended on June 30, 2019. Accounts Payable $4,800 Accounts Receivable 3,600 Accrued Liabilities 1,400 Administrative Expenses 3,800 Cash 4,500 Common Stock 7,550 Cost of Goods Sold 23,500 Dividends 2,000 Equipment, net 8,500 Interest Expense 150 Merchandise Inventory 2,500 Net Sales Revenue 35,000 Notes Payable, Long-term 1,500 Selling Expenses 1,700 Requirements: a. Prepare a multi-step income statement. b. Prepare the statement of retained earnings. c. Prepare a classified balance sheet. d. Compute the gross profit percentage.
Answer: a.

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