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Exam 5: Communicating and Interpreting Accounting Information

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Question 41

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Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000 Average total assets, $200,000 What is Marino's net profit margin?

A) 75%
B) 12%
C) 42%
D) 5%

E) None of the above
F) A) and D)

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Question 42

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Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO) ?

A) Overseeing the financial statement external audit.
B) Ensuring the accuracy and completeness of all reports provided to the Securities & Exchange Commission (SEC) .
C) The certification of the strength of the internal control system.
D) The disclosure to the auditor committee of any frauds they are aware of.

E) B) and C)
F) A) and C)

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Question 43

Multiple Choice

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Which of the following would not be included on an income statement?

An intangible asset has no physical existence and no life.

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances: Requirement: Determine the components of stockholders' equity as of December 31, 2016.

In what order are cash flow activities presented on the statement of cash flows?

Which of the following would not be included within the operating activities section of a cash flow statement?

Which of the following is an objective of the external audit of a company's financial statements?

Which of the following is not reported as an operating expense on the income statement?

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017: Requirements: Compute the following ratios for 2017: A.Net profit margin B.Total asset turnover C.Return on assets

Which of the following is true about gross profit (gross margin) ?

Which of the following would not be classified as a current asset?

Determine the effect of the following transactions on the financial statements components identified. Code your answers as follows: A: If the transaction results in an increase in the financial statement component or ratio. B: If the transaction results in a decrease in the financial statement component or ratio. C: If the transaction does not affect the financial statement component or ratio. Transaction 1: A company sold inventory for an amount greater than its cost. Gross profit _____ Current assets _____ Stockholders' equity _____ Transaction 2: Advertising expense was recorded but has yet to be paid for. Net income _____ Gross Profit _____ Stockholders' equity _____

Which of the following statements is true?

Kryton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

Information on all contractual agreements is included in notes as a financial statement disclosure.

The gross profit percentage decreases when operating expenses increase.