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Home / Questions / Bernstein Inc. is a local retailer The following selected information is available from

Bernstein Inc. is a local retailer The following selected information is available from

Bernstein Inc. is a local retailer. The following selected information is available from their 2007 and 2008 financial statements:
 

Accounts receivable at 12/31/07

$    160,000

Accounts receivable at 12/31/08

240,000

 

 

Inventory at 12/31/07

300,000

Inventory at 12/31/08

360,000

 

 

Net credit sales for 2008

3,400,000

Cost of goods sold for 2008

1,980,000

Net income for 2008

1,000,000

 

 



Refer to the Bernstein Inc. information above. What was Bernstein’s number of days inventory was held for sale in 2008? (round to two decimal places) 
A. 121.67 days
B.   60.83 days
C. 120.46 days
D. 240.13 days

 

42. Which of the following accounts should not be included in the calculation of the acid-test (or quick) ratio? 
A. Accounts payable
B. Accounts receivable
C. Cash
D. Inventory

 

43. Which of the following account balances would not be used in the calculation of the current ratio? 
A. Inventory
B. Accounts payable
C. Sales revenue
D. Prepaid insurance

 

44. Plumeria Inc. has recently calculated the accounts receivable turnover for the current year to be 15. In prior years, the same ratio was always higher. Which of the following statements would be the best interpretation for the reason for the ratio’s change? 
A. The company had less sales in the current year than in prior years.
B. The company had more sales in the current year than in prior years.
C. The company had fewer accounts receivables in the current year than in prior years.
D. The company took longer to collect on their accounts receivables in the current year than in prior years.

 

45. Torrence Inc. has recently calculated the inventory turnover for the current year to be 30. In prior years, the same ratio was always lower. Which of the following statements would be the best interpretation for the reason for the ratio’s change? 
A. The company had less sales in the current year than in prior years.
B. The company purchased less inventory in the current year than in prior years.
C. The company took fewer days to sell its inventory in the current year than in prior years.
D. The company took more days to sell its inventory in the current year than in prior years.

 

46. As a company’s accounts receivable turnover ratio increases from one year to the next, they will find that the number of days’ sales in receivables: 
A. decreases.
B. increases.
C. stays the same.
D. can not be determined.

 

47. As a company’s inventory turnover ratio decreases from one year to the next, they will find that the number of days inventory is held before sale: 
A. decreases.
B. increases.
C. stays the same.
D. can not be determined.

 

48. A quick ratio ____ is often a concern for creditors and managers. 
A. of more than one
B. of less than one
C. equal to one
D. of more than two

 

49. ABC Inc. has determined that it needs to increase its current ratio in order to be in compliance with a creditor’s loan agreement. All else being equal, which of the following ways would be best for increasing their current ratio? 
A. Increasing long-term assets
B. Decreasing current assets
C. Decreasing current liabilities
D. Increasing long-term liabilities

 

50. Which of the following types of companies would you expect to have the highest inventory turnover ratio? 
A. A law firm
B. A construction company
C. A fine jewelry retailer
D. A grocery store

Jan 11 2020 View more View Less

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