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Richard’s Sporting Goods reports net income of $100,000 net sales of $500,000 and average assets of $1,000,000

Richard’s Sporting Goods reports net income of $100,000, net sales of $500,000, and average assets of $1,000,000. The profit margin is:

a. 10%.

b. 20%.

c. 50%.

d. 5 times.

 

 

108. Richard’s Sporting Goods reports net income of $100,000, net sales of $500,000, and average assets of $1,000,000. The asset turnover is:

a. 0.1 times.

b. 0.5 times.

c. 2 times.

d. 5 times.

 

 

109. The sale or disposal of a significant component of a company’s operations is referred to as:

a.   A discontinued operation.

b.   An extraordinary item.

c.   Other revenues and expenses.

d.   Gain or loss on sale of assets.

 

 

110. A discontinued operation refers to:

a.   The sale or disposal of a significant component of a company’s operations.

b.   Discontinued inventory items.

c.    Inventory items that have been completed and sold.

d.   The sale of most long-term assets.

 

 

111. An extraordinary item must meet which of the following criteria?

a.   Unusual in nature.

b.   Infrequent in occurrence.

c.   Unusual in nature and infrequent in occurrence.

d.   Unusual in nature or infrequent in occurrence.

 

 

112. Extraordinary items:

a.

Include very large gains or losses from ordinary business activities.

b.

Are both unusual in nature and infrequent in occurrence.

c.

Are shown on the income statement before the tax effect.

d.

Are either unusual in nature or infrequent in occurrence.

 

 

113. Which of the following items is most likely to be reported as an extraordinary loss?

a.

Losses due to the write-down of inventory.

b.

Losses on the sale of long-term assets.

c.

Losses due to business restructuring.

d.

Uninsured losses from a natural disaster.

 

 

114. What is the correct order to present the following items on the income statement?

a.

Other revenues and expenses, income tax expense, discontinued operations, extraordinary items.

b.

Other revenues and expenses, income tax expense, extraordinary items, discontinued operations.

c.

Discontinued operations, extraordinary items, other revenues and expenses, income tax expense.

d.

Discontinued operations, extraordinary items, income tax expense, other revenues and expenses.

 

 

              115. Popson Inc. incurred a material loss, which was not unusual in character, but was clearly an infrequent occurrence. This loss should be reported as:

a.An extraordinary loss.

b.A loss from discontinued operations.

c.Other revenues and expenses.

d.A separate line item in retained earnings.

 

 

116. The financial statements of a firm that uses more conservative accounting practices would be likely to report:

a.

Higher profitability.

b.

Higher dividends.

c.

Higher liabilities.

d.

Higher stockholders’ equity.

Jan 27 2020 View more View Less

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