Unit 6 POB

The foundation for accounting; represents the relationship between assets, liabilities, and owners’ equity, is known as the 

• Accounting Equation 
• Earnings
• Balance Statement
• Worth

Which of the following makes comparisons of the financial conditions at multiple organizations possible: 

• Bookkeeping 
•  Source documents 
• Accounting standards
• Trial balance 

Also known as stockholders’ (or shareholders’) equity, book value, and net worth. 

• Assets
• Liabilities 
• Equity 
• Net Worth 

Cash Conversion Cycle is most effective with

• Retail-type companies 
• Consulting businesses 
• Software companies
• Software companies

On an Income State if the Total Expenses were greater than the Cost of Goods Sold the outcome would be a 

• Net Income
• Revenue
• Net Loss 
• Net Profit

Assets a company already owns and can use to finance a new venture are called:

• accounts payable. 
• dividends. 
• return on capital. 
• equity. 

When businesses invest funds to expand, they are involved in the process of: 

• selling. 
• depreciation. 
• finance.
•  capitalism. 

What is the Working Capital Ratio, if Current Assets are $350,000 and Current Liabilities are $275,000 and what is does the indicator represent?

• 1.27 ratio and is desirable
• 1.27 ratio and is insufficient 
•  .78 ratio and is desirable 
• .78 ratio and is insufficient 

Net Sales $1,600,000 Total Assets $1,500,000 Cost of Goods Sold $900,000 Total Liabilities $1,400,000 Total Expenses $500,000 Current Liabilities $62,000 Using Illustration 6.02, what is the Gross Profit on Sales for the Income Statement? 

• $3,100,000
• $2,500,000
• $700,000 
• $1,000,000

If DIO = 182.5 days, DSO = 3.9 days, and DPO = 103.4 days, what is the Cash Conversion Cycle?

• CCC = 182.5 - 3.9 + 103.4 = 282 days
• CCC = 182.5 + 3.9 - 103.4 = 83 days 
• CCC = 182.5 + 3.9 + 103.4 = 289.8 days 
• CCC = 182.5 - 3.9 - 103.4 = 75.2 days