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18 - 1 Financial Statement Analysis MATCHING SET A 236.For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio. Code: L =Liquidity ratio P =Profitability ratio S=Solvency ratio ____              1.Price-earnings ratio ____              2.Asset turnover ____              3.Accounts receivable turnover ____              4.Earnings per share ____              5.Payout ratio ____              6.Current ratio ____             .
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19 - 1 Managerial Accounting 88.Which one of the following represents a period cost? a.The VP of Sales' salary and benefits b.Overhead allocated to the manufacturing operations c.Labor costs associated with quality control d.Fringe benefits associated with factory workers 89.Product costs are also called a.direct costs. b.overhead costs. c.inventoriable costs. d.capitalizable costs. 90.For inventoriable costs to become expenses under the expense recognition.
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19 - 1 Managerial Accounting Ex. 170 Presented below are incomplete 2014 manufacturing cost data for Beloshi Corporation. Direct Materials Used Direct Labor Manufacturing Overhead Total Manufacturing Costs Work in Process (1/1) Work in Process (12/31) Cost of Goods Manufactured (a) $39,000 $82,000 $42,000 ? $123,000 $98,000 ? (b) $147,000 $51,000 $94,000 $292,000 ? $96,000 $310,000 (c) $51,000 $119,000 $124,000 $294,000 $408,000 ? $512,000 Instructions Determine the missing amounts. Ex. 171 Among the items that Thome Print Shop accounts for are the following:               1.Direct labor               2.Office supplies used              .
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19 - 1 Managerial Accounting Ex. 168 For each item listed below, indicate in the space to the left whether the item would be considered a product cost or a period cost for a manufacturing company. Use the following code: Pr=Product cost Pe=Period cost ____              1.Factory supervisory salaries ____              2.Sales commissions ____              3.Income tax expense ____              4.Indirect materials used ____             .
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19 - 1 Managerial Accounting 58.Which of the following is not a management function? a.Constraining b.Planning c.Controlling d.Directing 59.A manager that is establishing objectives is performing which management function? a.Controlling b.Directing c.Planning d.Constraining 60.The management function that requires managers to look ahead and establish objectives is a.controlling. b.directing. c.planning. d.constraining. 61.In determining whether planned goals are being met, a manager is performing the function of a.planning. b.follow-up. c.directing. d.controlling. 62.Which of the.
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18 - 1 Financial Statement Analysis Ex. 221 Indicate whether the following items would be reported as an ordinary or an extraordinary item in Mallak Corporation's income statement. (a)Loss attributable to labor strike. (b)Gain on sale of fixed assets. (c)Loss from fire. Mallak is a chemical company. (d)Loss from sale of short-term investments. (e)Expropriation of property by a.
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19 - 1 Managerial Accounting 118.Using $2,400,000 as the total manufacturing costs, compute the cost of goods manufactured using the following information. Raw materials inventory, January 1$     20,000 Raw materials inventory, December 3140,000 Work in process, January 122,000 Work in process, December 3128,000 Finished goods, January 142,000 Finished goods, December 3130,000 Raw materials purchases1,200,000 Direct labor560,000 Factory utilities160,000 Indirect labor90,000 Factory depreciation400,000 Operating expenses420,000 a.$2,394,000. b.$2,406,000. c.$2,422,000. d.$2,380,000. 119.Using.
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18 - 1 Financial Statement Analysis Ex. 210 Selected data from Decco Company are presented below: Total assets$1,600,000 Average assets2,000,000 Net income380,000 Net sales1,500,000 Average common stockholders' equity1,000,000 Instructions Calculate the profitability ratios that can be computed from the above information. Ex. 211 The following data are taken from the financial statements of Dands Company:     2015     2014  Monthly average accounts receivable$   565,000$   700,000 Net.
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19 - 1 Managerial Accounting BRIEF Exercises BE 152 Presented below are Puch Company’s monthly manufacturing cost data related to its personal computer products. (a)Taxes on factory building$830,000 (b)Raw materials 68,000 (c)Depreciation on manufacturing equip.220,000 (d)Wages for assembly line workers380,000 Instructions Enter each cost item in the following table, placing an “X” under the appropriate headings. Product Costs Direct Materials Direct Labor Manufacturing  Overhead (a) (b) (c) (d) BE.
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18 - 1 Financial Statement Analysis Ex. 199 The comparative condensed income statements of Marks Corporation are shown below. MARKS CORPORATION Comparative Condensed Income Statements For the Years Ended December 31     2015        2014    Net sales$620,000$500,000 Cost of goods sold 450,000  400,000 Gross profit170,000100,000 Operating expenses   54,000    40,000 Net income$116,000$  60,000 Instructions (a)Prepare a horizontal analysis of the income statement data for.
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19 - 1 Managerial Accounting Ex. 164 Presented below is a list of costs and expenses incurred in the factory by Off-Road Corporation, a manufacturer of recreational vehicles. ____1.Property taxes on the factory land ____2.Nails and glue used in production ____3.Cabinet maker's wages ____4.Factory supervisors’ salaries ____5.Metal used in manufacturing ____6.Depreciation on factory machines ____7.Factory utilities ____8.Carpeting for the recreational vehicles ____9.Property.
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18 - 1 Financial Statement Analysis Ex. 216 Lewis Corporation experienced a fire on December 31, 2015, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. December 31, 2015December 31, 2014 Cash$  30,000$  10,000 Receivables (net)85,000125,000 Inventory200,000180,000 Accounts payable50,00090,000 Notes payable30,00060,000 Common stock, $100 par400,000400,000 Retained.
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19 - 1 Managerial Accounting 138.Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion? a.Balanced scorecard b.Just-in-time inventory c.Activity-based costing d.Total-quality management 139.What is “balanced” in the balanced scorecard approach? a.The number of products produced b.The emphasis on financial and non-financial performance measurements c.The amount of costs allocated to products d.The number.
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19 - 1 Managerial Accounting 128.Perry Company has beginning work in process inventory of $216,000 and total manufacturing costs of $954,000. If cost of goods manufactured is $960,000, what is the cost of the ending work in process inventory?  a.$208,000. b.$210,000. c.$216,000. d.$204,000. 129.Lenand Company has beginning and ending raw materials inventories of $130,000 and $170,000,.
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18 - 1 Financial Statement Analysis Ex. 214 The income statement for Pointe Company for the year ended December 31, 2014 appears below. Sales$720,000 Cost of goods sold  380,000 Gross profit340,000 Expenses  190,000* Net income$150,000 *Includes $20,000 of interest expense and $25,000 of income tax expense. Additional information: 1.Common stock outstanding on January 1, 2014 was 50,000 shares. On July 1,.
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19 - 1 Managerial Accounting 11.Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead. 12.Raw materials are equal to direct materials minus indirect materials. 13.Raw materials that can be conveniently and directly associated with a finished product are called materials overhead. 14.The total cost of a finished.
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18 - 1 Financial Statement Analysis Ex. 209 Booker Corporation had the following comparative current assets and current liabilities: Dec. 31, 2015Dec. 31, 2014 Current assets Cash$  60,000$  30,000 Short-term investments40,00010,000 Accounts receivable55,00095,000 Inventory110,00090,000 Prepaid expenses    35,000    20,000 Total current assets$300,000$245,000 Current liabilities Accounts payable$140,000$110,000 Salaries payable40,00030,000 Income tax payable    20,000    15,000 Total current liabilities$200,000$155,000 During 2015, credit sales and cost of goods sold were $750,000 and.
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19 - 1 Managerial Accounting Exercises Ex. 162 Financial accounting information and managerial accounting information have a number of distinguishing characteristics. For each of the characteristics listed below, indicate which characteristics are more closely related to financial accounting by placing the letter "F" in the space to the left of the item and indicate.
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19 - 1 Managerial Accounting 48.Financial statements for external users can be described as a.user-specific. b.general-purpose. c.special-purpose. d.managerial reports. 49.Managerial accounting reports can be described as a.general-purpose. b.macro-reports. c.special-purpose. d.classified financial statements. 50.The reporting standard for external financial reports is a.industry-specific. b.company-specific. c.generally accepted accounting principles. d.department-specific. 51.Which of the following statements about internal reports is not true? a.The content of internal reports may extend beyond the double-entry.
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18 - 1 Financial Statement Analysis Ex. 196 The comparative balance sheet of Nathan Company appears below: NATHAN COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets   2015 2014 Current assets ............................................$   420$333 Plant assets ..............................................     780  567 Total assets ..............................................$1,200$900 Liabilities and stockholders' equity Current liabilities ..........................................$   168$144 Long-term debt ...........................................300162 Common stock ............................................432306 Retained earnings .........................................     300  288 Total liabilities and stockholders' equity .....................$1,200$900 Instructions (a)Using horizontal.
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18 - 1 Financial Statement Analysis SHORT-ANSWER ESSAY QUESTIONS S-A E 238 Horizontal and vertical analyses are analytical tools frequently used to analyze financial statements. What type of information or insights can be obtained by using these two techniques?  Explain how the output of horizontal analysis and vertical analysis can be compared to industry.
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18 - 1 Financial Statement Analysis Ex. 194 Ladle Corporation had net income of $2,000,000 in 2013. Using 2013 as the base year, net income decreased by 70% in 2014 and increased by 180% in 2015. Instructions Compute the net income reported by Ladle Corporation for 2014 and 2015. Ex. 195 The following items were taken from.
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19 - 1 Managerial Accounting Ex. 172 Kalven Company manufactures boats. During September, 2014, the company purchased 100 GPS devices at a cost of $120 each. Kalven withdrew 60 devices from the warehouse during the month. Twenty of these devices were installed in salespersons’ cars and the remaining 40 phones were put in.
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18 - 1 Financial Statement Analysis Ex. 205 The following ratios have been computed for Mason Company for 2015. Profit margin12.5% Times interest earned8 times Receivables turnover4 times Acid-test ratio2 : 1 Current ratio3 : 1 Debt to total assets ratio20% Mason Company’s 2015 financial statements with missing information follow: MASON COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets     2015    2014 Cash..............................................$  30,000$  45,000 Short-term Investments...............................10,00025,000 Accounts.
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18 - 1 Financial Statement Analysis Ex. 212 State the effect of the following transactions on the current ratio. Use increase, decrease, or no effect for your answer. (a)Collection of an accounts receivable. (b)Declaration of cash dividends. (c)Additional stock is sold for cash. (d)Short-term investments are purchased for cash. (e)Equipment is purchased for cash. (f)Inventory purchases are made for.
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18 - 1 Financial Statement Analysis Ex. 206 Selected data for Irma's Store appear below.     2015     2014  Net sales$800,000$520,000 Cost of goods sold600,000345,000 Inventory at end of year65,00085,000 Accounts receivable at end of year140,000110,000 Instructions Compute the following for 2015: (a)Gross profit rate. (b)Inventory turnover. (c)Receivables turnover. Ex. 207 Selected financial statement data for Homer Company are presented below. Net sales$1,500,000 Cost of goods sold700,000 Interest expense10,000 Net.
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18 - 1 Financial Statement Analysis Ex. 197 Using the following selected items from the comparative balance sheet of Ames Company, illustrate horizontal and vertical analysis. December 31, 2015December 31, 2014 Accounts Receivable$   960,000$   600,000 Inventory975,000780,000 Total Assets4,000,0002,500,000 .
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18 - 1 Financial Statement Analysis Ex. 200 Operating data for Lewis Corporation are presented below.    2014  Net sales$500,000 Cost of goods sold310,000 Operating expenses120,000 Net income70,000 Instructions Prepare a schedule showing a vertical analysis for 2014. Ex. 201 The following information was taken from the financial statements of Lawson Company:     2015    2014 Gross profit on sales...............................$900,000$840,000 Income before income taxes........................280,000230,000 Net income......................................240,000216,000 Net income.
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18 - 1 Financial Statement Analysis COMPLETION STATEMENTS               223.In analyzing and interpreting financial statement information, three major characteristics are generally evaluated:  (1)____________, (2)_____________, and (3)_____________.               224.______________ analysis, also called trend analysis, is a technique for evaluating a percentage increase or decrease for a financial statement item over a period of time.               225.Expressing.
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19 - 1 Managerial Accounting Ex. 166 Bush Company reports the following costs and expenses in May. Factory utilities$  13,300Direct labor$71,900 Depreciation on factorySales salaries44,800 equipment12,250Property taxes on factory Depreciation on delivery trucks3,500building2,600 Indirect factory labor49,800Repairs to office equipment1,500 Indirect materials70,100Factory repairs2,300 Direct materials used154,300Advertising21,000 Factory manager's salary9,000Office supplies used2,460 Instructions From the information, determine the total amount of: (a)Manufacturing overhead. (b)Product costs. (c)Period costs. Ex. 167 Phast.
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19 - 1 Managerial Accounting MULTIPLE CHOICE QUESTIONS 38.Managerial accounting applies to each of the following types of businesses except a.service firms. b.merchandising firms. c.manufacturing firms. d.Managerial accounting applies to all types of firms. 39.Managerial accounting information is generally prepared for a.stockholders. b.creditors. c.managers. d.regulatory agencies. 40.Managerial accounting information a.pertains to the entity as a whole and is highly aggregated. b.pertains to subunits of the.
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19 - 1 Managerial Accounting 78.Which of the following is not another name for the term manufacturing overhead? a.Factory overhead b.Pervasive costs c.Burden d.Indirect manufacturing costs 79.Because of automation, which component of product cost is declining? a.Direct labor b.Direct materials c.Manufacturing overhead d.Advertising 80.The product cost that is most difficult to associate with a product is a.direct materials. b.direct labor. c.manufacturing overhead. d.advertising. 81.Manufacturing costs that cannot.
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18 - 1 Financial Statement Analysis Ex. 198 The comparative condensed balance sheets of Able Corporation are presented below. ABLE CORPORATION Comparative Condensed Balance Sheets December 31 20152014 Assets Current assets$  72,000$  80,000 Property, plant, and equipment (net)95,40090,000 Intangibles    33,600    40,000 Total assets$201,000$210,000 Liabilities and stockholders' equity Current liabilities$  40,320$  48,000 Long-term liabilities142,500150,000 Stockholders' equity    18,180    12,000 Total liabilities and stockholders' equity$201,000$210,000 Instructions (a)Prepare a horizontal analysis of the.
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18 - 1 Financial Statement Analysis Ex. 204 The financial statements of Hainz Company appear below: HAINZ COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets    2015    2014 Cash.................................................$  20,000$  40,000 Short-term investments..................................20,00060,000 Accounts receivable (net).................................40,00030,000 Inventory..............................................60,00070,000 Property, plant and equipment (net).........................  260,000  300,000 Total assets ........................................$400,000$500,000 Liabilities and stockholders' equity Accounts payable.......................................$  20,000$  30,000 Short-term notes payable.................................40,00090,000 Bonds payable.........................................80,000160,000 Common stock.........................................150,000150,000 Retained earnings......................................  110,000    70,000 Total liabilities and stockholders' equity...................$400,000$500,000 Ex. 204 .
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19 - 1 Managerial Accounting 21.Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company. 22.The beginning work in process inventory appears on both the balance sheet and the cost of goods manufactured schedule of a manufacturing company. 23.In calculating gross profit for a manufacturing company,.
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18 - 1 Financial Statement Analysis Ex. 208 Flite Corporation has issued common stock only. The company has been successful and has a gross profit rate of 20%. The information shown below was taken from the company's financial statements. Beginning inventory$   482,000 Purchases4,036,000 Ending inventory? Average accounts receivable800,000 Average common stockholders' equity3,500,000 Sales (all on credit)5,000,000 Net income385,000 Instructions Compute the following: (a)Accounts.
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19 - 1 Managerial Accounting BE 158 Presented below are incomplete 2014 manufacturing cost data for Swayze Corporation. Direct Materials Used Direct Labor Manufacturing Overhead Total Manufacturing Costs (a) $  15,000 $40,000 ? $  86,000 (b) $158,000 ? $115,000 $465,000 Instructions Determine the missing amounts. BE 159 Presented below are incomplete 2014 manufacturing cost data for Apex Corporation.  Direct Materials Used Direct Labor Manufacturing Overhead Total Manufacturing Costs (a) $45,000 $76,000 ? $183,000 (b) $97,000 ? $90,000 $325,000 (c) ? $90,000 $125,000 $270,000 Instructions Determine the missing amounts. BE 160 Mystique Manufacturing Company.
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19 - 1 Managerial Accounting 68.Which one of the following is not a direct material? a.A tire used for a lawn mower b.Plastic used in the covered case for a home PC c.Steel used in the manufacturing of steel-radial tires d.Lubricant for a ball-bearing joint for a large crane 69.Which one of the following is not a.
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18 - 1 Financial Statement Analysis Ex. 202 Selected financial statement data for Mure Company are presented below. December 31, 2015December 31, 2014 Cash$  40,000$30,000 Short-term investments20,00018,000 Receivables (net)100,00090,000 Inventories80,00060,000 Total current liabilities100,00090,000 Ex. 202(Cont.) During 2015, net sales were $950,000, and cost of goods sold was $770,000. Instructions Compute the following ratios at December 31, 2015: (a)Current. (b)Acid-test. (c)Accounts receivable turnover. (d)Inventory turnover. Ex. 203 Selected information from.
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19 - 1 Managerial Accounting TRUE-FALSE STATEMENTS 1.Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports. 2.Managerial accounting information generally pertains to an entity as a whole and is highly aggregated. 3.Managerial accounting applies to all forms of business organizations. 4.Determining the unit cost of manufacturing a.
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19 - 1 Managerial Accounting Ex. 175 The following information is available for Ness Company. January 1, 20142014December 31, 2014 Raw materials inventory$ 25,000$31,000 Work in process inventory14,50020,200 Finished goods inventory32,00027,000 Materials purchased$175,000 Direct labor230,000 Manufacturing overhead190,000 Sales840,000 Instructions (a)Compute cost of goods manufactured. (b)Prepare an income statement through gross profit. Ex. 176 Manufacturing cost data for Salte Company are presented below. Case ACase BCase C Direct materials.
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18 - 1 Financial Statement Analysis Ex. 217 For its fiscal year ending December 31, 2014, Conner Corporation reported the following partial data Income before income taxes$1,200,000 Income tax expense (30% x 950,000)285,000 Income before extraordinary items915,000 Extraordinary loss from flood250,000 Net income$665,000 The flood loss is considered an extraordinary item. The income tax rate is 30% on all.
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19 - 1 Managerial Accounting Ex. 173 Ralphe Manufacturing Company has the following data at June 30, 2014: Raw materials inventory, June 1$  14,700 Work in process inventory, June 117,300 Finished goods inventory, June 144,600 Total manufacturing costs450,000 Sales690,000 Work in process inventory, June 3034,000 Finished goods inventory, June 3062,500 Raw materials inventory, June 3019,000 Ex. 173.(Cont.) Instructions (a)Prepare an income statement through gross.
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19 - 1 Managerial Accounting 108.Sandor Manufacturing Inc.'s accounting records reflect the following inventories: Dec. 31, 2013Dec. 31, 2014 Raw materials inventory$110,000$  90,000 Work in process inventory156,000174,000 Finished goods inventory138,000150,000 During 2014, Sandor purchased $1,440,000 of raw materials, incurred direct labor costs of $300,000, and incurred manufacturing overhead totaling $192,000. How much is raw materials transferred to production.
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19 - 1 Managerial Accounting Ex. 177 From the account balances listed below, prepare a schedule of cost of goods manufactured for Eileen Manufacturing Company for the month ended December 31, 2014. Account Balances Finished Goods Inventory, December 31$42,000 Factory Supervisory Salaries14,000 Income Tax Expense18,000 Raw Materials Inventory, December 113,000 Work In Process Inventory, December 3113,000 Sales Salaries Expense14,000 Factory Depreciation.
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18 - 1 Financial Statement Analysis Set B 237.Match the ratios with the appropriate ratio computation by entering the appropriate letter in the space provided. A.Current ratioF.Times interest earned B.Acid-test ratioG.Inventory turnover C.Profit marginH.Average collection period D.Asset turnoverI.Days in inventory E.Price-earnings ratioJ.Payout ratio               Cost of goods sold ____              1.              —————————               Average inventory               Net income ____              2.—————               Net sales               Cash.
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18 - 1 Financial Statement Analysis S-A E  242 Why is it important to report discontinued operations separately from income from continuing operations? S-A E 243(Ethics) A trusted employee of Outback Tours was caught in the act of embezzling funds. He confessed to earlier embezzlements, but retracted the confession on the advice of his attorney..
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18 - 1 Financial Statement Analysis Ex. 219 Nola Corporation gathered the following information for the fiscal year ended December 31, 2014: Sales$1,300,000 Extraordinary fire loss110,000 Selling and administrative expenses160,000 Cost of goods sold900,000 Loss on sale of equipment40,000 Nola Corporation is subject to a 30% income tax rate. Instructions Prepare a partial income statement, beginning with income before income taxes. Ex..
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19 - 1 Managerial Accounting 31.Managerial accounting is primarily concerned with managers and external users. 32.Planning involves coordinating the diverse activities and human resources of a company to produce a smooth running operation. 33.When the physical association of raw materials with the finished product is too small to trace in terms of cost, they.
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19 - 1 Managerial Accounting 98.Cost of goods manufactured is calculated as follows: a.Beginning WIP + direct materials used + direct labor + manufacturing overhead + ending WIP. b.Direct materials used + direct labor + manufacturing overhead – beginning WIP + ending WIP. c.Beginning WIP + direct materials used + direct labor + manufacturing overhead.
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