Answer the following statements true (T) or false (F)
1) A merchandiser's statement of retained earnings looks exactly like that of a service business.
2) The balance sheet of a merchandiser looks the same as the balance sheet of a retailer, except merchandisers have the following additional current liability accounts: Estimated Returns Inventory and Refunds Payable.
3) The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.
4) A small increase in the gross profit percentage may indicate an important rise in income.
5) Gross profit percentage reflects a business's ability to raise selling prices.
1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. FALSE
You might also like to view...
The Posting Reference column of the journal provides a cross-reference between
a. the journal and the trial balance; b. the journal and the source documents; c. the ledger and the financial statements; d. the journal and the financial statements; e. none of these.
The primary influence on a person’s value system is personality traits
a. true b. false
Karl Mathers set up a new company and obtained loans to buy inventory with the intention of filing for bankruptcy after 2 years and selling the inventory later to a close friend at deep discounts. What is the term for this type of bankruptcy fraud?
a. Commercial loan fraud b. Inventory dumping fraud c. Bust-out d. None of the above
Data on Liu Inc. for the most recent year are shown below, along with the inventory conversion period (ICP) of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks' average. If this were done, by how much would inventories decline? Use a 365-day year. Cost of goods sold =$85,000 Inventory =$20,000 Inventory conversion period (ICP) =85.88 Benchmark inventory conversion period (ICP) =38.00
A. $7,316 B. $8,129 C. $9,032 D. $10,036 E. $11,151