Indicate whether each of the following statements is true or false.________ a) A common size income statement facilitates comparison between two or more companies of different size and in the same industry.________ b) A common size income statement is prepared by dividing the various amounts reported on the income statement by the amount of total assets.________ c) A common size income statement is helpful in comparing the results of operation in different time periods.________ d) The gross margin percentage is computed by dividing gross margin by net income.________ e) Return on sales is computed by dividing net income by net sales.
What will be an ideal response?
a) T b) F c) T d) F e) T
a) This is true. Common size income statements are helpful in comparing companies of different size in the same industry.
b) This is false. A common size income statement is prepared by dividing elements by sales, not total assets.
c) This is true. Common size income statements are helpful in comparing different time periods.
d) This is false. Gross margin percentage is calculated as gross margin divided by sales.
e) This is true. Return on sales is computed by dividing net income by net sales.
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During May, Phone Mart sold 150 iPhones for $200 each. Each iPhone had cost Phone Mart $108 to purchase and carried a one-year warranty. If 4 percent typically need to be replaced over the warranty period and two actually are replaced during May, the entry to record the Product Warranty Expense is
A) Product Warranty Expense 216 Estimated Product Warranty Liability 216 B) Product Warranty Expense 3,000 Cash 3,000 C) Product Warranty Expense 648 Cash 648 D) Product Warranty Expense 648 Estimated Product Warranty Liability 648
Which of the following is NOT a requirement of strategic capacity planning?
a. forecasting demand over several years b. looking at demand and growth trends c. looking at cyclical demand patterns d. establishing a policy on discounts and rebates
An implied agreement in the contractual relationship is the agreement by the accountant to act in a competent and professional manner
Indicate whether the statement is true or false
Which of the following is the first step in the traditional pricing formula?
a. Determine the adjusted tangible net worth. b.Estimate potential annual earnings of the buyer. c. Determine the average annual net earnings. d. Discount future earnings.