JWI 530 Knowledge Check 2

$15.00

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Description

QUESTION 1

The balance sheet has two sections. In a side-by-side presentation:

Assets
Liabilities
are on the left

Assets
Liabilities
are on the right

0.4 points

QUESTION 2

Match each balance sheet category with the correct corresponding account types.

A.
B.
C.
Assets

A.
B.
C.
Liabilities

A.
B.
C.
Equity
A.
Loans, accounts payable, mortgages, and deferred/prepaid revenues
B.
Cash, accounts receivable and inventory, equipment, buildings, real estate
C.
Common stock, preferred shares, paid-in capital, retained earnings, treasury stock
0.4 points

QUESTION 3

Financial Statements like the Balance Sheet are required to have standard titles and formats.
Match the correct phrases – in the correct sequence – with the 3 lines on a Balance Sheet for “Company ABC”:


A.
B.
C.
D.
E.
F.
Line 1:

A.
B.
C.
D.
E.
F.
Line 2:

A.
B.
C.
D.
E.
F.
Line 3:
A.
Balance Sheet
B.
Balance Sheet of Company ABC
C.
As of 12/31/2015
D.
For the Year ended 12/31/2015
E.
In accordance with US GAAP
F.
Company ABC
0.4 points

QUESTION 4

Match each term with the correct definition.

A.
B.
C.
D.
Liquidity

A.
B.
C.
D.
Insolvency

A.
B.
C.
D.
Leverage

A.
B.
C.
D.
Write-off
A.
The ability to meet current obligations with cash or other assets that can be quickly converted to cash in order to pay bills as they come due.
B.
The ability to use borrowed money to put into a business.
C.
Not having enough money to pay the bills as they come due.
D.
Removing an amount from the balance sheet.
0.4 points

QUESTION 5

Based on the balance sheet, what type of organization is this?

Balance Sheet
Cash & Equivalents
33

Accounts Payable
115
Accounts Receivable
50

Salaries Payable
25
Inventory
120

ST portion of Long Term Debt
200
Current Assets
203

Total Current Liabilities
340

Store & HQ Building
750

Long Term Debt
200
Less Accumulated Depreciation
-250

Long Term Assets
500

Common Stock
100

Retained Earnings
83
Other Assets
20

Total Assets
723

Total Liabilities and Equity
723

Manufacturer

Services

Retailer

0.4 points

QUESTION 6

If the annual credit sales are $600, what is the average payment time from customers?

Balance Sheet
Cash & Equivalents
33

Accounts Payable
115
Accounts Receivable
50

Salaries Payable
25
Inventory
120

ST portion of Long Term Debt
200
Current Assets
203

Total Current Liabilities
340

Store & HQ Building
750

Long Term Debt
200
Less Accumulated Depreciation
-250

Long Term Assets
500

Common Stock
100

Retained Earnings
83
Other Assets
20

Total Assets
723

Total Liabilities and Equity
723

1 month

1 week

60 days

12 days

0.4 points

QUESTION 7

Calculate the Total Debt to Equity Ratio. * Refer to the Ratio Reference Guide

Balance Sheet
Cash & Equivalents
33

Accounts Payable
115
Accounts Receivable
50

Salaries Payable
25
Inventory
120

ST portion of Long Term Debt
200
Current Assets
203

Total Current Liabilities
340

Store & HQ Building
750

Long Term Debt
200
Less Accumulated Depreciation
-250

Long Term Assets
500

Common Stock
100

Retained Earnings
83
Other Assets
20

Total Assets
723

Total Liabilities and Equity
723

2.95

1.35

2.0

1.1

0.4 points

QUESTION 8

Calculate the Quick Ratio. * Refer to the Ratio Reference Guide
Balance Sheet
Cash & Equivalents
33

Accounts Payable
115
Accounts Receivable
50

Salaries Payable
25
Inventory
120

ST portion of Long Term Debt
200
Current Assets
203

Total Current Liabilities
340

Store & HQ Building
750

Long Term Debt
200
Less Accumulated Depreciation
-250

Long Term Assets
500

Common Stock
100

Retained Earnings
83
Other Assets
20

Total Assets
723

Total Liabilities and Equity
723

0.22

0.75

0.76

0.24

0.4 points

QUESTION 9

This organization will likely have difficulty paying its debts this fiscal year.

Balance Sheet
Cash & Equivalents
33

Accounts Payable
115
Accounts Receivable
50

Salaries Payable
25
Inventory
120

ST portion of Long Term Debt
200
Current Assets
203

Total Current Liabilities
340

Store & HQ Building
750

Long Term Debt
200
Less Accumulated Depreciation
-250

Long Term Assets
500

Common Stock
100

Retained Earnings
83
Other Assets
20

Total Assets
723

Total Liabilities and Equity
723
True

False

0.4 points

QUESTION 10

Select all that apply. The Inventory account on the balance sheet indicates:

An asset with an inherent risk of deterioration, obsolescence, and breakage.

A healthy, growing business if it’s a large account.

Production materials and products held by the company until sold.

A need to sensitively manage manufacturing processes, warehousing, consumer demand, and competition.