FAR — Financial Accounting & Reporting — Quiz 44

Questions in this quiz (10)

1. Which financial statement reports both revenues and expenses?

   • Balance sheet
   • Income statement
   • Statement of retained earnings
   • Statement of cash flows

2. What represents sales revenue minus cost of goods sold?

   • Operating income
   • Gross profit
   • Net income
   • Total assets

3. Which ratio measures how quickly inventory is sold?

   • Current ratio
   • Inventory turnover ratio
   • Debt ratio
   • Profit margin

4. Which formula is used to calculate inventory turnover?

   • Cost of Goods Sold ÷ Average Inventory
   • Sales ÷ Total Assets
   • Net Income ÷ Inventory
   • Assets ÷ Liabilities

5. Which of the following defines gross profit?

   • Sales minus operating expenses
   • Sales minus cost of goods sold
   • Net income minus taxes
   • Sales minus administrative expenses

6. Gross profit appears on which financial statement?

   • Balance sheet
   • Income statement
   • Statement of retained earnings
   • Statement of cash flows

7. Which inventory method leaves the newest costs in ending inventory?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

8. Which inventory method results in lower net income during inflation?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

9. What is the purpose of inventory turnover analysis?

   • Measure profitability
   • Evaluate inventory management efficiency
   • Determine tax expense
   • Calculate operating expenses

10. Which item increases cost of goods sold under the periodic system?

    • Purchase returns
    • Purchase discounts
    • Freight-in
    • Ending inventory