JWI 530 Knowledge Check 2

QUESTION 1

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

1. 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

1. 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

1. 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

1. 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

1. 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

1. 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

1. 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

1. 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

1. 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.

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