Chapter 5 Fundamental Accounting Principles

A company has $550,000 in net sales and $193,000 in gross profit. This means its cost of goods sold equals

• a. $743,000

• b. $550,000

• c. $357,000

• d. $193,000

• e. $(193,000)

A company purchased $4,500 of merchandise on May 1st with terms of 2/10, n/30. On May 6th, it returned $250 of that merchandise. On May 8th, it paid the balance owed for merchandise, taking any discount it is entitled to. The cash paid on May 8th is

• a. $4,500

• b. $4,250

• c. $4,160

• d. $4,165

• e. $4,410

A company has cash sales of $75,000, credit sales of $320,000, sales returns and allowances of $13,700, and sales discounts of $6,000. Its net sales equal

• a. $395,000

• b. $375,300

• c. $300,030

• d. $339,700

• e. $414,700

A company's quick assets are $37,500, its current assets are $80,000, and its current liabilities are $50,000. Its acid-test ratio equals

• a. 1.600

• b. 0.750

• c. 0.625

• d. 1.333

• e. 0.469

A company's net sales are $675,000, its cost of goods sold is $459,000, and its net income is $74,250. Its gross margin ratio equals

• a. 32%

• b. 68%

• c. 47%

• d. 11%

• e. 34%