JWI 530 Knowledge Check 2

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.
 
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