MBA 510 FINAL ACTUAL ANSWERS AND QUESTIONS
SET A+
✔✔unclassified balance sheet - ✔✔broadly groups accounts into assets, liabilities, and
equity
✔✔current assets - ✔✔cash and other assets expected to be exchanged for cash or
consumed within a year
✔✔Long-term investments - ✔✔Generally, (1) investments in stocks and bonds of other
corporations that companies hold for more than one year; (2) long-term assets, such as
land and buildings, not currently being used in the company's operations; and (3) long-
term notes receivable.
✔✔Current Liabilities - ✔✔liabilities due within a short time, usually within a year
✔✔long-term liabilities - ✔✔liabilities owed for more than a year
✔✔profit margin - ✔✔net income/net sales
✔✔cost of goods sold - ✔✔the total cost of merchandise sold during the period
✔✔gross profit (or gross margin) - ✔✔net sales - cost of goods sold
✔✔Merchandise Inventory - ✔✔products that a company owns and intends to sell
✔✔credit period - ✔✔the amount of time allowed before full payment is due
✔✔FOB (free on board) - ✔✔the point when ownership of goods passes to the buyer
✔✔FOB shipping point - ✔✔the buyer pays shipping costs and accepts ownership of
goods when the seller transfers goods to the carrier
, ✔✔FOB destination - ✔✔ownership of the goods remains with the seller until the goods
reach the buyer
✔✔multiple-step income statement - ✔✔details net sales and expenses and reports
subtotals for various types of items.
✔✔selling expenses - ✔✔the expenses of advertising merchandise, making sales, and
delivering goods to customers
✔✔general and administrative expenses - ✔✔support a company's overall operations
and include expenses related to accounting, human resource management, and
financial management
✔✔single-step income statement - ✔✔Income statement format that groups all
revenues together and then lists and deducts all expenses together without calculating
any subtotals.
✔✔Classified Balance Sheet - ✔✔reports merchandise inventory as a current asset,
usually after accounts receivable according to an asset's nearness to liquidity
✔✔Acid Test Ratio - ✔✔Current Assets - Stock / Current Liabilities
✔✔Gross Margin Ratio - ✔✔(Net Sales - Cost of Goods Sold) / Net Sales
✔✔what sub headings would appear on a multiple step income statement - ✔✔cost of
goods sold
selling expenses
general and administrative expenses
gross profit
net sales
income from operations
✔✔When are goods included in buyers inventory once they are shipped - ✔✔FOB
Shipping Point
✔✔When goods are included in buyers inventory after arrival at their destination -
✔✔FOB Destination
✔✔specific identification method - ✔✔inventory costing method that matches or
identifies each unit of inventory with its actual cost
✔✔First-In, First-Out (FIFO) - ✔✔Method to assign cost to inventory that assumes items
are sold in the order acquired; earliest items purchased are the first sold.
SET A+
✔✔unclassified balance sheet - ✔✔broadly groups accounts into assets, liabilities, and
equity
✔✔current assets - ✔✔cash and other assets expected to be exchanged for cash or
consumed within a year
✔✔Long-term investments - ✔✔Generally, (1) investments in stocks and bonds of other
corporations that companies hold for more than one year; (2) long-term assets, such as
land and buildings, not currently being used in the company's operations; and (3) long-
term notes receivable.
✔✔Current Liabilities - ✔✔liabilities due within a short time, usually within a year
✔✔long-term liabilities - ✔✔liabilities owed for more than a year
✔✔profit margin - ✔✔net income/net sales
✔✔cost of goods sold - ✔✔the total cost of merchandise sold during the period
✔✔gross profit (or gross margin) - ✔✔net sales - cost of goods sold
✔✔Merchandise Inventory - ✔✔products that a company owns and intends to sell
✔✔credit period - ✔✔the amount of time allowed before full payment is due
✔✔FOB (free on board) - ✔✔the point when ownership of goods passes to the buyer
✔✔FOB shipping point - ✔✔the buyer pays shipping costs and accepts ownership of
goods when the seller transfers goods to the carrier
, ✔✔FOB destination - ✔✔ownership of the goods remains with the seller until the goods
reach the buyer
✔✔multiple-step income statement - ✔✔details net sales and expenses and reports
subtotals for various types of items.
✔✔selling expenses - ✔✔the expenses of advertising merchandise, making sales, and
delivering goods to customers
✔✔general and administrative expenses - ✔✔support a company's overall operations
and include expenses related to accounting, human resource management, and
financial management
✔✔single-step income statement - ✔✔Income statement format that groups all
revenues together and then lists and deducts all expenses together without calculating
any subtotals.
✔✔Classified Balance Sheet - ✔✔reports merchandise inventory as a current asset,
usually after accounts receivable according to an asset's nearness to liquidity
✔✔Acid Test Ratio - ✔✔Current Assets - Stock / Current Liabilities
✔✔Gross Margin Ratio - ✔✔(Net Sales - Cost of Goods Sold) / Net Sales
✔✔what sub headings would appear on a multiple step income statement - ✔✔cost of
goods sold
selling expenses
general and administrative expenses
gross profit
net sales
income from operations
✔✔When are goods included in buyers inventory once they are shipped - ✔✔FOB
Shipping Point
✔✔When goods are included in buyers inventory after arrival at their destination -
✔✔FOB Destination
✔✔specific identification method - ✔✔inventory costing method that matches or
identifies each unit of inventory with its actual cost
✔✔First-In, First-Out (FIFO) - ✔✔Method to assign cost to inventory that assumes items
are sold in the order acquired; earliest items purchased are the first sold.
