ACCT 2102 Exam 1 Questions With Complete Solutions
Accounts Receivable Turnover Ratio Correct Answers A ratio
that measures the number of times the company collects the
average accounts receivable balance in a year. Net credit sales /
Average net accounts receivable
Acid-Test (Quick) Ratio Correct Answers The ratio tells
whether the entity can pay all of its current liabilities if they
came due immediately. (Cash + Short-term investments + Net
current receivables) / Total current liabilities
Annual Report Correct Answers A report required by the SEC
that provides information about a company's financial condition
Cash Flows Correct Answers Cash receipts and cash payments
of a business
Controlling Correct Answers Implementing plans and
evaluating the results of business operations by comparing the
actual results to the budget
Conversion Costs Correct Answers Direct labor and
manufacturing overhead
Cost of Goods Sold Correct Answers # of units sold X unit
product cost
Costs of Goods Manufactured Correct Answers The
manufacturing costs of the goods that finished the production
process in a given accounting period; beginning work-in-process
, inventory + direct materials used + direct labor + manufacturing
overhead - ending work-in-process inventory
Current Ratio Correct Answers Measures the company's
ability to pay current liabilities from current assets. Total current
assets / Total current liabilities
Days' Sales in Inventory Correct Answers Measures the
average number of days that inventory is held by a company.
365 days / Inventory turnover
Days' Sales in Receivables Correct Answers The ratio of
average net accounts receivable to one day's sales. The ratio tells
how many days it takes to collect the average level of accounts
receivable. 365 days / Accounts receivable turnover ratio
Debt Ratio Correct Answers A ratio that shows the proportion
of assets financed with debt. Total liabilities / Total assets
Debt to Equity Ratio Correct Answers A ratio that measures
the proportion of total liabilities relative to total equity. Total
liabilities / Total equity
Direct Cost Correct Answers Cost that can be easily and cost-
effectively traced to a cost object
Direct Labor Correct Answers The labor cost of employees
who convert raw materials into finished products
Accounts Receivable Turnover Ratio Correct Answers A ratio
that measures the number of times the company collects the
average accounts receivable balance in a year. Net credit sales /
Average net accounts receivable
Acid-Test (Quick) Ratio Correct Answers The ratio tells
whether the entity can pay all of its current liabilities if they
came due immediately. (Cash + Short-term investments + Net
current receivables) / Total current liabilities
Annual Report Correct Answers A report required by the SEC
that provides information about a company's financial condition
Cash Flows Correct Answers Cash receipts and cash payments
of a business
Controlling Correct Answers Implementing plans and
evaluating the results of business operations by comparing the
actual results to the budget
Conversion Costs Correct Answers Direct labor and
manufacturing overhead
Cost of Goods Sold Correct Answers # of units sold X unit
product cost
Costs of Goods Manufactured Correct Answers The
manufacturing costs of the goods that finished the production
process in a given accounting period; beginning work-in-process
, inventory + direct materials used + direct labor + manufacturing
overhead - ending work-in-process inventory
Current Ratio Correct Answers Measures the company's
ability to pay current liabilities from current assets. Total current
assets / Total current liabilities
Days' Sales in Inventory Correct Answers Measures the
average number of days that inventory is held by a company.
365 days / Inventory turnover
Days' Sales in Receivables Correct Answers The ratio of
average net accounts receivable to one day's sales. The ratio tells
how many days it takes to collect the average level of accounts
receivable. 365 days / Accounts receivable turnover ratio
Debt Ratio Correct Answers A ratio that shows the proportion
of assets financed with debt. Total liabilities / Total assets
Debt to Equity Ratio Correct Answers A ratio that measures
the proportion of total liabilities relative to total equity. Total
liabilities / Total equity
Direct Cost Correct Answers Cost that can be easily and cost-
effectively traced to a cost object
Direct Labor Correct Answers The labor cost of employees
who convert raw materials into finished products
