KSU accounting 231 exam 2 review
Question and answers correctly
solved 2025/2026
gross margin ratio - correct answer ✔analyzes the portion of sale leftover after deducting the COGS
gross margin ratio formula - correct answer ✔Gross margin/net sales (want it to be higher than
industry average)
return on sales ratio - correct answer ✔shows how good a job we do of keeping the sales revenue
return on sales ratio formula - correct answer ✔net income/net sales(higher than industry average)
earnings per share (EPS) - correct answer ✔allows for a relative comparison between companies
(compare lowes against home depot)
earnings per share formula - correct answer ✔net income/#shares of stock outstanding
return on assets ratio - correct answer ✔looks at two important profitability elements : earning and
investments
return on assets ratio formula - correct answer ✔net income/total assets (higher than industry
average)
return on equity ratio - correct answer ✔"financial leverage" it links the income statement to the
balance sheet
, return on equity formula - correct answer ✔net income/total stockholder's equity
what is the statement of owner's equity? - correct answer ✔shows the change in the net value of the
business for a period of time (tracks the balance of the resources claimed by the owners)
what title applies to the st. of OE? - correct answer ✔sole props & partnerships.
What is the balance sheet? - correct answer ✔Assets=liabilities+OE
what are assets? - correct answer ✔the right to use resources that have expected future economic
benefit
what are liabilities? - correct answer ✔the obligation to transfer resources to a supplier of goods or
capital
what is owner's equity? - correct answer ✔the net assets of the business; the obligation on the part of
the business to the owners.
what is another name for the balance sheet? - correct answer ✔the statement of financial position
what are the purpose of solvency (liquidity ratios)? - correct answer ✔they evaluate a companies
ability to meet short-term obligations.
(like, can you pay your bills)
what are current assets? - correct answer ✔assets that are expected to be used up or converted to
cash within one year.
Question and answers correctly
solved 2025/2026
gross margin ratio - correct answer ✔analyzes the portion of sale leftover after deducting the COGS
gross margin ratio formula - correct answer ✔Gross margin/net sales (want it to be higher than
industry average)
return on sales ratio - correct answer ✔shows how good a job we do of keeping the sales revenue
return on sales ratio formula - correct answer ✔net income/net sales(higher than industry average)
earnings per share (EPS) - correct answer ✔allows for a relative comparison between companies
(compare lowes against home depot)
earnings per share formula - correct answer ✔net income/#shares of stock outstanding
return on assets ratio - correct answer ✔looks at two important profitability elements : earning and
investments
return on assets ratio formula - correct answer ✔net income/total assets (higher than industry
average)
return on equity ratio - correct answer ✔"financial leverage" it links the income statement to the
balance sheet
, return on equity formula - correct answer ✔net income/total stockholder's equity
what is the statement of owner's equity? - correct answer ✔shows the change in the net value of the
business for a period of time (tracks the balance of the resources claimed by the owners)
what title applies to the st. of OE? - correct answer ✔sole props & partnerships.
What is the balance sheet? - correct answer ✔Assets=liabilities+OE
what are assets? - correct answer ✔the right to use resources that have expected future economic
benefit
what are liabilities? - correct answer ✔the obligation to transfer resources to a supplier of goods or
capital
what is owner's equity? - correct answer ✔the net assets of the business; the obligation on the part of
the business to the owners.
what is another name for the balance sheet? - correct answer ✔the statement of financial position
what are the purpose of solvency (liquidity ratios)? - correct answer ✔they evaluate a companies
ability to meet short-term obligations.
(like, can you pay your bills)
what are current assets? - correct answer ✔assets that are expected to be used up or converted to
cash within one year.
