Question

21. The use of depreciation is in accordance with a. The matching principle. b. The historic cost principle. c. The full disclosure principle. d. The fair market value (FMV) principle. 22. A company's acid-test ratio was 1:1 in 2013; 1.5:1 in 2014; 1.75:1 in 2015. This would seem to indicate that: a. The company's profitability seems to be improving b. The company's liquidity seems to be improving. c. The company's long-term solvency seems to be improving. d. All of the above. 23. The "accounts receivable turnover" was 25 days in 2013, 34 days in 2014 and 36 days in 2015. This would seem to indicate that: a. Sales are increasing. b. Profits are increasing. c. It is taking less time to collect accounts receivable. d. It is taking more time to collect credit sales. 24. Cost of goods sold: a. Is another term for merchandise sales. b. Is the cost of all of the merchandise inventory purchased or acquired. c. Is another term for gross profit. d. None of the above. 25. The account Equipment appears on the balance sheet at $300,000 less accumulated depreciation of $100,000. a. The equipment's book value is $200,000. b. The equipment's book value is $300,000. c. The equipment's book value is $400,000 d. The equipment's market value is $200,000. 26. The cost of the equipment in the prior question was most likely: a. S200,000 b. $300,000 c. $400,000 d. Some undeterminable amount.

Answer 1

21	a. The matching principle
22	b. The company's liquidity seems to be improving
23	d. It is taking more time to collect credit sales
24	d. None of the above
25	a. The equipment's book value is $200,000
26	b. $300,000