45) When Chris charges a gallon of chlorine for his pool at Pinch-A-Penny to his store account, he
creates a(n) ________ for the retailer.
A) long-term liability
B) accounts payable
C) notes receivable
D) notes payable
E) accounts receivable
46) The formula for calculating operating expenses percentage is
A) total sales/operating expenses.
B) gross sales/operating expenses.
C) operating expenses/net sales.
D) average sales/gross sales.
E) total sales/average sales.
47) The information used to analyze a retailer’s asset management path primarily comes from the
A) strategic profit model.
B) financial leverage statement.
C) income statement.
D) profitability statement.
E) balance sheet.
48) Which of the following would be listed as an asset on the balance sheet for a children’s clothing
shop?
A) Interest due on startup loan
B) Retained earnings
C) Accounts receivable
D) Money owed to vendors
E) Cost of goods sold
49) Which of the following would not be listed as an asset on the balance sheet of a hardware
store?
A) Nuts and bolts
B) A set of metric wrenches
C) Display cabinets
D) A $55 credit card charge from a store patron
E) Accounts payable
50) If Mohammed wanted to examine the assets and liabilities of the Silver Exchange Coin Shop
for the end of the year, he should look at its
A) balance sheet.
B) financial leverage statements.
C) income statement.
D) profitability statement.
E) strategic profit model.
51) The Bookstore Café is a small restaurant located in a downtown business district. It is opened
for breakfast and lunch and serves simple yet nutritious meals and also sells books from the New
York Times bestseller list. How would you categorize the book inventory, cooking equipment,
tables, chairs, and the register?
A) As retained earnings
B) As assets
C) As current liabilities
D) As investor capital
E) As owners’ equity
52) Of the following, which can be converted into cash within one year?
A) Current assets
B) Fixed assets
C) Accrued assets
D) Accountable assets
E) Substantial assets
53) Which of the following can be considered as a current asset?
A) Net profit percentage
B) Accounts receivable
C) Selling expenses
D) Gross margin
E) Operating expenses
54) Which of the following is classified as an asset?
A) Debts
B) Buildings
C) Accrued wages
D) Deferred revenue
E) Interest payable
55) When Erica calculates the current assets for her picture framing business, she should not
include which of the following?
A) Her accounts payable
B) The money in her cash register
C) Office supplies
D) Her accounts receivable
E) The store’s inventory of matting
56) Harriet’s Wimsey is a bookstore for people who love mysteries. How would a complete set of
P. D. James mystery novels, a first edition copy of The Maltese Falcon, the money in the cash
register, and an IOU from a loyal customer who forgot her wallet one day when she came to
purchase the newest Dorothy Cannell book be listed on the store’s balance sheet?
A) As owners’ equity
B) As current liabilities
C) As fixed assets
D) As long-term liabilities
E) As current assets
57) As Dean calculates his current assets for his used video game store, he is sure to include which
of the following?
A) Merchandise inventory
B) Accrued liabilities
C) Fixed assets
D) Notes receivable
E) Retained earnings
58) When Nick is figuring the current assets for his nail salon, he should be certain to include
________ in his calculations.
A) the cash in the drawer
B) accrued liabilities
C) fixed assets
D) notes receivable
E) retained earnings
59) What is inventory turnover used to evaluate?
A) It is used to see the speed of the inventory sold.
B) It is used to calculate net sales.
C) It is used to measure average inventory.
D) It is used to see how effectively buyers purchase the right assortments.
E) It is used to calculate gross margin.
60) A store that sells books, magazines, and newspapers has an average inventory of $15,000 at
cost. Its cost of goods for the previous year was $62,000, and its net profit was $9,000. Calculate
the retailer’s inventory turnover.
A) 1.67
B) 2.14
C) 6.89
D) 4.13
E) 14.5
61) Inventory turnover
A) is calculated by dividing accounts receivable by net sales.
B) equals total assets minus current assets divided by average inventory.
C) is calculated by dividing cost of goods sold by average inventory.
D) equals net sales minus cost of goods sold divided by average turnover.
E) is calculated by dividing accounts receivable by average inventory.
62) Which of the following would be a fixed asset?
A) Merchandise inventory
B) A hand calculator
C) The store building
D) Accounts receivable
E) Accounts payable
63) Which of the following is an example of a fixed asset for a music store?
A) Sheet music that is played in the store
B) An assortment of music displayed in the store
C) A selection of jazz CDs owned by the store employees
D) A wide range of classical and electric guitars
E) A computer that is used to manage the store’s inventory
64) Which of the following is not an example of a fixed asset for a lawn care service?
A) The trailer used to haul away debris
B) The plant nursery owned by the service
C) The bucket truck it uses to trim trees
D) A computer which is used to manage the store’s inventory
E) Its accounts receivable
65) Asset turnover
A) is calculated from information found on a firm’s income statement.
B) is calculated by dividing total assets by net sales.
C) reveals how profitable a company is.
D) is net sales divided by total assets.
E) is another term for inventory turnover.
66) ________ equals a company’s net sales divided by its total assets.
A) Asset turnover
B) Current ratio
C) Gross margin
D) Net sales margin
E) Return on assets