Question

The Cost of Sales (or Cost of Goods Sold) is usually considered the most important cost...

The Cost of Sales (or Cost of Goods Sold) is usually considered the most important cost in hospitality businesses. How is it determined? Please select the most appropriate answer.
1. It is calculated by adding up all purchases of inventory during one accounting period.
2. It is the amount of inventory on hand. It is calculated by adding the value of every item of inventory available on hand.
3. It is calculated by adding all purchase amounts to the beginning inventory amount; and by subtracting the ending inventory amount.
4. It is calculated by multiplying the management's target percentage (%) of the revenues to the amount of revenues generated.

How can we determine whether the payroll expense has truly grown in this year compared with that of the last year?
1. Compare the amount of the payroll expense of each year. If this year's amount is larger, it has grown by the amount of the difference.
2. Compare the amount of each year's payroll expense with the budget. If the actual expense amount is larger than the budget, it has grown.
3. Calculate the percentage (%) of the payroll expense of the revenues of the year. If this year's payroll expense percentage is larger than that of the last year, this year's payroll has grown.
4. Calculate the percentage (%) of this year's payroll expense of the last year's payroll expense. If this year's payroll expense % is larger than 100%, it has grown.


One company's Balance Sheet shows a huge increase in its Accounts Receivable (A/R) amount compared with the previous year. Which analysis of the following would you agree most?
1. The increase of A/R indicates the huge growth of revenues during the current year. This is considered a positive sign.
2. The increase of A/R indicates that the company has collected a large amount of cash from its uncollected revenues. It must have increased its cash flows.
3. The increase of A/R indicates that the company owes a lot to its creditors this year. When they are paid, the company will experience a huge cash decrease.
4. The increase of A/R indicates the company has failed to collect cash from its customers who have not paid. The company must have experienced huge amount of cash decrease.

If one company's Balance Sheet shows a huge increase of Inventory balance compared with the previous year, which one of the following analyses do you think is wrong?
1. The increase of Inventory indicates the company has spent a lot of expenses during the current year. Its profits must have declined.
2. The increase of Inventory indicates the company is ready to expand its operations in the next year.
3. The increase of Inventory must have had negative impact on the cash flows.
4. The increase of Inventory may have temporarily increased the company's Accounts Payable balance.

Homework Answers

Answer #1

3. It is calculated by adding all purchase amounts to the beginning inventory amount; and by subtracting the ending inventory amount. Correct option

3. Calculate the percentage (%) of the payroll expense of the revenues of the year. If this year's payroll expense percentage is larger than that of the last year, this year's payroll has grown. Correct option

4. The increase of A/R indicates the company has failed to collect cash from its customers who have not paid. The company must have experienced huge amount of cash decrease. Correct option

1. The increase of Inventory indicates the company has spent a lot of expenses during the current year. Its profits must have declined. Correct option

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
One company's Balance Sheet shows huge increase in its Accounts Receivable (A/R) compared with that of...
One company's Balance Sheet shows huge increase in its Accounts Receivable (A/R) compared with that of the previous year. Which of the following is the most reasonable analysis? Group of answer choices 1. The increase of the A/R indicates the huge growth of its sales in the current year. 2. The increase of the A/R indicates that the company has not collected cash for its sales from its customers. By doing so, the company's cash flows of this year must...
Question 94 pts When using vertical analysis, net cost of goods sold is the 100% benchmark...
Question 94 pts When using vertical analysis, net cost of goods sold is the 100% benchmark against which all other income statement amounts are compared. net cost of goods sold is the 100% benchmark against which all other balance sheet amounts are compared. net sales is the 100% benchmark against which all other income statement amounts are compared. net sales is the 100% benchmark against which all other balance sheet amounts are compared. horizontal analysis cannot be applied to the...
Sauerbraten Corp. reported 2007 sales ($ in millions) of $2,157 and cost of goods sold of...
Sauerbraten Corp. reported 2007 sales ($ in millions) of $2,157 and cost of goods sold of $1,827. Inventories at year - end 2007 and 2006, respectively, were $553 and $562. The company uses the LIFO method for inventory valuation and discloses that if the FIFO inventory valuation method had been used, inventories would have been $63.3 million and $56.8 million higher in 2007 and 2006, respectively. Compared to the inventory turnover ratio reported, if Sauerbraten had exclusively used the FIFO...
Kingbird Corporation had the following 2020 income statement. Sales revenue $187,000 Cost of goods sold 111,000...
Kingbird Corporation had the following 2020 income statement. Sales revenue $187,000 Cost of goods sold 111,000 Gross profit 76,000 Operating expenses (includes depreciation of $20,000) 54,000 Net income $22,000 The following accounts increased during 2020: Accounts Receivable $14,000, Inventory $12,000, Accounts Payable $14,000. Prepare the cash flows from operating activities section of Kingbird’s 2020 statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)...
Campbell Company, which sells electric razors, had $330,000 of cost of goods sold during the month...
Campbell Company, which sells electric razors, had $330,000 of cost of goods sold during the month of June. The company projects a 9 percent increase in cost of goods sold during July. The inventory balance as of June 30 is $35,000, and the desired ending inventory balance for July is $36,000. Campbell pays cash to settle 75 percent of its purchases on account during the month of purchase and pays the remaining 25 percent in the month following the purchase....
Income Statement For the year ended December​ 31, 2019 Sales Revenue ​$347,000 Cost of Goods Sold...
Income Statement For the year ended December​ 31, 2019 Sales Revenue ​$347,000 Cost of Goods Sold ​(78,000) Gross Profit ​$269,000 Selling and Administrative Expenses ​(43,900) Operating Income ​225,100 Gain on Sale of Equipment ​5,500 Net Income ​$230,600 All of the​ company’s sales are made on account. At the beginning of the​ year, the Accounts Receivable balance was​ $53,500. The balance had decreased to​ $50,200 by​ year-end. All of the​ company’s inventory purchases are made on account. Accounts Payable consists solely...
Delphino’s has sales for the year of $127,300 and cost of goods sold of $86,700. The...
Delphino’s has sales for the year of $127,300 and cost of goods sold of $86,700. The firm carries an average inventory of $14,300 and has an average accounts payable balance of $13,600. What is the inventory period? 81.36 days 60.20 days 58.68 days 89.02 days The Lumber Yard has projected sales for April through July of $152,400, $161,800, $189,700, and $196,400, respectively. The firm collects 52 percent of its sales in the month of sale, 46 percent in the month...
For the most recent year, Seether, Inc., had sales of $451,000, cost of goods sold of...
For the most recent year, Seether, Inc., had sales of $451,000, cost of goods sold of $218,000, depreciation expense of $57,700, and additions to retained earnings of $49,900. The firm currently has 36,000 shares of common stock outstanding, and the previous year’s dividends per share were $1.30. The income tax rate is 35 percent. What was the EBIT? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT            $ How much in total...
Lemon Auto Wholesalers had sales of $1,180,000 last year, and cost of goods sold represented 73...
Lemon Auto Wholesalers had sales of $1,180,000 last year, and cost of goods sold represented 73 percent of sales. Selling and administrative expenses were 13 percent of sales. Depreciation expense was $12,000 and interest expense for the year was $13,000. The firm’s tax rate is 30 percent. a. Compute earnings after taxes. b-1. Assume the firm hires Ms. Carr, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 15 percent of sales, sales...
XYZ Company has annual sales of $501,811. The cost of goods sold are $344,296. The firm...
XYZ Company has annual sales of $501,811. The cost of goods sold are $344,296. The firm has an accounts receivable balance of $18,238, an accounts payable balance of $17,334 and inventory of $6,859. How many days does it take on average for the firm to pay its suppliers? That is, what is the payable period? Assume 365 days. Enter your answer rounded off to one decimal point.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT