Answered: 1. The formula being used to get the…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...

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Transcribed Image Text:1. The formula being used to get the working capital is - a. Working Capital= Current Assets/Current Liabilities b. Working Capital= Current Assets – Current Liabilities 2. In franchising, the capital needed to expand the business is provided by the Franchisee. a. True b. False 3. Under an area development franchise, a franchisee has the right to open more than one unit during a specific time, within a specified area. a. True b. False 4. The formula being used to get the current ratio is - a. Current Ratio = Current Assets-Current Liabilities b. Current Ratio = Current Assets/Current Liabilities 5. Business format franchises are the most common type of franchise. a. True b. False 6. current ratio analysis, the rule of thumb being followed is - a. 1:1 Ratio b. 3:1 Ratio c. 2:1 Ratio d. 5:1 Ratio 7. The three (3) major parties interested in the ratio analysis of the business are the following, except a. Stakeholders b. Management c. Creditors d. Shareholders 8. In product distribution franchising, the franchisor licenses its trademark and logo to the franchisees but typically does not provide them with an entire system for running their business. a. True b. False 9. In Quick Ratio or Acid Test Ratio Analysis, the rule of thumb being followed is- a. 3:1 Ratio b. 2:1 Ratio c. 5:1 Ratio d. 1:1 Ratio 10. The formula being used to get the Quick Ratio or Acid Test Ratio is - a. Quick Ratio or Acid Test Ratio = Quick Assets / Current Liabilities b. Quick Ratio or Acid Test Ratio = Quick Assets - Current Liabilities

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