Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Question
Chapter 12, Problem 12QC
To determine
To identify: Which of the given option is correct regarding the cost of goods sold as a percentage of net revenues.
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Students have asked these similar questions
Steadily increasing cost of goods sold as a percentage of net revenues is an indication ofa. decreasing earnings quality.b. increasing earnings quality.c. financial statement fraud.d. increasing production efficiencies.
Which of the following statements is true with regard to the gross profit ratio?
An increase in cost of goods sold would increase the gross profit ratio (assuming sales remain constant).
An increase in the gross profit ratio may indicate that a company is efficiently managing its inventory.
An increase in selling expenses would lower the gross profit ratio.
a.1
b.2
c.1 and 2
d.2 and 3
Increasing earnings quality could be indicated bya. an improving operating earnings/sales ratio.b. a declining operating expenses/sales ratio.c. an improving gross margin/sales ratio.d. all of the above.
Chapter 12 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 12 - Prob. 1QCCh. 12 - Prob. 2QCCh. 12 - Prob. 3QCCh. 12 - Prob. 4QCCh. 12 - Expressing accounts receivable as a percentage of...Ch. 12 - Kincaid Company reported the following data (in...Ch. 12 - Prob. 7QCCh. 12 - Ratios that measure liquidity include all of the...Ch. 12 - Verba Corporation has an inventory turnover of 15...Ch. 12 - The measure of a companys ability to collect cash...
Ch. 12 - A ratio that measures a companys profitability is...Ch. 12 - Prob. 12QCCh. 12 - Prob. 13QCCh. 12 - Prob. 14QCCh. 12 - Prob. 12.1ECCh. 12 - Prob. 12.1SCh. 12 - Prob. 12.2SCh. 12 - Prob. 12.3SCh. 12 - Prob. 12.4SCh. 12 - Prob. 12.5SCh. 12 - (Learning Objective 4: Evaluate a companys quick...Ch. 12 - Prob. 12.7SCh. 12 - (Learning Objective 4: Measure ability to pay...Ch. 12 - (Learning Objective 4: Measure profitability using...Ch. 12 - Prob. 12.10SCh. 12 - (Learning Objective 4: Use ratio data to...Ch. 12 - Prob. 12.12SCh. 12 - (Learning Objective 4: Analyze a company based on...Ch. 12 - Prob. 12.14SCh. 12 - Prob. 12.15SCh. 12 - Prob. 12.16AECh. 12 - Prob. 12.17AECh. 12 - Prob. 12.18AECh. 12 - Prob. 12.19AECh. 12 - Prob. 12.20AECh. 12 - Prob. 12.21AECh. 12 - Prob. 12.22AECh. 12 - Prob. 12.23AECh. 12 - Prob. 12.24AECh. 12 - Prob. 12.25AECh. 12 - Prob. 12.26AECh. 12 - Prob. 12.27BECh. 12 - Prob. 12.28BECh. 12 - Prob. 12.29BECh. 12 - Prob. 12.30BECh. 12 - Prob. 12.31BECh. 12 - LO 4 (Learning Objective 4: Calculate ratios;...Ch. 12 - Prob. 12.33BECh. 12 - Prob. 12.34BECh. 12 - Prob. 12.35BECh. 12 - Prob. 12.36BECh. 12 - Prob. 12.37BECh. 12 - Prob. 12.38QCh. 12 - Prob. 12.39QCh. 12 - Prob. 12.40QCh. 12 - Prob. 12.41QCh. 12 - Prob. 12.42QCh. 12 - Prob. 12.43QCh. 12 - Prob. 12.44QCh. 12 - Use the Orlando Medical Corporation financial...Ch. 12 - Prob. 12.46QCh. 12 - Use the Orlando Medical Corporation financial...Ch. 12 - Prob. 12.48QCh. 12 - Prob. 12.49QCh. 12 - Prob. 12.50QCh. 12 - Prob. 12.51QCh. 12 - Prob. 12.52QCh. 12 - Prob. 12.53QCh. 12 - Prob. 12.54QCh. 12 - Prob. 12.55QCh. 12 - LO 1, 2, 4 (Learning Objectives 1, 2, 4: Calculate...Ch. 12 - Prob. 12.57APCh. 12 - Prob. 12.58APCh. 12 - LO 4 (Learning Objective 4: Use ratios to evaluate...Ch. 12 - Prob. 12.60APCh. 12 - LO 2, 4, 5 (Learning Objectives 2, 4, 5: Analyze...Ch. 12 - Group B LO 1, 2, 4 (Learning Objectives 1, 2, 4:...Ch. 12 - Prob. 12.63BPCh. 12 - Prob. 12.64BPCh. 12 - LO 4 (Learning Objective 4: Use ratios to evaluate...Ch. 12 - Prob. 12.66BPCh. 12 - LO 2, 4, 5 (Learning Objectives 2, 4, 5: Analyze...Ch. 12 - Prob. 12.68CEPCh. 12 - Prob. 12.69CEPCh. 12 - (Learning Objectives 2, 3.4: Use trend...Ch. 12 - (Learning Objectives 4, 5: Calculate and analyze...Ch. 12 - Prob. 12.72DCCh. 12 - Prob. 12.73DCCh. 12 - Prob. 12.74EICCh. 12 - Focus on Financials Apple Inc. LO 1, 2, 3, 4, 5...Ch. 12 - Comprehensive Financial Statement Analysis Project...
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Similar questions
- A high inventory turnover ratio provides evidence that a company is having problems with stockouts and disgruntled customers. Do you agree? Explain.arrow_forwardWhich of the following indicates a positive trend for inventory management? A. increasing number of days sales in inventory ratio B. increasing inventory turnover ratio C. increasing cost of goods sold D. increasing sales revenuearrow_forwardBased on the vertical analysis attached in the screenshot, which of the following statements is correct? a. Costs other than selling expenses (cost of goods sold and administrative expenses) improved as a percentage of sales. b. Net income as a percentage of sales increased. c. The sales promotion campaign appears to have been successful. d. Selling expenses as a percent of sales increased slightlyarrow_forward
- which of the following is considered a signal of success for a manufacturing company? A) A low quick ratio B) A high inventory turnover ratio C) A high current ratio D) Low quality costsarrow_forwardWhich of the following statements is correct? When cost of goods sold as a percentage of sales increases, the gross profit margin will increase. If the gross profit margin increases from one year to the next, then the net profit margin will also increase from one year to the next. If the gross profit margin is the same for the current and past year, then sales and cost of goods sold in dollars did not change. It is possible that when cost of goods sold in dollars increases, cost of goods sold as a percentage of sales decreases.arrow_forwardGross profit variance analysis can be used to study the effect of: a. Changes in cost of goods sold on a company's profitability. b. Changes in selling prices on a company's profitability. c. Changes in volume of goods sold on a company's profitability. d. All of the choices. Changes in product sales mix on a company's profitability.arrow_forward
- Gross profit is: The amount left over after cost of goods sold is subtracted from net sales. A.Net sales less operating expenses. B.Sales less sales discount. C.less sales discounts. D.Net sales less selling expensesarrow_forwardThe margin of safety can be defined as the amount by which sales can decrease beforelosses are incurred by the company.TRUEFALSEarrow_forward1. Which of the following is TRUE about contribution margin? Select one: A. The amount remaining after cost of goods sold has been deducted from sales revenues. B. The amount remaining fixed costs have been deducted from sales revenue. C. The amount remaining after fixed costs have been deducted from variable costs. D. The amount remaining after variable costs have been deducted from sales revenue. 2. Which of the following financial statements reports information as of a specific date? Select one: A. Statement of Changes in Equity. B. Statement of Profit or Loss and other Comprehensive Income. C. Statement of Cash Flows. D. Statement of Financial Position. 3. The following are objectives of budgeting EXCEPT: Select one: A. Compare organisational actual achievement with planned goals. B. Ensuring departments within an organisation operate as a team. C. Establishing and communicating organisational goals. D. Developing appropriate high technology information system for an…arrow_forward
- During a period of rising inventory costs and stable output prices, describe how net income and total assets would differ depending upon whether LIFO or FIFO is applied. Explain how your answer would change if the company is experiencing declining inventory costs and stable output prices.arrow_forwardWhen the return on sales (also known as net profit margin) is negative, what does this mean? Group of answer choices Costs and expenses combined are bigger than sales Sales is smaller compared to net income The tax amount is higher than sales Cost of goods and operating expenses are higher than salesarrow_forwardIn a period of rising prices,a. cost of goods sold under LIFO will be less than under FIFO.b. gross profit under FIFO will be higher than under LIFO.c. LIFO inventory will be greater than FIFO inventory.d. net income under LIFO will be higher than under FIFO.arrow_forward
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