# (Multiple choice)1. The sum of ending inventory and cost of goods sold isa. Net purchases.b. Beginning inventory.c. Goods available.d. Gross profit.2. The following data come from the inventory records of Dodge Company:Net sales revenue......................................... \$627,000Beginning inventory .................................... 61,000Ending inventory......................................... 40,000Net purchases.............................................. 430,000Based on these facts, the gross profit for Dodge Company isa. \$197,000.b. \$190,000.c. \$166,000.d. \$176,000.3. Ellen Donoghue Cosmetics ended

(Multiple choice)
1. The sum of ending inventory and cost of goods sold is
a. Net purchases.
b. Beginning inventory.
c. Goods available.
d. Gross profit.

2. The following data come from the inventory records of Dodge Company:
Net sales revenue......................................... \$627,000
Beginning inventory .................................... 61,000
Ending inventory......................................... 40,000
Net purchases.............................................. 430,000
Based on these facts, the gross profit for Dodge Company is
a. \$197,000.
b. \$190,000.
c. \$166,000.
d. \$176,000.

3. Ellen Donoghue Cosmetics ended the month of March with inventory of \$25,000. Ellen Donoghue expects to end April with inventory of \$17,000 after selling goods with a cost of \$92,000. How much inventory must Donoghue purchase during April in order to accomplish these results?
a. \$84,000
b. \$109,000
c. \$100,000
d. \$134,000

4. Two financial ratios that clearly distinguish a discount chain such as Wal-Mart from a high-end retailer such as Gucci are the gross profit percentage and the rate of inventory turnover. Which set of relationships is most likely for Gucci?
Gross profit percentage Inventory turnover
a. Low ........ High
b. High ........ High
c. Low ........ Low
d. High ........ Low

5. Sales are \$580,000 and cost of goods sold is \$310,000. Beginning and ending inventories are \$23,000 and \$38,000, respectively. How many times did the company turn its inventory over during this period?
a. 8.9 times
b. 11.7 times
c. 19.0 times
d. 10.2 times

6. Tulsa, Inc., reported the following data:

Tulsa€™s gross profit percentage is
a. 54.0.
b. 50.7.
c. 53.0.
d. 46.0.

7. Turbo Tank Company had the following beginning inventory, net purchases, net sales, and gross profit percentage for the first quarter of 2012:

By the gross profit method, the ending inventory should be
a. \$78,000.
b. \$97,000.
c. \$57,000.
d. \$135,000.

8. An error understated Rex Corporation€™s December 31, 2012, ending inventory by \$36,000. What effect will this error have on total assets and net income for 2012?
Assets Net income
a. Understate No effect
b. No effect No effect
c. No effect Overstate
d. Understate Understate

9. An error understated Rex Corporation€™s December 31, 2012, ending inventory by \$36,000. What effect will this error have on net income for 2013?
a. Understate
b. No effect
c.Overstate

Financial Ratios
The term is enough to curl one's hair, conjuring up those complex problems we encountered in high school math that left many of us babbling and frustrated. But when it comes to investing, that need not be the case. In fact, there are ratios that,...