The Following Information Was Taken from the Annual Report of Jones

question 91

Multiple Choice

The following information was taken from the annual report of Jones Inc.
$$\begin{array} { | l | l | c | } \hline & 2017 & \mathbf { 2 0 1 6 } \\\hline \text { BALANCE SHEET } & & \\\hline \text { Deferred incame tax liability } & \$ 29,700 & \$ 28,300 \\\hline & & \\\hline \text { INCOME STATEMENT } & & \\\hline \text { Incame befare taxes } & \$ 89,000 & \\\hline \text { Incame tax expense } & \mathbf {( 3 0 , 4 0 0 ) } & \\\hline \text { Net incame } & \$ 57,600 & \\\hline \text { Effective incame tax rate 40\% } & & \\\hline\end{array}$$
What is Jones's conservatism ratio?

• A)1.02
• B)1.52
• C)2.89
• D)1.21

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Definitions:

Book Value

The net value of a company's assets as recorded on the balance sheet, minus its liabilities and the par value of any outstanding shares.

Opportunity Cost

Opportunity cost is the value of the next best alternative foregone as the result of making a decision.

Variable Costs

Payments that are contingent on the amount of production or the scope of sales, covering expenditures like materials and labor.

Variable Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor expenses.