The Following Data Comes from Beaumont Company's Financial Statements for the Year

question 104

Multiple Choice

The following data comes from Beaumont Company's financial statements for the year ended December 31, 2014.(Assume that the balance sheet amounts represent both average and ending balances.) $$\begin{array} { l r } \text { Cash } & \$ 5,000 \\\text { Accounts receivable } & 75,000 \\\text { Inventory } & 32,500 \\\text { Sales } & 525,000 \\\text { Cost of goods sold } & 315,000 \\\text { Net income } & 42,500\end{array}$$ What are Beaumont's accounts receivable turnover ratio and their inventory turnover ratio closest to? $\begin{array}{lr}\text { A/R } & \text { Inventory } \\\text { Turnover } & \text { Turnover }\\\text { A) } 7 \text { times } & 9.7 \text { times } \\\text { B) } 7 \text { times } & 16.1 \text { times } \\\text { C) } 1.4 \text { times } & 9.7 \text { times } \\\text { D) } 1.4 \text { times } & 16.1 \text { times }\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Random Samples

Selections made in such a way that each individual in the population has an equal chance of being included in the sample.

F-test Statistic

A value calculated for conducting an F-test, used to compare variances across groups to determine if they differ significantly.

Level of Significance

A threshold within hypothesis testing used to determine if there is enough evidence to reject the null hypothesis, often set at 0.05.

Critical Value

The threshold value that the test statistic must exceed for the null hypothesis to be rejected, dependent on the chosen significance level.