Following Are Selected Data from the Financial Statements of Mother

question 115

Multiple Choice

Following are selected data from the financial statements of Mother Nature Supplies: $\begin{array} { r r }& \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \\ \text {Accounts receivable}&\$ 60,000 & \$ 38,000 \\\text {Merchandise inventory}& 12,000 & 16,000 \\ \text {Total assets}&450,000 & 380,000 \\ \text {Net sales}&380,000 & 270,000 \\ \text {Cost of goods sold}&160,000 & 210,000 \end{array}$
-Refer to the data for Mother Nature Supplies. ?
Which of the following would result from a horizontal analysis of its balance sheet?

• A) Accounts receivable increased $22,000 or 57.9% during 2017.
• B) Accounts receivable is five times larger than Merchandise inventory in 2017.
• C) Accounts receivable is 13.3% of total assets for 2017.
• D) Merchandise inventory is 2.7% of total assets for 2017.

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Definitions:

Implied-in-fact Condition

A legal term for a provision that, although not expressly stated, is presumed to be a part of an agreement based on the actions or circumstances of the parties.

Transaction

The act of conducting business or completing an exchange of goods, services, or funds between two or more parties.

Express Condition

An express condition is a specific, clearly stated requirement within a contract that must be fulfilled for the obligations of the contract to be performed.

Implied Covenant

An unspoken legal promise or guarantee, assumed to be included in a contract or transaction.