Lisa Inc.'s Balance Sheet Appears Below

question 198

Multiple Choice

Lisa Inc.'s balance sheet appears below:
The company's sales for the year were $300,000, its cost of goods sold was $220,000, and its net income was $35,000. All sales were on credit. Dividends paid on preferred shares for the year were $5,000.



-Lisa Inc.'s accounts receivableturnover for Year 2 was closest to which of the following?

• A) 4.9 times.
• B) 5.9 times.
• C) 6.7 times.
• D) 8.0 times.

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Definitions:

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company. This includes the cost of the materials and labor directly used to create the good.

Standard Cost Variances

Differences between the expected (standard) costs of a product or service and the actual costs incurred.

Standard Cost System

A cost accounting system that uses cost standards for prices and quantities to control costs.

Cost of Goods Sold

The expenses directly related to the manufacturing of products a company sells, such as raw materials and workforce costs.