Selected Data from the Financial Statements Are Provided in the Following

question 31

Multiple Choice

Selected data from the financial statements are provided in the following table:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\\text { Accounts receivable } & \$ 120,000 & \$ 76,000 \\\text { Inventory } & 24,000 & 32,000 \\\text { Total assets } & 900,000 & 760,000 \\\text { Net sales } & 760,000 & 540,000 \\\text { Cost of goods sold } & 320,000 & 420,000\end{array}$
-Refer to the figure Rags to Riches.Which of the following would result from a horizontal analysis of the company's income statement?

• A) Net sales in Year 2 increased to 140.74% of the Year 1 amount.
• B) Gross profit is 57.9% of net sales for Year 2.
• C) Accounts receivable is 13.3% of total assets in Year 2.
• D) The accounts receivable turnover ratio is 7.76 in Year 2.

Distinguish between private and social values/costs in the context of externalities.

Recognize the significance of internalizing external costs and benefits to achieve social efficiency.

Apply the concepts of externalities to various real-world markets such as tobacco, pollution control technology, and antibiotic usage.

Understand and analyze the tools for internalizing positive and negative technology spillovers.

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Definitions:

Discounts a Note

The process of reducing the face value of a promissory note, usually to accelerate cash flow or recognize interest income prior to its receipt.

Note Matures

The point in time when a promissory note, bond, or other financial instrument's principal is due to be paid back.

Financial Statement

A written report which quantitatively describes the financial health of a company; it includes the income statement, balance sheet, statement of cash flows, and statement of retained earnings.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance based on the accounting rules.