Use the Following Information About the Current Year's Operations of a Company

question 127

Multiple Choice

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $$\begin{array} { l |l } \text { Cost \& goods sold } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 735,000 \\\hline \text { Merchandise inventory. January } 1 \ldots \ldots \ldots \ldots \ldots \ldots & 84,700 \\\hline \text { Mer chandise inventory. December } 31 \ldots \ldots \ldots \ldots \ldots & 82,400 \\\hline \text { Accounts payable, January } 1 \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 54,500 \\\hline \text { Accounts payable, December } 31 \ldots \ldots \ldots \ldots \ldots \ldots & 60,200\end{array}$$

• A) $727,000.
• B) $726,300.
• C) $732,700.
• D) $737,700.
• E) $737,300.

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Definitions:

Total Asset Turnover

Total asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue; it indicates how well a company can convert its assets into revenue.

Return on Total Assets

A financial ratio that measures a company's profitability in relation to its total assets, indicating how effectively a company uses its assets to generate profit.

Semiannual Interest Payment

A finance term referring to the practice of making interest payments twice a year on a loan or bond.

Bonds

Debt instruments signifying an investment made by an investor in the form of a loan to either a corporation or a government entity.