On March 31 a Company Needed to Estimate Its Ending

question 136

Multiple Choice

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,000 Net sales: $80,000
Net purchases: $78,000
The company's gross margin ratio is 25%.
- Using the gross profit method, the estimated ending inventory value would be:

• A) $19,500.
• B) $60,000.
• C) $20,000.
• D) $82,000.
• E) $22,000.

Grasp the concept of homemade leverage and its relevance to individual investors.

Understand the relationship between a firm's capital structure and its weighted average cost of capital (WACC).

Distinguish between various states of insolvency and their implications for firms.

Assess the implications of financial leverage on a firm's business risk and financial risk.

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Definitions:

Temporary

Describes a condition or period that is not permanent and is intended to last only for a limited time.

Revocable

Capable of being revoked, withdrawn, or annulled, often used in the context of legal agreements or trusts.

License

A permit from an authority to own or use something, do a particular thing, or carry on a trade.

Trademark

A symbol, word, or phrase legally registered or established by use as representing a company or product, serving to distinguish goods or services from those of other producers.