Use This Balance Sheet and Income Statement for the First

question 117

Multiple Choice

Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios. Laytan Navelties
Income St-tement
Far the Year Ended December 31, 2010
$\begin{array}{lr}\text { Net sales } & \$ 80,000 \\\text { Cost of goods sold } & 32,000 \\\text { Gross margin } & \$ 48,000 \\\text { Operating expenses } & 26,400\\\text { Net income }&\$21,600\end{array}$ The return on assets for Layton Novelties is

• A) 40 percent.
• B) 70 percent.
• C) 18 percent.
• D) 66-2/3 percent.

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Definitions:

Breach of Contract

The non-performance of any clause in a contract, whether written or verbal, in the absence of a legitimate legal excuse.

Acceptance

The act of agreeing to the terms of an offer, thereby forming a contract.

Legally Enforceable Contract

An agreement between parties that is recognized by law and can be enforced in court if not fulfilled.

Breached

Violation or breaking of a law, duty, or agreement.