Use This Balance Sheet and Income Statement for the First

question 57

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 equity for Layton Novelties is

• A) 48 percent.
• B) 21.6 percent.
• C) 42 percent.
• D) 30 percent.

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Definitions:

Different Smells

The perception of various odors, which are interpreted by the brain through the olfactory system.

Colors

The perception of different wavelengths of light by the visual system, leading to the ability to distinguish objects based on the wavelengths they reflect, emit, or transmit.

Sensation

The process by which our sensory receptors and nervous system receive and represent stimulus energies from our environment, serving as the foundation for perception.

Physical Energy

The capacity to do work, which manifests in forms such as kinetic, potential, thermal, electrical, chemical, and nuclear energy.