Retail Management – Chapter 12 Sample Test Questions
Essay Preview: Retail Management – Chapter 12 Sample Test Questions
Report this essay
Chapter 12
Which is not a typical time frame for a profit-and-loss statement?
Correct Answer:
Weekly
Which is not a major component of a profit-and-loss statement?
Your Answer:
Depreciation
Property, buildings, fixtures, and equipment are examples of
Your Answer:
fixed assets.
Payroll expenses payable and accounts payable are examples of
Your Answer:
current liabilities.
Assets minus liabilities equals a retailers
Correct Answer:
net worth.
The value of a retail business, after deducting all financial obligations, is known as
Your Answer:
net worth.
Which of the following will increase asset turnover?
Correct Answer:
Outsourcing delivery operations
The three components of return on assets are
Correct Answer:
net sales, net profit after tax, and total assets.
Total assets divided by net worth equals
Correct Answer:
financial leverage.
A firm with a financial leverage equal to one has
Your Answer:
no debt.
The strategic profit model results in a performance measure known as
Your Answer:
return on net worth.
The key business ratio found by computing cash plus accounts receivable, and then dividing by total current liabilities is the
Correct Answer:
quick ratio.
The key business ratio found by calculating net sales minus cost of goods sold, and then dividing by net sales is the
Correct Answer:
overall gross profit.
Planned expenditures for a given time period based on expected performance are outlined in a
Correct Answer:
budget.
After determining who is responsible for budgeting decisions, the next step in the preliminary budgeting process is to determine
Correct Answer:
the budgeting time frame.
With zero-based budgeting, a retailer
Correct Answer:
starts each new budget from scratch.
When planning and implementing a budget, a retailer must carefully consider
Correct Answer:
cash flow.
Capital expenditures are
Correct Answer:
the long-term investments in fixed assets.
Which measure is not used to describe a retailers productivity?
Correct Answer:
Quick ratio
Which is a way for a retailer to increase its productivity?
Correct Answer:
Automating operations
A profit-and-loss statement summarizes a retailers assets, liabilities, and net worth at a particular point in time.
Correct Answer:
False
Accounts receivable is a component of a retailers current assets.
Correct Answer:
Fixed assets are recorded on the basis of cost less accumulated depreciation.
Your Answer:
Depreciated assets that are reflected on a retailers balance sheet at low values relative to their actual worth are referred to as hidden assets.
Correct Answer:
Net worth represents the value of a retail business after deducting all financial obligations.
Your Answer:
Net profit margin is also known as owners equity.
Your Answer:
False
Asset turnover is based on net profit and net sales.
Correct Answer:
False
A firm with high financial leverage has a low level of debt.
Your Answer:
False
The strategic profit model has three components: asset turnover, profit margin, and financial leverage.
Your Answer:
A current ratio above 1 to 1 means a firm is liquid and can cover short-term debt.
Your Answer:
Overall gross profit does not take markdowns, discounts, or shortages into account.
Your Answer:
False
In top-down budgeting, lower-level executives develop departmental budget requests; these requests are assembled and an overall company wide budget is designed.
Correct Answer:
False
Operating expenditures are the short-term expenses of running a retail business.
Your Answer:
Sales commissions are a fixed cost.
Your Answer:
False
Indirect costs are shared by multiple departments.
Correct Answer:
Natural account expenses are classified on the basis of the purpose or activity for which expenditures are made.
Correct Answer:
False
With incremental budgeting, a firm uses current and past budgets as guides and adds or subtracts from these budgets to arrive at the coming periods expenditures.
Your Answer:
A percentage