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1. Presented below are select financial data from Major Drugs annual report:

Amounts in millions	Year 1	Year 2
Balance sheet
Accounts receivable (net)	$9,367	$13,765
Inventory	6,860	6,239
Income statement
Net sales	$52,716	$61,498
Cost of goods sold	7,541	8,525

What can be said about Major Drugs accounts receivable turnover for Year 2?

A. It improved from Year 1 to Year 2

B. Major Drug collected receivables less effectively in Year 2 as compared to Year 1

C. Fewer customers purchased items on account during Year 2 as compared to Year 1

D. Customers paid their account balances more quickly during Year 2 as compared to Year 1

2. What advantage exists in analyzing common-size statements rather than statements prepared using actual dollar amounts?

A. Firms of different size can be readily compared.

B. Pro forma amounts are reported.

C. Opportunity costs are minimized.

D. Measurement concerns are eliminated.

3. Presented below are the consolidated balance sheets for B&B Company, Inc. at December 31:

Amounts in thousands
Current assets
Cash	$ 24,600
Accounts receivable	29,500
Inventory	33,400
Marketable securities	25,900
Total current assets	113,400
Equipment, net	145,000
Total assets	$258,400
Current liabilities
Accounts payable	$ 21,000
Income taxes payable	10,000
Current portion of long-term debt	13,000
Total current liabilities	44,000
Long-term obligations	75,400
Common stock	55,000
Retained earnings	84,000
Total liabilities & shareholders' equity	$258,400

How does B&B current ratio compare to the industry average of 1.8?

A. B&B will likely have a more difficult time servicing it current liabilities as compared to its competition.

B. B&B is significantly more liquid than other companies in the same industry.

C. B&B current ratio is significantly lower than the benchmark.

D. B&B current ratio implies it is more risky than other companies in the same industry.

B&B of California provided the following information concerning its accounting records:

Collection revenue (all on account)	$925,000
Accounts receivable, January 1	250,000
Allowance for uncollectible accounts, January 1	2,700
Collections from customers during the year	810,000
Accounts written off as uncollectible during the year	25,000

4. How much is the balance of the Accounts Receivable account at December 31?

A. $455,000

B. $340,000

C. $357,300

D. $250,700

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