6. Thorton Co. reported the following data at year end. Sales, $500000; beginning inventory,$40 000; ending inventory, $45 000; costof goods sold, $350 000; and gross margin, $150 000. What was theamount of merchandise purchased during the year?

   1. $370 000

   2. $355 000

   3. $348 000

   4. $341 000

   5. None of the above

7. If a current ratio has been increasing over the past severalyears, which of these would cause the ratio to rise?

   1. A decrease in accounts payable

   2. An increase in inventories

   3. An increase in short term borrowings

   4. Both a and b cause the ratio to rise

   5. All of the above would cause the ratio to rise

8. Young company is involved in a lawsuit. The liability whichcould arise as a result of this lawsuit should be recorded on thebooks if the probability of Young owing money as a result of thelawsuit is

   1. Remote and the amount can be reasonably estimated

   2. Probable and the amount can be reasonably estimated

   3. Reasonably possible and the amount can be reasonablyestimated

   4. Probable and the amount cannot be reasonably estimated

   5. None of the above is correct

9. Which of the following is true?

   1. Working capital is current assets divided by currentliabilities

   2. Working capital will increase if current assets increase fasterthan current liabilities

   3. Working capital will decrease when we use cash to pay anaccounts payable

   4. All of the above are true

   5. None of the above is true