Cost of Goods Sold (COGS) or Cost of Sales: The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory. Current Ratio : It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is, Current ratio = Current assets Current liabilities Acid Test Ratio: It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is, Acid test Ratio = Current assets − ( Stock + Prepaid expenses ) Current Liabilities 1. To compute: Net cost of goods purchased.

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Answer 1

Question

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

2.

To determine

To compute: Current ratio and acid test ratio for two years.

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

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Answer 2

Question

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

2.

To determine

To compute: Current ratio and acid test ratio for two years.

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

2.

To determine

To compute: Current ratio and acid test ratio for two years.

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

2.

To determine

To compute: Current ratio and acid test ratio for two years.

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

2.

To determine

To compute: Current ratio and acid test ratio for two years.

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

Answer 6

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

Answer 7

Chapter 4, Problem 1BTN

To determine

Cost of Goods Sold (COGS) or Cost of Sales:

The direct cost incurred in the production of goods. It involves labor cost, material cost, direct factory overheads. The purpose of finding the COGS is to compute the “true cost” of goods sold. It supports the management in monitoring the purchase cost of inventory.

Current Ratio:

It is ratio which gives idea about the ability of company to pay it liabilities. Formula to calculate current ratio is,

Current ratio=Current assetsCurrent liabilities

Acid Test Ratio:

It measures whether a company is able to use cash or its liquid assets or paying off current liabilities. Formula to calculate acid test ratio is,

Acid test Ratio=Current assets−(Stock+Prepaid expenses)Current Liabilities

1.

To compute: Net cost of goods purchased.

Answer 8

2.

To determine

To compute: Current ratio and acid test ratio for two years.

Answer 9

2.

To determine

To compute: Current ratio and acid test ratio for two years.

Answer 10

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

Answer 11

3.

To determine

To compute: Current ratio and acid test ratio for year.2016.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 4 - Prob. 1MCQ Ch. 4 - A company purchased $4,500 of merchandise on May 1...Ch. 4 - Prob. 3MCQ Ch. 4 - Prob. 4MCQ Ch. 4 - Prob. 5MCQ Ch. 4 - Prob. 1DQ Ch. 4 - Prob. 2DQ Ch. 4 - Prob. 3DQ Ch. 4 - Prob. 4DQ Ch. 4 - Prob. 5DQ

Solution Summary: The author explains the cost of goods sold (COGS) and the acid test ratio, which measures the company's ability to pay its liabilities.

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To compute: Current ratio and acid test ratio for two years.

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