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NEW QUESTION: 1



A. Option E
B. Option F
C. Option A
D. Option G
E. Option H
F. Option C
G. Option B
H. Option D
Answer: D

NEW QUESTION: 2
Based on a comparison of RST's times-interest-earned ratios in Year 5 and Year 6, what is a likely conclusion?
A. RST's long-run solvency has improved.
B. RST's liquidity has improved.
C. RST's liquidity has declined.
D. RST's long-run solvency has declined.
Answer: A
Explanation:
The times-interest-earned ratio increased from 14.67 times in Year 5 44,0On - 3,00n) to
23.33 times in Year 6 70,000 - 3.000). This increase signifies that RST has more profit
available to meet the interest payments on its debt, and that long-run solvency has
improved. Consequently, creditors will RST's obligations as less risky.
An entity had the following opening and closing inventory balances during the current year:

The following transactions and events occurred during the current year 300,000 of raw materials were purchased, of which 20,000 were returned because of defects.
600,000 of direct labor costs were incurred. 750,000 of production overhead costs were incurred.

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