ACC2011 Final Exam MS 2015

Exam

Name___________________________________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

1) The cost of razing a building on a parcel of land to build a new building is added to the cost of the

land.

1)

2) Treating a cost which should be an expense as a capital expenditure will make a company's net

income higher.

2)

3) Accelerated depreciation differs from straight-line depreciation in that depreciation expense is

greater in the first year and less in the later years.

3)

4) Tangible assets must be tested for impairment at least once a year. 4)

5) If assets are junked before being fully depreciated, there is a loss equal to the book value of the

asset.

5)

6) A loss on disposal of an asset is recorded when cash received is less than book value. 6)

7) Accumulated depletion is a contra asset account. 7)

8) One of the key concepts surrounding the definition of an asset is that it must provide future benefit. 8)

9) Amounts owed for products or services purchased on account are contingent liabilities. 9)

10) Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee

during a pay period.

10)

11) Ensuring efficiency of the payroll process is one of the two key controls for payroll. 11)

12) The current portion of notes payable is the principal amount that will be paid within one year of

the balance sheet date.

12)

13) The bond carrying amount is the balance in the bond payable account subtracted from or added to

the balance in either the discount or premium account.

13)

14) If a company issues a bond in-between interest payments, the company can pay a prorated portion

of the interest payment on the regular payment date.

14)

15) If the difference between the effective-interest method of amortizing bond discount and the

straight-line method is immaterial, then GAAP permits use of the straight-line method.

15)

1

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

16) On May 1, 2013, Metro Company has bonds with balances as shown below.

If Metro retires the bonds for $52,000, what will be the effect on the income statement?

16)

A) There will be sales revenue of $3,140.

B) There will be a gain on retirement of $3,140.

C) There will be no effect on net income.

D) There will be a loss on retirement of $3,140.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

17) A corporation is a separate legal entity formed under the laws of a particular state. 17)

18) Corporations must issue common stock, but may or may not decide to issue preferred stock. 18)

19) Stock sold for amounts in excess of par value results in a gain reported on the income statement. 19)

20) The stock of publicly owned corporations is bought and sold on stock exchanges, such as the New

York Stock Exchange.

20)

21) When a company records the year-end closing entries, the Income summary balance, before it is

closed to Retained earnings, should be equal to the Net income or Net loss for the year.

21)

22) If preferred stock is non-cumulative, then the company does NOT need to pay dividends that were

passed in previous years.

22)

23) The book value of common stock is equal to the total equity less the book value of preferred stock,

divided by the number or common shares outstanding.

23)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

24) Which of the following measures a company's success in using assets to earn income? 24)

A) The rate of return on total assets B) Inventory turnover

C) Days sales in receivables D) The rate of return on stockholders' equity

25) A company's income tax expense is calculated on the basis of book income, but the income tax

payable amount is based on the:

25)

A) amount of taxable income, as calculated on the income tax return.

B) sales tax rate applied to sales revenues.

C) amount of dividends paid to shareholders.

D) amount of payroll tax that has not been paid yet.

2

26) Origami Company is considering a new project and needs to raise $800,000 of capital. Their

after-tax net income would be $75,000 if they do not implement the new project. If the new project

is implemented, it will add an additional $50,000 of profits before tax and interest. Origami's

income tax rate is 40%. If they use debt financing, the interest will be at 5%. Origami has 25,000

shares of common stock outstanding and no preferred stock.

If Origami decides to implement the project using debt financing, what will be the earnings per

share amount? (Please round to the nearest cent.)

26)

A) $3.40 B) $4.20 C) $3.24 D) $4.14

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

27) On June 30, 2014, Stephans Company showed the following data on the equity section of their

balance sheet:

Stockholders' equity

Common stock, $1 par 100,000 shares authorized $40,000

40,000 shares issued

Paid-in capital in excess of par 260,000

Retained earnings 940,000

Total stockholder's equity $1,240,000

On July 1, 2014, Stephans distributed a 5% stock dividend. The market value of the stock at that

time was $13 per share. Following this transaction, the total shareholders' equity would go down

by $26,000.

27)

28) A stock split is an increase in the number of issued and outstanding shares of stock, coupled with a

proportionate reduction in the par value of the stock.

28)

29) A corporation must record a gain on sale for the sale of treasury stock at an amount greater than its

purchase price.

29)

30) Please refer to the following information for Petra Sales Company:

• Common stock, $1.00 par, 200,000 issued, 180,000 outstanding

• Paid-in capital in excess of par: $1,600,000

• Retained earnings: $2,440,000

• Treasury stock: 20,000 shares purchased at $12 per share

If Petra Sales sells 10,000 shares of treasury stock at $14 per share, the company will record a gain

on the sale of treasury stock of $20,000.

30)

31) Public companies are required to publish financial statements, but privately held companies are

generally not required to do so.

31)

3

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

32) Which of the following BEST describes operating income? 32)

A) The income or loss generated from the normal operations of the business

B) The income or loss from segments of the business that have been sold or terminated

C) The gains and losses from transactions that are not part of the normal operations of the

business

D) The income or loss generated from unusual or infrequent events

33) Which of the following best describes extraordinary items on the income statement? 33)

A) The income or loss generated from the normal operations of the business

B) The income or loss generated from unusual and infrequent events

C) The income or loss from segments of the business that have been sold or terminated

D) The gains and losses from transactions that are not part of the normal operations of the

business

34) A statement of cash flows is generated to show: 34)

A) the inflow and outflow of cash during the time period.

B) the expenses the company incurred during the time period.

C) how profits were generated.

D) the revenues the company has earned.

35) Which one of the following is a principal function of the statement of cash flows? 35)

A) To evaluate the company's earnings per share

B) To predict future net income

C) To evaluate management decisions

D) To predict the growth of company assets

36) Which of the following describes the operating activities as shown in the statement of cash flows? 36)

A) Includes transactions that primarily impact current assets and current liabilities

B) Includes increases and decreases in long-term assets

C) Includes transactions affecting the capitalization of the business

D) Shows the beginning and ending balance of cash

37) Which of the following describes the investing activities as shown in the statement of cash flows? 37)

A) Includes increases and decreases in long-term assets

B) Includes transactions affecting the capitalization of the business

C) Shows the beginning and ending balance of cash

D) Includes transactions that primarily impact current assets and current liabilities

38) Transnational Company just started in business and was looking for additional capital in order to

purchase a property to build their headquarters. They found an investor who was willing to sell

them land worth $500,000 in exchange for stock in the company. How would this transaction be

shown on the statement of cash flows?

38)

A) In the noncash investing and financing activities section

B) In the investing activities section

C) In the operating activities section

D) In the financing activities section

4

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

39) Companies sometimes obtain financing other than cash. Although such transactions do not directly

involve cash, they still must be reported in the financing section of the cash flow statement.

39)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

40) Which of the following sections from the statement of cash flows would include the acquisition of a

building by issuing common stock?

40)

A) The financing section

B) The noncash investing and financing section

C) The investing section

D) The operating section

41) Which of the following sections from the statement of cash flows would include the payment of a

note payable by issuing common stock?

41)

A) The payment of a note payable by issuing common stock would not be included in the

noncash investing and financing section.

B) The payment of a note payable by issuing common stock would be included in the investing

section.

C) The payment of a note payable by issuing common stock would be included in the operating

section.

D) The payment of a note payable by issuing common stock would be included in the financing

section.

42) If an investor wants to know how much cash a company can free up for new opportunities, such as

expanding into a new sales region, they would most likely look at:

42)

A) acid ratio. B) cash flow from investing activities.

C) earnings per share. D) free cash flow.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

43) Qtopia Company uses the direct method to prepare its statement of cash flows. It has reported sales

revenues of $100,000 on its income statement for the year 2012. If the balance in accounts

receivable has gone up by $4,000 during the year, then $4,000 will have to be added to $100,000 to

calculate collections from customers.

43)

44) Qtopia Company uses the direct method to prepare its statement of cash flows. It has reported

operating expenses of $21,000 on its income statement for the year 2012. If the balance in accrued

liabilities has gone up by $1,000 during the year, then $1,000 will have to be added to $21,000 as

part of the process to calculate payments to suppliers for operating expenses.

44)

45) Investors and creditors generally evaluate a company by using one year's data. 45)

46) Horizontal analysis compares each item in the income statement to the net sales amount. 46)

47) Benchmarking is the comparison of a company's current year results with an earlier year's

performance.

47)

48) If an analyst wishes to see how operating expenses of a company have changed from one year to

the next, using a horizontal analysis would be the best approach.

48)

5

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

49) Which of the following is the definition of vertical analysis? 49)

A) Vertical analysis is the practice of comparing a company with other companies that are

leaders.

B) Vertical analysis is the analysis of a financial statement that reveals the relationship of each

statement item to a specified base, which is the 100% figure.

C) Vertical analysis is the study of percentage changes in comparative financial statements.

D) Vertical analysis is the analysis in which percentages are computed by selecting a base year as

100% and expressing amounts for following years as a percentage of the base amount.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

50) In a vertical analysis of the income statement, each line item is shown as a percentage of gross

profit.

50)

51) The Arlington Company prepared a common-size income statement to compare its results with its

key competitor, Bardo Company. Please refer to the following data:

Arlington Co. Bardo Co.

Revenues 100.0% 100.0%

Cost of goods sold 42.1% 47.8%

Gross Profit 57.9% 52.2%

Operating expenses:

Sales and marketing expense 26.3% 8.6%

General and administrative expense 12.0% 10.8%

Research and development expense 4.1% 10.2%

Total operating expenses 42.4% 29.6%

Income before income tax 15.5% 22.6%

Income tax expense 3.3% 5.8%

Net income (loss) 12.3% 16.8%

Based on this data, an analyst could conclude that Arlington's total gross profit is higher than

Bardo's.

51)

52) The inventory turnover ratio is a measure of the company's ability to pay all of its current liabilities

if they come due immediately.

52)

53) Days' sales in receivables is a measure of a company's ability to collect receivables. 53)

54) The current ratio is a key indicator of a company's ability to pay current liabilities. 54)

55) Management accounting often requires forward-looking data because of the futuristic nature of

many business decisions.

55)

6

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

56) Which of the following is NOT an objective of management accounting? 56)

A) To provide information to shareholders to assist them with their investment decisions

B) To assist business managers with respect to providing a return to the owners of the business

C) To provide information to business managers to assist them in planning for their business

D) To provide information to business managers to assist them in controlling their business

57) Management is accountable to its employees in which of the following ways? 57)

A) Providing a return on the owner's shareholders' investment

B) Providing a safe workplace

C) Providing products that are safe and free of defects

D) Ensuring the business is environmentally responsible for impacts on the community

58) Which of the following describes a system in which suppliers deliver materials at the time they are

needed and finished units are completed when customer orders need to be filled?

58)

A) Total quality management B) Just-in-time (JIT)

C) Enterprise resource planning D) Supply chain management

59) What is the name given to software systems that can integrate all of a company's worldwide

functions, departments and data into a single system?

59)

A) Just-in-time inventory management B) Enterprise resource planning

C) Total quality management D) E-Commerce

60) Which of the following is NOT an advantage of just-in-time inventory management? 60)

A) Reduce the amount of insurance needed for lower levels of inventory

B) Surplus inventory is maintained to prevent production shut-down in case of supply

interruption

C) Lower inventory levels reduce storage cost

D) Inventory kept for shorter periods of time reduces the amount of goods that become obsolete

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

61) Baker products shipped an order to a customer on the second day of January. Later that day, the

sales manager told the accountant to record the sale as if it had taken place on the last day of

December. This would allow the company to book the sales revenue in the year just ended and

boost year-end profit. Because the transaction was a legitimate sale, the alteration of the date of

sale alone would not be considered unethical.

61)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

62) Which of the following is NOT one of the key standards of ethical practice published by the IMA? 62)

A) Environmental sensitivity B) Integrity

C) Confidentiality D) Competence

63) Which of the following could be found on the income statement of a service company? 63)

A) Cost of goods sold B) Rent expense

C) Cost of goods manufactured D) Manufacturing overhead

7

64) Bainbridge Services reported the following information for the year 2012:

Service revenue $20,000

Operating expenses $15,750

Net income $4,250

Number of service calls for the year 21,000

How much was the unit cost per service call?

64)

A) $2.20 B) $0.20 C) $0.95 D) $0.75

65) Which of the following applies to the raw materials used by a manufacturing company? 65)

A) Finished goods inventory B) Merchandise inventory

C) Work in process inventory D) Materials inventory

66) The following information pertains to Bright Toy Company's operating activities for 2012. The

company sells light box toys and sold 10,000 units in 2012.

Purchases $126,000

Selling and Administrative Expenses 90,000

Merchandise inventory, 1/1/2012 14,000

Merchandise inventory, 12/31/2012 10,000

Sales Revenue 250,000

What is the cost of goods available for sale for 2012?

66)

A) $104,000 B) $130,000 C) $140,000 D) $126,000

67) The following information pertains to Bright Toy Company's operating activities for 2012. The

company sells light box toys and sold 10,000 units in 2012.

Purchases $126,000

Selling and Administrative Expenses 90,000

Merchandise inventory, 1/1/2012 14,000

Merchandise inventory, 12/31/2012 10,000

Sales Revenue 250,000

What is the gross profit percentage?

67)

A) 56% B) 36% C) 100% D) 48%

68) All of the following are examples of manufacturing overhead EXCEPT for: 68)

A) indirect materials. B) insurance on factory equipment.

C) wages of assembly line workers. D) utilities incurred in the factory.

8

69) Given the following information, determine the cost of goods sold.

Direct labor incurred $126,000

Manufacturing overhead incurred 359,000

Direct materials used 1,000

Finished goods inventory, 1/1/2012 395,000

Finished goods inventory, 12/31/2012 442,000

Work in process inventory, 1/1/2012 193,000

Work in process inventory, 12/31/2012 218,000

69)

A) $731,000 B) $461,000 C) $414,000 D) $781,000

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

70) The wages and benefits of the factory janitors are included in manufacturing overhead. 70)

71) Premium on bonds payable is spread over the term of the bonds and reduces total interest expense. 71)

72) The balance in the Bonds payable account is a credit of $50,000. The balance in the Discount on

bonds payable account is a debit of $1,500. The bond carrying amount is $51,500.

72)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

73) The following information has been provided by LeMaire Company:

• Direct labor: $50,000

• Direct materials used: $20,000

• Materials purchased: $27,000

• Cost of goods manufactured: $100,000

• Ending work in process: $16,000

• Corporate headquarters' property taxes: $6,000

• Manufacturing overhead: $39,000

The beginning work in process was:

73)

A) $7,000. B) $9,000. C) $1,000. D) $23,000.

74) The following information was obtained from Sizzler Company:

• Advertising costs: $7,900

• Indirect labor: $9,000

• Direct Labor: $31,000

• Indirect materials: $7,200

• Direct materials: $47,000

• Factory utilities: $3,000

• Factory repair and maintenance: $700

• Factory janitorial costs: $1,900

• Manufacturing equipment depreciation: $1,600

• Delivery vehicle depreciation: $790

• Administrative wages and salaries: $19,000

How much were Sizzler's product costs?

74)

A) $102,190 B) $99,500 C) $101,400 D) $129,090

9

75) Pearland Company has 2,000 shares of preferred stock outstanding. The preferred stock has a $100

par value, a 5% dividend rate, and is non-cumulative. If Pearland has sufficient funds to pay

dividends, what is the total amount of dividends that will be paid out to preferred shareholders?

75)

A) $10,000 B) $1,000 C) $2,000 D) $5,000

76) Orleans Company was incorporated on January 1, 2012. Orleans issued 4,000 shares of common

stock and 500 shares of preferred stock on that date. The preferred shares are cumulative, $100 par,

with an 8% dividend rate. Orleans has not paid any dividends yet. In 2015, Orleans had its first

profitable year, and on November 1, 2015, Orleans declared a total dividend of $28,000. What is the

total amount that will be paid out to preferred shareholders?

76)

A) $3,200 B) $16,000 C) $4,000 D) $28,000

77) A corporation has 15,000 shares of 10%, $50 par cumulative preferred stock outstanding and 25,000

shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the

current year, the corporation declares a dividend of $120,000.

What is the dividend per share for preferred shares and for common shares?

77)

A) The dividend per share is $.50 to preferred shares and $4.60 to common shares.

B) The dividend per share is $7.50 to preferred shares and $.30 to common shares.

C) The dividend per share is $8.00 to preferred shares and $0 to common shares.

D) None of the above are correct.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

78) When a company sells stock for more than the par value, it will record a gain on sale for the

amount in excess of par.

78)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

79) Which of the following would be included in the entry to record the issuance of 5,000 shares of $10

par value common stock at $13 per share cash?

79)

A) Cash would be debited for $65,000.

B) Common stock would be debited for $50,000.

C) Paid-in capital in excess of par—common would be debited for $5,000.

D) Common stock would be credited for $65,000.

80) The rate of return on total assets and the rate of return on common stockholders' equity are used to

evaluate the:

80)

A) cash flow of the business.

B) ability to pay current liabilities with current assets.

C) liquidity of the business.

D) profitability of the business.

10

81) Reed Company reports the following information for the year 2013:

Net income $46,000

Preferred dividends 12,000

Common equity, Jan 1 800,000

Common equity, Dec 31 900,000

Please calculate the rate of return on common stockholders' equity. Please round to 3 decimal

places.

81)

A) 0.043 B) 0.054 C) 0.040 D) 0.014

82) Which of the following factors may cause a difference between book income and taxable income? 82)

A) The company uses straight-line depreciation for books and accelerated depreciation for tax.

B) The company pays its federal income taxes quarterly as opposed to annually.

C) The company has a deposit in transit at year-end.

D) The company sells stock right before the end of the year.

83) Onyx Company's income statement shows net income before income tax of $38,000. The

company's tax return shows taxable income of $34,000. Company's tax rate is 40%. Which of the

following entries would be used to record tax expense and tax payable?

83)

A) Debit Income tax expense $15,200, credit Deferred tax liability $1,600 and credit Income tax

payable $13,600.

B) Debit Income tax expense $15,200 and credit Cash $15,200.

C) Debit Deferred tax liability $13,600 and credit Income tax payable $13,600.

D) Debit Deferred tax liability $1,600, debit Income tax expense $13,600 and credit Income tax

payable $15,200.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

84) Normally, a company's book income and tax income should be the same. 84)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

85) Please refer to the following information for Peartree Company:

• Common stock, $1.00 par, 100,000 issued, 95,000 outstanding

• Paid-in capital in excess of par: $2,150,000

• Retained earnings: $910,000

• Treasury stock: 5,000 shares purchased at $20 per share

If Peartree resold 1,000 shares of treasury stock for $24 per share, what journal entry would be

required?

85)

A) Debit Cash $24,000 and credit Treasury stock $24,000.

B) Debit Treasury stock $24,000 and credit Cash $24,000.

C) Debit Treasury stock $20,000, debit Paid-in capital $2,000 and credit Cash $24,000.

D) Debit Cash $24,000, credit Treasury stock $20,000 and credit Paid-in capital $4,000.

11

86) Which of the following is a common reason for companies to retire preferred stock? 86)

A) To stop paying out dividends to preferred shareholders

B) To increase stockholders' equity

C) To reward the preferred shareholders

D) To make a profit on the retirement of preferred stock

87) Which of the following statements is TRUE? 87)

A) No journal entries are needed to either appropriate or restrict retained earnings.

B) Appropriations of retained earnings require journal entries, but restrictions on retained

earnings do not.

C) Restrictions on retained earnings must be journalized, but appropriations do not need to be

journalized.

D) Both appropriations and restrictions of retained earnings require journal entries.

88) At January 1, 2014, Foxmore Company had 80,000 shares of common stock outstanding and no

preferred stock. During the year, they issued 40,000 additional shares of common stock. At

December 31, 2014, Foxmore had 120,000 shares of common stock outstanding, and no preferred

stock. In addition, Foxmore reported the following results for the year 2014:

Sales revenues from regular business operations $3,000,000

Cost of goods sold 900,000

Operating expenses from their regular business

operations

600,000

Gain on disposal of several items of property, plant &

equipment

15,000

Income tax expense on continuing operations 330,000

Loss on the termination of a discontinued business

segment, net of tax

120,000

Losses on damage caused by earthquake, net of tax 280,000

At December 31, 2014, how much is the earnings per share for income (loss) from continuing

operations?

(Please round all calculations to the nearest cent.)

88)

A) $(1.20) B) $10.65 C) $7.85 D) $11.85

89) A corporation has net income of $365,000 for the current year. It paid its required preferred

dividend of $17,500 and had no other stock transactions during the year. The average number of

common shares outstanding during the year was 69,500. What is the earnings per share?

89)

A) $1.00 B) $4.37 C) $5.84 D) $5.00

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

90) Origami Company is considering a new project and needs to raise $800,000 of capital. Their

after-tax net income would be $75,000 if they do not implement the new project. If the new project

is implemented, it will add an additional $50,000 of profits before tax and interest. Origami's

income tax rate is 40%. If they use debt financing, the interest will be at 5%. Origami has 25,000

shares of common stock outstanding and no preferred stock. They would have to issue an

additional 10,000 shares of common stock to finance the project with equity capital.

If Origami decides to use equity financing, their earnings per share will be higher than if they use

debt.

90)

12

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

91) Deferred tax would normally arise from which of the following situations? 91)

A) When a company makes a different choice for its tax return versus its book net income

B) When a company pays income tax quarterly versus yearly

C) When a company withholds income tax from its employees' payroll

D) When a company pays off all of its debts at the end of the year

92) Which of the following describes preferred stock? 92)

A) Stock which gives shareholders certain preferences and advantages over common stock

B) Stock that is purchased by the corporation for investment purposes

C) Stock that sells for a very high price

D) Stock that is sold to employees of the company as a performance incentive

93) Which of the following characteristics is an advantage of the corporate form of business? 93)

A) Higher degree of government regulation

B) Double taxation

C) Separation of ownership and management

D) The potential to raise large amounts of capital

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

94) SUTA (state unemployment compensation) tax is paid by the employer only and is not deducted

from gross pay.

94)

95) FUTA (federal unemployment compensation) tax is paid by the employee and deducted from gross

pay.

95)

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

96) Which of the following is paid by the employee only? 96)

A) FICA B) Employee income tax

C) State unemployment tax D) FUTA

97) Which of the following is pay over and above base salary, usually paid for exceptional

performance?

97)

A) Benefits B) Commissions C) Wages D) Bonuses

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

98) A common-size statement reports only percentages—no dollar amounts. 98)

99) If an analyst wishes to see a company's current assets as a percentage of total assets, a vertical

analysis would be the best approach.

99)

13

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

100) Olivera Company provides the following data for the year 2013:

Net sales revenue $398,000

Cost of goods sold $255,000

Operating expenses $95,000

Income tax expense $9,000

On a vertical analysis, what percentage would be shown for net income?

100)

A) 8.8% B) 9.8% C) 27.3% D) 12.1%