86.In a multiple-step income statement, interest expense usually is not classified as an operating expense because interest charges:
A. Do not contribute to the production of revenue.
B. Stem from the manner in which assets are financed, not the manner in which they are used in business operations.
C. Relate directly to the cost of goods sold.
D. The statement is incorrect. Interest usually is classified as an operating expense.
87.In a multiple-step income statement, income taxes are not classified as operating expenses because:
A. Income taxes do not contribute to the production of revenue.
B. Income taxes stem from the manner in which assets are financed, not the manner in which they are used in business operations.
C. Not all forms of business organization are subject to income taxes.
D. The statement is incorrect; income taxes are classified as operating expenses.
88.All of the following are true of operating expenses
except:
A. Operating expenses are incurred for the purpose of producing revenue.
B. Operating expenses are subdivided into the classifications of component and trend.
C. The administrative expenses portion of operating expenses tends to remain constant from period to period.
D. Subdividing operating expenses into different classifications helps managers and investors evaluate different aspects of the company's operations.
89.The measurement that best reflects investors' expectations about future earnings is:
A. Earnings per share.
B. Return on assets.
C. The price-earnings ratio.
D. Return on equity.
90.Refer to the information above. Supreme's gross profit rate was:
A. 42.9%.
B. 57.7%.
C. 20.0%.
D. 31.7%.
91.Refer to the information above. What was Supreme's operating income? (in millions):
A. $710.
B. $390.
C. $270.
D. $520.
92.Refer to the information above. Supreme's return on assets was:
A. 9.75%.
B. 6.75%.
C. 17.75%.
D. 30.75%.
93.Refer to the information above. Supreme's return on equity was:
A. 11%.
B. 25%.
C. 7.5%.
D. 16.3%.
94.Refer to the information above. Supreme's price-earnings ratio at year end was:
A. 25.
B. 22.
C. 100.
D. 4.
95.Refer to the information above. Noble's price-earnings ratio at year end was:
A. .07.
B. 13.5.
C. 17.
D. 1.42.