Accounting Principles 11th Edition

1) A periodic inventory system requires a detailed inventory record of inventory items. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A dividend based on paid-in capital is termed a liquidating dividend. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) The purchase of store

1) Dougan Company purchased equipment on January 1, 2013 for $90,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. Instructions Answer the following independent questions. 1>Compute the amount of

1) A debenture bond is an unsecured bond which is issued against the general credit of the borrower. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Allowance for Doubtful Accounts is a contra asset account. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) The book value of a plant asset is always equal to its fair market value. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) When finished goods are sold, the

1) Marley Jeans utilizes the retail inventory method to estimate its inventories. It calculated its cost to retail ratio during the period at 80%. Goods available for sale at retail amounted to $600,000 and goods were sold during the period for $420,000. How much is the estimated cost of the ending inventory? a.$180,000 b.$144,000 c.$480,000 d.$225,000 Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2)

1) An account consists of a.one part b.two parts c.three parts d.four parts Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Companies cannot use the a.periodic inventory system under GAAP b.periodic inventory system under IFRS c.perpetual system under IFRS d.both periodic and perpetual can be used under GAAP and IFRS Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 3) Lenand Company has beginning and ending raw materials inventories of $130,000 and $170,000, respectively. If

1) The income statement for the year 2014 of Fugazi Co. contains the following information: Revenues$70,000 Expenses: Salaries and Wages Expense$45,000 Rent Expense12,000 Advertising Expense10,000 Supplies Expense6,000 Utilities Expense2,500 Insurance Expense 2,000 Total expenses 77,500 Net income (loss)$ (7,500) After all closing entries have been posted, the revenue account will have a balance of a.$0 b.$70,000 credit c.$70,000 debit d.$7,500 credit Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 2) The following information was

1) Mary Ehrat, an employee of Eddington Company, has gross earnings for the month of October of $8,000. FICA taxes are 7.65% of gross earnings, federal income taxes amount to $1,270 for the month, state income taxes are 2% of gross earnings, and Mary authorizes voluntary deductions of $20 per month to the

1) A job order cost system would most likely be used by a(n): a.cement manufacturer b.paint manufacturer c.automobile manufacturer d.specialty printing company Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) On the costs of goods manufactured schedule, the item raw materials inventory (ending) appears as a(n) a.addition to raw materials purchases b.addition to raw materials available for use c.subtraction from raw materials available for use d.subtraction

1) Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The drawing account is a subdivision of the owner's capital account and appears as an expense on the income statement. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Current maturities of long-term debt refers to the amount of interest on a note payable

1) Drawings ________________ owner's equity but are not expenses. Answer:[cpmembership level="2,3,4,5"] reduce[/cpmembership] 2) The end of the period account balances after adjustments of Hernandez Shoe Repair are as follows: Account Balances (After Adjustments) Cash$ 36,000 Supplies2,700 Prepaid Rent9,600 Equipment94,000 Accumulated DepreciationEquipment22,000 Accounts Payable14,500 Owners Capital54,600 Owners Drawing7,500 Service Revenues41,000 Supplies Expense2,000 Depreciation Expense3,000 Rent Expense900 Salaries and Wages Expense1,200 Utilities Expense1,800 Instructions: Prepare the end of the period closing entries for

1) The first step in solving an ethical dilemma is to a.identify and analyze the principal elements in the situation b.identify the alternatives c.recognize an ethical situation and the ethical issues involved d.weigh the impact of each alternative on various stakeholders Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) A company's planned activity level for next year is expected to be

1) The following facts are known: The total pounds needed for production are 2 times the units to be produced. The desired ending direct materials inventory is 20% of the total pounds needed for production. The beginning direct materials inventory is equal in number to 10% of the units to be produced. Cost per pound is

1) The internal rate of return method differs from the net present value method in that it results in finding the ___________________ of the potential investment. Answer:[cpmembership level="2,3,4,5"] interest yield[/cpmembership] 2) 1>Picket Industries had 300,000 common shares and 10,000 preferred shares outstanding throughout 2014. The preferred stock is not cumulative and received dividends of $40,000 for

1) Kalven Company manufactures boats. During September, 2014, the company purchased 100 GPS devices at a cost of $120 each. Kalven withdrew 60 devices from the warehouse during the month. Twenty of these devices were installed in salespersons cars and the remaining 40 phones were put in boats manufactured during the month. Of the

1) A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n) a.period cost b.indirect material c.direct material d.miscellaneous expense Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period? a.The total of the

1) The following costs and inventory data were taken from the accounts of Garfunkle Company for 2014: January 1, 2014December 31, 2014 Inventories: Raw materials$ 9,000$ 6,000 Work in process16,00014,000 Finished goods15,00010,000 Costs incurred: Raw materials purchases$94,000 Direct labor40,000 Factory rent8,400 Factory utilities10,600 Indirect materials4,300 Indirect labor9,700 Operating expenses17,000 Instructions a.Prepare a schedule showing the amount of direct materials used in production during the year. b.Compute the amount

1) A variable cost remains constant per unit at various levels of activity. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Partnership income or loss need not be closed to partners' capital accounts each period because of the

1) Accounting time periods that are one year in length are referred to as interim periods. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Free cash flow equals cash provided by operations less capital expenditures and cash dividends. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) A corporation can be organized for the purpose of making a profit or it may be not-for-profit. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) The flow

1) Use of the LIFO inventory valuation method enables a company to report paper or phantom profits. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) To be faithfully representative, accounting information

1) Retailers and wholesalers are both considered merchandisers. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Unless the partnership agreement specifically indicates an income ratio, partnership net income or loss is not allocated to the partners. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Using special journals can save time in posting because column totals are often posted rather than individual entries. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) Once cost is

1) The budget is developed within the framework of a sales forecast. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The flow of costs is essentially the same in job order and process cost accounting. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Financing activities include the obtaining of cash from issuing debt and repaying the amounts borrowed. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) All major financing and investing activities

1) A process with no beginning work in process, completed and transferred out 28,000 units during a period and had 12,000 units in the ending work in process that were 50% complete. How much is equivalent units of production for the period for conversion costs? a.34,000 equivalent units b.40,000 equivalent units c.46,000 equivalent units d.22,000 equivalent units Answer:[cpmembership

1) Under the indirect method, retained earnings is adjusted for items that affected reported net income but did not affect cash. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The withdrawal of a partner legally dissolves the partnership. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Preferred stock has contractual preference over common stock in certain areas. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) Asset prepayments become expenses when they expire. Answer:[cpmembership

1) A loss on the exchange of plant assets occurs when the fair market value of the old asset is less than its book value. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Setting standard costs is relatively simple because it is done entirely by accountants. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Adjusting entries are recorded in the general journal but are not

1) Contribution margin is the amount of revenue remaining after deducting cost of goods sold. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) An advantage of the return on investment ratio is that no judgmental factors are involved. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) A post-closing trial balance

1) If the ending work in process inventory is greater than the beginning work in process inventory, then the cost of goods manufactured will be less than total manufacturing costs for the period. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The adjusted trial balance is the only item needed to prepare the Statement of Cash Flows. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A decision

1) U.S. standards are developed by the a.IFRS b.GAAP c.IASB d.FASB Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) As of December 31, 2014, Millen Industries had $1,600 of raw materials inventory. At the beginning of 2014, there was $2,000 of materials on hand. During the year, the company purchased $325,600 of materials; however it paid for only $316,000. How much inventory was requisitioned

1) In applying the high-low method, what is the unit variable cost? Month MilesTotal Cost January80,000$144,000 February50,000120,000 March70,000141,000 April90,000$180,000 a.$2.00 b.$1.50 c.$2.40 d.Cannot be determined from the information given Answer:[cpmembership level="2,3,4,5"] b Solution: ($180,000 $120,000) (90,000 50,000) = $1.50 [/cpmembership] 2) The White Stripes Animal Encounters operates a drive through tourist attraction. The company adjusts its accounts at the end of each month. The

1) Sebastiani Inc. declared a $80,000 cash dividend. It currently has 3,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Sebastiani distribute to the common stockholders? a.$38,000 b.$42,000 c.$59,000 d.None of these answer choices are correct Answer:[cpmembership level="2,3,4,5"] a Solution: $80,000 (3,000)

1) If an investor owns less than 20% of the common stock of another corporation as a long-term investment, a.the equity method of accounting for the investment should be employed b.no dividends can be expected c.it is presumed that the investor has relatively little influence on the investee d.it is presumed that the investor has

1) Which of the following is not a common cost flow assumption used in costing inventory? a.First-in, first-out b.Middle-in, first-out c.Last-in, first-out d.Average cost Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) (a)Identify several alternatives for presenting significant noncash activities in financial statements. (b)Give three examples of significant noncash transactions. Answer:[cpmembership level="2,3,4,5"] (a)Significant noncash transactions may appear at the bottom of the statement of cash flows as

1) The specific identification method of inventory costing a.always maximizes a company's net income b.always minimizes a company's net income c.has no effect on a company's net income d.may enable management to manipulate net income Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) The following totals for the month of June were taken from the payroll register of Ford Company. Salaries and wages$80,000 FICA

1) An inexperienced accountant for Tilly Company made the following errors in recording merchandising transactions. 1>A $270 refund to a customer for faulty merchandise was debited to Sales Revenue $270 and credited to Cash $270. 2>A $310 credit purchase of supplies was debited to Inventory $310 and credited to Cash $310. 3>A $190 sales return was

1) Britt Slais owns a garage and is contemplating purchasing a tire retreading machine for $20,350. After estimating costs and revenues, Britt projects a net cash flow from the retreading machine of $3,500 annually for 8 years. Britt hopes to earn a return of 11% on such investments. What is the present value

1) In the liquidation of a partnership, any gain or loss on the realization of noncash assets should be allocated a.first to creditors and the remainder to partners b.to the partners on the basis of their capital balances c.to the partners on the basis of their income ratios d.only after all creditors have been paid Answer:[cpmembership

1) The dominant form of business organization in the United States in terms of dollar sales volume, earnings, and employees is a.the sole proprietorship b.the partnership c.the corporation d.not known Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Financial statements combining the operations of Target and Walmart would violate the a.economic entity assumption b.cost principle c.monetary unit assumption d.both the cost principle and the monetary unit assumption Answer:[cpmembership

1) Ban Co. purchased 50, 5% Waylan Company bonds for $50,000 cash plus brokerage fees of $500. Interest is payable semiannually on July 1 and January 1 . The entry to record the December 31 interest accrual would include a a.debit to Interest Receivable for $1,250 b.debit to Interest Revenue for $1,250 c.credit to Interest

1) A decline in the fair value of a trading security is recorded by debiting an unrealized loss account and crediting the Fair Value Adjustment account. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Requisitions for direct materials are posted daily to the individual job cost sheets. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Working capital is current assets divided by current liabilities. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4)

1) Physical controls to safeguard assets do not include a.cashier department supervisors b.vaults c.employee identification badges d.security guards Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 2) The process of totaling the columns of a journal is termed a.ruling b.columnizing c.sizing d.footing Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 3) In a recent year Luke Corporation had net income of $250,000, interest expense of $50,000, and a times interest earned ratio of 10 .

1) If an acquired franchise or license has an indefinite life, the cost of the asset is not amortized. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) An assumption of CVP analysis is that all costs can be classified as either variable or fixed. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Posting is the process of proving the equality of debits and credits in the

1) Suarez Company paid $700 cash in advance for insurance coverage which will begin in the following month. As a result of this event, a.owners equity decreased by $700 b.total assets decreased by $700 c.total assets remained the same d.liabilities decreased by $700 Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Present value is based on a.the dollar amount to be received b.the length

1) The times interest earned is computed by dividing net income by interest expense. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The percentage of sales basis for estimating uncollectible accounts always results in more Bad Debt Expense being recognized than the percentage of receivables basis. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The master budget reflects management's long-term plans encompassing five years or more. Answer:[cpmembership

1) Humphreys, Inc. manufactures widgets for distribution. The standard costs for the manufacture of widgets follow: Standard CostsActual Costs Direct materials3 lbs. per widget at31,000 lbs. at $33 $35 per poundper pound Direct labor2.5 hours per widget22,500 hours at at $11 per hour$11.80 per hour Factory overheadVariable cost, $24/widget$241,500 variable cost Fixed cost, $40/widget$381,250 fixed cost Budgeted factory overhead

1) As part of a Careers in Accounting program sponsored by accounting organizations and supported by your company, you will be taking a group of high school students through the accounting department in your company. You will also provide them with various materials to explain the work of an accountant. One of the

1) The budget itself and the administration of the budget are entirely accounting responsibilities. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Financial statements are the major means of communicating accounting information to interested parties. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) A flexible budget is prepared before the master budget. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) The budgeted income statement indicates the expected profitability of operations for the next year. Answer:[cpmembership

1) Westcoast Sporting Goods Company manufactures aluminum baseball bats that it sells to university athletic departments. It has developed the following per unit standard costs for 2014 for each baseball bat: Manufacturing Direct MaterialsDirect Labor Overhead Standard Quantity2 Pounds (Aluminum)1/2 hour1/2 hour Standard Price$4.00$10.00$7.00 Unit Standard Cost$8.00$5.00$3.50 In 2014, the company planned to produce 120,000 baseball bats at

1) Robert Tingle is studying for the next accounting mid-term examination. What should Robert know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method? Answer:[cpmembership level="2,3,4,5"] Robert should know the following: (a)A departure from the cost basis of accounting for inventories is justified

1) To grant a customer a sales return, the seller credits Sales Returns and Allowances. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The operating cycle of a company is the average time required to collect the receivables resulting from producing revenues. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Meaningful analysis of financial statements will include either horizontal or vertical analysis, but not both. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4)

1) The return on common stockholders equity is computed by dividing a.net income by ending common stockholders equity b.net income by average common stockholders equity c.net income less preferred dividends by ending common stockholders equity d.net income less preferred dividends by average common stockholders equity Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) For prepaid expense adjusting entries a.an expenseliability account relationship

1) The higher the sales tax rate, the more profit a retailer can earn. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Premium on Bonds Payable is a contra account to Bonds Payable. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) If volume increases, all costs will increase. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) Once set, normal standards should not be changed during the year. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 5) Using the direct

1) All of the following statements regarding changes in accounting principles are true except: a.Most changes in accounting principles are only reported in current periods when the principle change takes place b.Changes in accounting principles are allowed when new principles are preferable to old ones c.Most changes in accounting principles are retroactively reported d.Consistency is one of

1) Gardaner Company had the following department information about physical units and percentage of completion: Physical Units Work in process, May 1 (60%)60,000 Completed and transferred out150,000 Work in process, May 31 (40%)40,000 If materials are added at the beginning of the production process, what is the total number of equivalent units for materials during May? a.210,000 b.202,000 c.190,000 d.166,000 Answer:[cpmembership level="2,3,4,5"] c

1) When bonds are converted into common stock, the carrying value of the bonds is transferred to paid-in capital accounts. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Ordinary repairs should be recognized

1) Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) A deposit ticket is a negotiable instrument that can be transferred to another party by endorsement. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The current ratio is a measure of all the

1) Karley Company sold equipment on July 1, 2014 for $75,000. The equipment had cost $210,000 and had $120,000 of accumulated depreciation as of January 1, 2014 . Depreciation for the first 6 months of 2014 was $12,000. Instructions Prepare the journal entry to record the sale of the equipment. Answer:[cpmembership level="2,3,4,5"] Cash75,000 Accumulated DepreciationEquipment ($120,000 +

1) The worksheet for Montoya Company has been completed through the adjusted trial balance. You are ready to extend each amount to the appropriate financial statement column. Indicate for each account, the financial statement column to which the account should be extended by placing a check mark () in the appropriate column. Income Statement

1) Under the double-entry system, revenues must always equal expenses. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Checks from customers who pay their accounts promptly are called outstanding checks. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) When purchasing land, the costs for

1) Owner's capital at the end of the period is equal to a.owner's capital at the beginning of the period plus net income minus liabilities b.owner's capital at the beginning of the period plus net income minus drawings c.net income d.assets plus liabilities Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) The purpose of recording depreciation on productive assets is to: a.reflect

1) Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for noncontrollable items than for controllable items. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which

1) In preparing a statement of cash flows, an increase in the Common Stock and Treasury Stock accounts during a period would be an investing activity. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at

1) At the break-even point, total contribution margin is equal to total fixed costs. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) A highly automated computerized system of accounting eliminates the need for internal control. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) The relationship between current liabilities

1) Under the double-declining-balance method, the depreciation rate used each year remains constant. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) A solvency ratio measures the income or operating success of an enterprise for a given period of time. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Gains and losses are not recognized when convertible bonds are converted into common stock. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) A credit to a Materials

1) Gross profit rate is computed by dividing cost of goods sold by net sales. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The admission of a new partner results in the legal dissolution of the existing partnership and

1) A corporation must be incorporated in each state in which it does business. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The trial balance will not balance when incorrect account titles are used in journalizing or posting. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The chart of accounts is a special ledger used in accounting systems. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) A note is dishonored when it

1) Accrued revenues are revenues which have been received but not yet recognized. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The time period assumption is often referred to as the expense recognition principle. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The adjustments on a worksheet can be posted directly to the accounts in the ledger from the worksheet. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) The acquisition of treasury

1) The most important element of the fraud triangle is a.financial pressure b.incompatible duties c.opportunity d.rationalization Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Under IFRS, the components of other comprehensive income can be reported in each of the following ways except a.the one-statement approach b.the two-statement approach c.the statement of stockholders' equity approach d.All of these answer choices are correct Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 3) Equipment was purchased for

1) How much sales are required to earn a target net income of $160,000 if total fixed costs are $300,000 and the contribution margin ratio is 40%? a.$766,667 b.$750,000 c.$1,150,000 d.$500,000 Answer:[cpmembership level="2,3,4,5"] c Solution: ($300,000 + $160,000) 40 = $1,150,000 [/cpmembership] 2) Match each of the principles and phases in the development of an accounting system with the statement

1) The assignment of the three manufacturing cost elements to Work in Process in a process cost system is the same as in a job order cost system. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The par value of stock issued for noncash assets is never a factor in determining the cost of the assets received. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Each

1) On January 1, 2014, Cat Power Company reported owners equity of $705,000. During the year, the owner withdrew cash of $30,000. At December 31, 2014, the balance in owners equity was $825,000. What amount of net income or net loss would the company report for 2014? a.Net loss of $30,000 b.Net income of $90,000 c.Net

1) Shoemaker Department Store prepares monthly financial statements but only takes a physical count of merchandise inventory at the end of the year. The following information has been developed for the month of July: At Cost At Retail Beginning inventory$ 30,000$ 50,000 Merchandise purchases99,000150,000 The net sales for July amounted to $142,000. Instructions Use the retail inventory method

1) If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Capital budgeting decisions usually involve large investments and can have a significant

1) Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were a.$185,000 b.$197,000 c.$222,000 d.$148,000 Answer:[cpmembership level="2,3,4,5"] c Solution; $185,000 $25,000 $12,000 $222,000 [/cpmembership] 2) On January

1) As soon as a corporation is authorized to issue stock, an accounting journal entry should be made recording the total value of the shares authorized. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Neither corporate bond interest nor dividends are deductible for tax purposes. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) In concept, standards and budgets are essentially the same. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) In developing

1) Unsecured bonds that are issued against the general credit of the borrower are called ________________ bonds. Answer:[cpmembership level="2,3,4,5"] debenture[/cpmembership] 2) To be classified as a short-term investment, the investment must be readily marketable and intended to be converted into cash within the next year or operating cycle. Answer:[cpmembership level="2,3,4,5"] TSO: 6, Bloom: K,[/cpmembership] 3) Shellhammer Company's inventory records

1) For analysis purposes, the high-low method usually produces a(n) a.reasonable estimate b.precise estimate c.overstated estimate d.understated estimate Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 2) The following data are taken from the financial statements of Dands Company: 2015 2014 Monthly average accounts receivable$ 565,000$ 700,000 Net sales on account$6,200,000$7,000,000 Terms for all sales are 2/10, n/30 Instructions (a)Compute the accounts receivable turnover and the average collection

1) A mixed cost has both selling and administrative cost elements. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) In a process cost system, materials, labor and overhead are only added in the first production department. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) If inventories are valued using the LIFO cost assumption, they should not be classified as a current asset on the balance sheet. Answer:[cpmembership

1) A post-closing trial balance will show a.only permanent account balances b.only temporary account balances c.zero balances for all accounts d.the amount of net income (or loss) for the period Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 2) If the present value of lease payments equals or exceeds 90% of the fair market value of the leased property, the a.conditions are met for

1) If an account is collected after having been previously written off, a.the allowance account should be debited b.only the control account needs to be credited c.both income statement and balance sheet accounts will be affected d.there will be both a debit and a credit to accounts receivable Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) A company expected its annual

1) Mehring Company reported net sales of $540,000, net income of $72,000, beginning total assets of $240,000, and ending total assets of $360,000. What was the company's asset turnover? a.2.3 times b.0.6 times c.1.8 times d.1.5 times Answer:[cpmembership level="2,3,4,5"] c Solution: $540,000 [($240,000 + $360,000) 2] = 1.8 [/cpmembership] 2) Bish Company had an investment which cost $270,000 and had

1) Pare Company reported a net loss of $30,000 for the year ended December 31, 2014 . During the year, accounts receivable decreased $15,000, merchandise inventory increased $25,000, accounts payable increased by $30,000, and depreciation expense of $20,000 was recorded. During 2014, operating activities a.used net cash of $10,000 b.used net cash of $25,000 c.provided net

1) The following items were taken from the financial statements of Rug, Inc., over a four-year period: Item 2016 2015 2014 2013 Net Sales$900,000$650,000$600,000$500,000 Cost of Goods Sold 580,000 460,000 420,000 400,000 Gross Profit$320,000$190,000$180,000$100,000 Instructions Using horizontal analysis and 2013 as the base year, compute the trend percentages for net sales, cost of goods sold, and gross profit.

1) The periodicity assumption states that the business will remain in operation for the foreseeable future. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Cash which is restricted for a specific use should be separately reported. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) A company whose current liabilities exceed

1) At the beginning of the year, Franklen Company estimates annual overhead costs to be $1,050,000 and that 200,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 205,000 hours is a.$1,050,000 b.$1,024,390 c.$1,050,320 d.$1,076,250 Answer:[cpmembership level="2,3,4,5"] d Solution: ($1,050,000 $200,000)

1) A flexible budget is a series of static budgets at different levels of activities. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) If the unit price of inventory is increasing during a period, a company using the LIFO inventory

1) The double-entry system is a logical method for recording transactions and results in equal debits and credits for each transaction. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Standard costs may be incorporated into the accounts in the general ledger. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) A credit balance in a liability account indicates that an error in recording has occurred. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) A

1) Matt Warren and Associates, a C. P. A. firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November. McCartneyLennonRingo Direct materials$930$500$350 Auditor labor costs$5,700$6,300$3,600 Auditor hours809045 Overhead costs are applied

1) A double rule applied to accounts in the ledger during the closing process implies that a.the account is a temporary account b.the account is a balance sheet account c.the account balance is not zero d.a mistake has been made, since double ruling is prescribed Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 2) Cost of raw materials is debited to Raw Materials

1) All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The complete effect of a transaction on the accounts is disclosed in the journal. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) The quality of consistency pertains to the use of the same

1) Which one of the following best describes a job cost sheet? a.It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job b.It is used to track manufacturing overhead costs to specific jobs c.It is used by management

1) A corporation acts under its own name rather than in the name of its stockholders. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Bonds are a form of interest-bearing notes payable. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) In using variance reports, top management normally looks carefully at every variance. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) Each stockholder in a corporation has a separate capital account in the

1) Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) A major advantage of the partnership form of organization is that the partners have unlimited liability. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The study of accounting will be useful only if a student is interested in working

1) Wilson Company developed the following standard costs for its product for 2014: WILSON COMPANY Standard Cost Card Cost ElementsStandard QuantityStandard Price=Standard Cost Direct materials4 pounds$ 5$20 Direct labor2 hours1020 Variable overhead2 hours48 Fixed overhead2 hours2 4 $52 The company expected to work at the 120,000 direct labor hours level of activity and produce 60,000 units of product. Actual results for

1) Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Every adjusting entry affects one balance sheet account and one income statement account. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Dividends received on stock investments of

1) A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Long-term investments would appear in the property, plant, and equipment section of the balance sheet. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A budget can facilitate the coordination of activities among the segments of a large company. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) If

1) The budgeted balance sheet is prepared entirely from the budgets for the current year. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) When an asset is purchased during the year, it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A subsidiary ledger provides up-to-date information on specific account

1) Instructions: Match the cash expenditures given below with the appropriate accounting treatment. An individual classification may be used more than once, or not at all. Treatments A.Record the expenditure as an asset and depreciate it. B.Record the expenditure as an asset and amortize it. C.Record the expenditure as an asset and deplete it. D.Record the expenditure

1) A note payable must always be paid before an account payable. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The cash payback method is frequently used as a screening tool but it does not take into consideration the profitability of a project. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Owners' claims to total business assets take precedence over the claims of creditors because owners

1) Marks Company uses four special journals, (cash receipts, cash payments, sales, and purchases journal) in addition to a general journal. On November 1, 2014, the control accounts in the general ledger had the following balances: Cash $12,000, Accounts Receivable $200,000 and Accounts Payable $42,000. Selected information on the final line of the special

1) After Picard Company had completed all posting for the month of December, the sum of the balances in the following accounts payable subsidiary ledger did not agree with the balance of the control account in the general ledger. NameRykers Address286 Buck Avenue DateItemPost. Ref.DebitCreditBalance Dec.2P252,4002,400 NameGeordie Company Address818 Western Avenue DateItemPost. Ref.DebitCreditBalance Dec.1Balance7,600 10CP237,600 20P323,3003,300 29J158004,100 NameLaforge Company Address90210 Baker Boulevard DateItemPost. Ref.DebitCreditBalance Dec.1Balance9,900 18CP289,900 29P3410,500600 NameDeanna Troi Address2720 Sommers

1) A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at maturity. Answer:[cpmembership level="2,3,4,5"] T Solution: $30,000 .08 912 [/cpmembership] 2) On July 1, 2014, Fogg Corporation issued $600,000, 8%, 10-year bonds at face value. Interest is payable semiannually on January 1 and July 1. Fogg Corporation has a calendar year end. Instructions Prepare all entries

1) The balances that appear on the post-closing trial balance will match the a.income statement account balances after adjustments b.balance sheet account balances after closing entries c.income statement account balances after closing entries d.balance sheet account balances after adjustments Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) The heading for a post-closing trial balance has a date line that is similar

1) The balance in retained earnings on January 1, 2014, for Hotel Plaza Inc., was $575,000. During the year, the corporation paid cash dividends of $70,000 and distributed a stock dividend of $15,000. In addition, the company determined that it had overstated its depreciation expense in prior years by $50,000. Net income for

1) Amy Pond, a fellow employee, wants to understand the basic steps in the recording process. Identify and briefly explain the steps in the order in which they occur. Answer:[cpmembership level="2,3,4,5"] The basic steps in the recording process are: 1>Analyze each transaction. In this step, business documents are examined to determine the effects of the

1) Carpio Company begins the month of March with $15,000 of work in process costs from Job 324 . Information from job cost sheets shows the following additional costs assigned during March, April, and May of 2014: Manufacturing Costs Assigned Job No. March April May 324$25,000 32522,000$28,000$15,000 32641,00013,000 32719,00035,000 32826,00050,000 Job 324 was completed in March. Jobs 325 and 327

1) The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) If a retailer accepts a national credit card such as Visa, the retailer must maintain detailed records of customer accounts. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Notes payable are often used instead

1) The responsibility for keeping the records for an asset should be separate from the physical custody of that asset. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) A contingent liability is a liability that may occur if some future event takes place. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Two proprietorships cannot combine and form a partnership. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) When recording bond interest, Interest

1) Earnings per share is reported for both preferred and common stock. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) When the physical association of raw materials with

1) A detailed listing of all the assets invested by a partner in a partnership appears on the Partners' Capital Statement. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted annually. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) If a partner's investment in a partnership

1) The high-low method is often employed in analyzing a.fixed costs b.mixed costs c.variable costs d.conversion costs Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) Blitzen Corporation had net income of $500,000 and paid dividends to common stockholders of $40,000 in 2014 . The weighted average number of shares outstanding in 2014 was 60,000 shares. Blitzen Corporation's common stock is selling for $50

1) The holder of a convertible bond can convert an interest payment received into a cash dividend paid on common stock if the dividend is greater than the interest payment. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The percentage of receivables basis of estimating expected uncollectible accounts emphasizes income statement relationships. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A capital lease requires the lessee to

1) A bank reconciliation should be prepared a.whenever the bank refuses to lend the company money b.when an employee is suspected of fraud c.to explain any difference between the depositor's balance per books and the balance per bank d.by the person who is authorized to sign checks Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Times interest earned is also called the a.money

1) A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 9% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. The accounts

1) Cash is defined by IFRS as a.cash on hand b.demand deposits c.cash on hand and demand deposits d.cash on hand, demand deposits, and highly liquid investments Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Autumn Company purchased a building on January 2 by signing a long-term $630,000 mortgage with monthly payments of $5,400. The mortgage carries an interest rate of 10 percent. The

1) A company that produces motion pictures would likely use a process cost system. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Transactions are recorded in alphabetic order in a journal. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The owner's drawings account is a permanent account whose balance is carried forward to the next accounting period. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) The accounts payable subsidiary ledger provides detailed

1) Specific Identification must be used for inventory valuation where the inventory items are not interchangeable under GAAPIFRS a.YesNo b.YesYes c.NoNo d.NoYes Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) Under management by exception, which differences between planned and actual results should be investigated? a.Material and noncontrollable b.Controllable and noncontrollable c.Material and controllable d.All differences should be investigated Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 3) A division sold 100,000 calculators during 2014: Sales$2,000,000 Variable costs: Materials$380,000 Order processing110,000 Billing

1) Incremental analysis is synonymous with a.difficult analysis b.differential analysis c.gross profit analysis d.derivative analysis Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) The functions of management in an organization are: a.planning, directing, and controlling b.planning, controlling, and decision making c.directing, controlling, and decision making d.directing, planning, and decision making Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 3) Inventories affect a.only the balance sheet b.only the income statement c.both the balance sheet and the income

1) 1>Drive-by Truckers prepares monthly financial statements. On July 1, the Supplies account had a balance of $3,000. During July, additional supplies were purchased for $4,800 and that amount was debited to Supplies Expense. On July 31, a physical count of supplies revealed that there was $2,000 on hand. Prepare the adjusting journal

1) The account balances appearing in the adjusted trial balance columns are extended to the ______________ columns and the ______________ columns. Answer:[cpmembership level="2,3,4,5"] income statement, balance sheet[/cpmembership] 2) The following information was used to prepare the March 2014, bank reconciliation for Walker Machine Works. Identify the items that require adjustment to the cash balance per books

1) If bonds with a face value of $140,000 are converted into common stock when the carrying value of the bonds is $135,000, the entry to record the conversion will include a debit to a.Bonds Payable for $140,000 b.Bonds Payable for $135,000 c.Discount on Bonds Payable for $5,000 d.Bonds Payable equal to the market price of

1) Which of the following is not an advantage of issuing bonds instead of common stock? a.Stockholder control is not affected b.Earnings per share on common stock may be lower c.Income to common shareholders may increase d.Tax savings result Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) Bacher Company developed the following reconciling information in preparing its September bank reconciliation: Cash balance per bank,

1) Bestie Donuts sells boxes of donuts each with a variable cost percentage of 35%. Its fixed costs are $55,250 per year. Instructions Determine the sales dollars Bestie needs to break even per year. Answer:[cpmembership level="2,3,4,5"] Contribution margin ratio = 100% 35% = 65% .65x $55,250 = 0 X = $85,000 of sales dollars [/cpmembership] 2) Instructions: Midland Medical

1) An income ratio based on ______________ balances may be appropriate when the amount of funds invested in the partnership is critical to the partnership. Answer:[cpmembership level="2,3,4,5"] capital[/cpmembership] 2) Hayden Company purchased a machine on January 1, 2014, at a cost of $90,000. It is expected to have an estimated salvage value of $5,000 at

1) A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The expense recognition principle requires that efforts be matched with accomplishments. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) During a period, cost of goods sold + an increase in inventory + an increase

1) Which of the following steps in the accounting cycle may be performed most frequently? a.Prepare a post-closing trial balance b.Journalize closing entries c.Post closing entries d.Prepare a trial balance Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) The largest companies in the United States are primarily organized as a.limited partnerships b.partnerships c.corporations d.proprietorships Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 3) Budget development for the coming year usually starts a.a year in advance b.the

1) In a single-step income statement, all data are classified under two categories: (1) Revenues, or (2) Expenses. If the income statement is recast in a multiple-step format, what additional information or intermediate components of income would be presented? Answer:[cpmembership level="2,3,4,5"] The items reported in a multiple-step income statement that are not reported in a single-step

1) A cost is considered controllable at a given level of managerial responsibility if a.the manager has the power to incur the cost within a given time period b.the cost has not exceeded the budget amount in the master budget c.it is a variable cost, but it is uncontrollable if it is a

1) Normal standards incorporate normal contingencies of production into the standards. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) If a company is operating at full capacity, the incremental costs of a special order will likely include fixed manufacturing costs. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) The gross profit method is based on the assumption that the rate of gross profit remains constant from

1) Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger at the end of an accounting period. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Unit material cost is computed by taking total material costs charged to the department for the period and dividing by the physical units

1) The ledger accounts given below, with an identification number for each, are used by Sun Cleaning. Instructions: Prepare appropriate adjusting entries for the year ended December 31, 2014, by replacing the appropriate identification number(s) in the debit and credit columns provided and the dollar amount in the adjoining column. Item 0 is given

1) The following information is available for Lewis Corporation's available-for-sale securities at December 31, 2014 . Security Cost Fair Value X$34,000$30,000 Y 24,000 32,000 $58,000$62,000 Instructions Prepare the adjusting entry to record the securities at fair value at December 31, 2014 . Answer:[cpmembership level="2,3,4,5"] Fair Value AdjustmentAvailable-for-Sale4,000 Unrealized Gain or LossEquity4,000 [/cpmembership] 2) An analysis of the transactions made by Cookie Mountain

1) Classify each of the following as a(n): A.Operating Activity B.Investing Activity C.Financing Activity _____1>Issuance of bonds. _____2>Sale of equipment. _____3>Amortization expense. _____4>Purchase of treasury stock. _____5>Receipt of dividends on investment. _____6>Purchase of land. Answer:[cpmembership level="2,3,4,5"] 1>C4>C 2>B5>A 3>A6>B [/cpmembership] 2) An asset was purchased for $250,000. It had an estimated salvage value of $50,000 and an estimated useful life of 10 years. After 5 years

1) An unfavorable materials quantity variance would occur if a.more materials were purchased than were used b.actual pounds of materials used were less than the standard pounds allowed c.actual labor hours used were greater than the standard labor hours allowed d.actual pounds of materials used were greater than the standard pounds allowed Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) All

1) The _________________ basis of estimating uncollectibles normally results in the best approximation of _______________ value and therefore emphasizes balance sheet relationships. Answer:[cpmembership level="2,3,4,5"] percentage-of-receivables, cash realizable[/cpmembership] 2) The process of transferring net income (or loss) for the period to Owner's Capital is accomplished by making ______________ entries. Answer:[cpmembership level="2,3,4,5"] closing[/cpmembership] 3) An unrealized gain or loss on available-for-sale

1) A lower discount rate produces a higher present value. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The more inventory a company has in stock, the greater the company's profit. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A merchandiser has a merchandise purchases budget rather than a production budget. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) The Sales Returns and Allowances account and the Sales Discount account are

1) Sergei Company issued $400,000 of bonds on January 1, 2014 . Instructions Prepare the journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100 . Prepare the journal entry to record the redemption of the bonds before maturity at 97 . Assume the balance in Premium

1) An adjusting entry is always a compound entry affects two balance sheet accounts c.affects two income statement accounts d.affects a balance sheet account and an income statement account Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) Bell Food Store developed the following information in recording its bank statement for the month of March. Balance per books March 31$ 3,664 Balance per bank statement

1) Activity-based costing (ABC) eliminates arbitrary assignments of overhead. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The starting point for determining the causes of an unfavorable materials price variance is the purchasing department. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) A static budget is most useful for evaluating a manager's performance in controlling variable costs. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) Closing the drawings account to Owners Capital is

1) If an actual cost exceeds the standard cost, the result is: a.credited to a variance account b.an unfavorable variance c.carried as a liability on the balance sheet d.carried as an asset on the balance sheet Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) Quasar Corporation had net income of $300,000 and paid dividends to common stockholders of $40,000 in 2014 .

1) The balanced scorecard approach attempts to maintain as little inventory on hand as possible. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Internal control over payroll is not necessary because employees will complain if they

1) The difference between actual hours times the actual pay rate and actual hours times the standard pay rate is the labor _________________ variance. Answer:[cpmembership level="2,3,4,5"] price[/cpmembership] 2) On September 1, Reid Supply had an inventory of 15 backpacks at a cost of $20 each. The company uses a perpetual inventory system. During September, the

1) The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The annual rate of return technique requires dividing a project's annual cash inflows by the economic life of the project. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Totaling the columns of a journal and

1) Retained earnings are a part of stockholders' equity. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The accounts receivable turnover is computed by dividing total sales by the average net receivables during the year. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) Period costs

1) Malay Corporation issued $2 million, 10-year, 6% bonds on January 1, 2014 . Instructions Prepare the entry to record the sale of these bonds, assuming they were issued at (a)98 (b)103 Answer:[cpmembership level="2,3,4,5"] (a)Cash ($2,000,000 98%)1,960,000 Discount on Bonds Payable40,000 Bonds Payable2,000,000 (b)Cash ($2,000,000 103%)2,060,000 Bonds Payable2,000,000 Premium on Bonds Payable60,000 [/cpmembership] 2) Niles Manufacturing estimates its sales at 220,000 units in

1) In general, adjusting entries are required each time financial statements are prepared. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) A cost item is considered to be controllable if there is not a large difference between actual cost and budgeted cost for that item. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) The Sarbanes-Oxley Act replaces generally accepted accounting principles in a manufacturing company. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4)

1) The future value is the value now of a given amount to be paid or received in the future, assuming compound interest. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) The accounting cycle begins at the start of a new accounting period. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) The Financial Accounting Standards Board is a part of the Securities and Exchange Commission. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4)

1) Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) A statement of cash flows indicates the sources and uses of cash during a period. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) A corporation incurs income tax expense only if it pays dividends to stockholders. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4)

1) A static budget is one that is geared to one level of activity. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The reconciling entry for depreciation expense in a worksheet is a credit to Accumulated Depreciation and a debit to Operating-Depreciation Expense. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) Dividends in arrears on cumulative preferred stock are considered a liability. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 4) Income tax

1) Differences between a job order cost system and a process cost system include all of the following except the a.documents used to track costs b.point at which costs are totaled c.unit cost computations d.flow of costs Answer:[cpmembership level="2,3,4,5"] d[/cpmembership] 2) Henson Company incurred $600,000 of research and development costs in its laboratory to develop a new product. It

1) Greenwond Inc. can make 1,000 units of a necessary component with the following costs: Direct Materials$72,000 Direct Labor18,000 Variable Overhead9,000 Fixed Overhead? The company can purchase the 1,000 units externally for $117,000. The avoidable fixed costs are $6,000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between

1) A hurdle rate is the rate of return set by applying ideal standards. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) When plant assets are exchanged, the cost of the new asset is the book value of the old asset plus any cash paid. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A distinction should be made between controllable and noncontrollable costs when reporting information

1) The Jamison and Stephens partnership reports net income of $50,000. Partner salary allowances are Jamison $18,000 and Stephens $12,000. Any remaining income is shared 60:40. Instructions Determine the amount of net income allocated to each partner. Answer:[cpmembership level="2,3,4,5"] Jamison Stephens Total Salary allowance$18,000$12,000$30,000 Remaining income, $15,000 Jamison ($20,000 60%)12,000 Stephenss ($20,000 40%) 8,000 20,000 Total division$30,000$20,000$50,000 [/cpmembership] 2) Three quantitative techniques which

1) A company may use more than one inventory costing method concurrently. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) A ratio can be expressed as a percentage, a rate, or a proportion. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 4) Research and development costs should be charged to expense when incurred. Answer:[cpmembership

1) Holmes Corporation manufactures electronic components for use in many consumer products. Their raw materials are purchased literally from all over the world. Depending on the country involved, purchase terms vary widely. Some suppliers, for example, require full prepayment, while others are content to receive payment within six months of receipt of the goods. Because

1) Equivalent units of production must be calculated before the unit production costs can be computed. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) The process of determining the present value is referred to as discounting the future amount. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) The amounts appearing in the Inventory column of the cash payments journal are posted individually to the accounts in the

1) A loss on disposal of a plant asset is reported in the financial statements a.in the Other Revenues and Gains section of the income statement b.in the Other Expenses and Losses section of the income statement c.as a direct increase to the capital account on the balance sheet d.as a direct decrease to

1) Why is it important to report discontinued operations separately from income from continuing operations? Answer:[cpmembership level="2,3,4,5"] Discontinued operations refers to the disposal of a significant component of the business such as the stopping of an entire activity or eliminating a major class of customers. It is important to report discontinued operations separately from continuing

1) Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 2) A corporation is not an entity which is separate and distinct from its owners. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Operating expenses + an increase in prepaid expenses a decrease in accrued expenses payable =

1) Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) A loss on disposal of a plant asset can only occur if the cash proceeds received from the asset sale are less than the asset's book value. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 3) In order to develop a

1) Liabilities of a company are owed to a.debtors b.benefactors c.creditors d.underwriters Answer:[cpmembership level="2,3,4,5"] c[/cpmembership] 2) Villa Company purchased raw materials for $200,000. If this represents a $5,000 unfavorable price variance, what is the amount debited to Raw Materials Inventory in the entry that records this acquisition? a.$195,000 b.$200,000 c.$205,000 d.Either (a) or (b) Answer:[cpmembership level="2,3,4,5"] a[/cpmembership] 3) Cooney Inc. reported net income of $540,000 during

1) Internal control is defined, in part, as a plan that safeguards a.all balance sheet accounts b.assets c.liabilities d.capital stock Answer:[cpmembership level="2,3,4,5"] b[/cpmembership] 2) The per share amount normally assigned by the board of directors to a small stock dividend is a.the market value of the stock on the date of declaration b.the average price paid by stockholders on outstanding

1) A liabilityrevenue account relationship exists with an unearned rent revenue adjusting entry. Answer:[cpmembership level="2,3,4,5"] T[/cpmembership] 2) Treasury stock purchased for $35 per share that is reissued at $31 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement. Answer:[cpmembership level="2,3,4,5"] F[/cpmembership] 3) Interest expense on a note payable is only