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1) A periodic inventory system requires a detailed inventory record of inventory items. 2) The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique. Answer: F 3) A dividend based […]

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 […]

1) A debenture bond is an unsecured bond which is issued against the general credit of the borrower. 2) Allowance for Doubtful Accounts is a contra asset account. Answer: T 3) The book value of a plant asset is always […]

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 […]

1) An account consists of a.one part b.two parts c.three parts d.four parts 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 […]

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 […]

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 […]

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 2) On the costs of goods manufactured schedule, the item raw materials inventory (ending) appears as a(n) a.addition […]

1) Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account. 2) The drawing account is a subdivision of the owner’s capital account and appears as an expense on the income statement. Answer: F 3) […]

1) Drawings ________________ owner’s equity but are not expenses. 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 […]

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 […]

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 […]

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. 2) 1>Picket Industries had 300,000 common shares and 10,000 preferred shares outstanding throughout 2014. […]

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 […]

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 2) Which one of the following should be equal to the balance […]

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 […]

1) A variable cost remains constant per unit at various levels of activity. 2) When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited. Answer: F 3) Partnership income or […]

1) Accounting time periods that are one year in length are referred to as interim periods. 2) Free cash flow equals cash provided by operations less capital expenditures and cash dividends. Answer: T 3) A corporation can be organized for […]

1) Use of the LIFO inventory valuation method enables a company to report paper or phantom profits. 2) If bonds are issued at a discount, the issuing corporation will pay a principal amount less than the face amount of the […]

1) Retailers and wholesalers are both considered merchandisers. 2) Unless the partnership agreement specifically indicates an income ratio, partnership net income or loss is not allocated to the partners. Answer: F 3) Using special journals can save time in posting […]

1) The budget is developed within the framework of a sales forecast. 2) The flow of costs is essentially the same in job order and process cost accounting. Answer: T 3) Financing activities include the obtaining of cash from issuing […]

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 […]

1) Under the indirect method, retained earnings is adjusted for items that affected reported net income but did not affect cash. 2) The withdrawal of a partner legally dissolves the partnership. Answer: T 3) Preferred stock has contractual preference over […]

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. 2) Setting standard costs is relatively simple because it is done entirely by accountants. Answer: […]

1) Contribution margin is the amount of revenue remaining after deducting cost of goods sold. 2) Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller. Answer: T 3) An advantage of the return […]

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. 2) The adjusted trial balance is the […]

1) U.S. standards are developed by the a.IFRS b.GAAP c.IASB d.FASB 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, […]

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 2) The White Stripes Animal Encounters operates a drive through tourist […]

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 […]

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 […]

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 2) (a)Identify several alternatives for presenting significant noncash activities in financial statements. (b)Give three examples of […]

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 2) The following totals for […]

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 […]

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 […]

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 […]

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 2) Financial statements combining the operations of Target and Walmart […]

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 […]

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. 2) Requisitions for direct materials are posted daily to the individual job cost sheets. […]

1) Physical controls to safeguard assets do not include a.cashier department supervisors b.vaults c.employee identification badges d.security guards 2) The process of totaling the columns of a journal is termed a.ruling b.columnizing c.sizing d.footing Answer: d 3) In a recent […]

1) If an acquired franchise or license has an indefinite life, the cost of the asset is not amortized. 2) An assumption of CVP analysis is that all costs can be classified as either variable or fixed. Answer: T 3) […]

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 […]

1) The times interest earned is computed by dividing net income by interest expense. 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: […]

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 […]

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 […]

1) The budget itself and the administration of the budget are entirely accounting responsibilities. 2) Financial statements are the major means of communicating accounting information to interested parties. Answer: T 3) A flexible budget is prepared before the master budget. […]

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 […]

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? 2) During August, 2014, […]

1) To grant a customer a sales return, the seller credits Sales Returns and Allowances. 2) The operating cycle of a company is the average time required to collect the receivables resulting from producing revenues. Answer: F 3) Meaningful analysis […]

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 […]

1) The higher the sales tax rate, the more profit a retailer can earn. 2) Premium on Bonds Payable is a contra account to Bonds Payable. Answer: F 3) If volume increases, all costs will increase. Answer: F 4) Once […]

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 […]

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 […]

1) When bonds are converted into common stock, the carrying value of the bonds is transferred to paid-in capital accounts. 2) The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first […]

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. 2) A deposit ticket is a negotiable instrument that can be transferred to another party […]

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 […]

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 […]

1) Under the double-entry system, revenues must always equal expenses. 2) Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account. Answer: F 3) Checks from customers who pay […]

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 […]

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. 2) Direct materials requisitioned from the storeroom should be charged to the Work In Process […]

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. 2) A debit to the Overhead Volume Variance account indicates that the standard hours […]

1) At the break-even point, total contribution margin is equal to total fixed costs. 2) A highly automated computerized system of accounting eliminates the need for internal control. Answer: F 3) The extent of internal control features adopted by a […]

1) Under the double-declining-balance method, the depreciation rate used each year remains constant. 2) A solvency ratio measures the income or operating success of an enterprise for a given period of time. Answer: F 3) Gains and losses are not […]

1) Gross profit rate is computed by dividing cost of goods sold by net sales. 2) Allowance for Doubtful Accounts is debited under the direct write-off method when an account is determined to be uncollectible. Answer: F 3) The admission […]

1) A corporation must be incorporated in each state in which it does business. 2) The trial balance will not balance when incorrect account titles are used in journalizing or posting. Answer: F 3) The chart of accounts is a […]

1) Accrued revenues are revenues which have been received but not yet recognized. 2) The time period assumption is often referred to as the expense recognition principle. Answer: F 3) The adjustments on a worksheet can be posted directly to […]

1) The most important element of the fraud triangle is a.financial pressure b.incompatible duties c.opportunity d.rationalization 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 […]

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 2) Match each of the principles and phases in […]

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. 2) The par value of stock issued for noncash assets is never […]

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 […]

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$ […]

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. […]

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 […]

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. 2) Neither corporate bond interest nor dividends are deductible for tax purposes. Answer: F […]

1) Unsecured bonds that are issued against the general credit of the borrower are called ________________ bonds. 2) To be classified as a short-term investment, the investment must be readily marketable and intended to be converted into cash within the […]

1) For analysis purposes, the high-low method usually produces a(n) a.reasonable estimate b.precise estimate c.overstated estimate d.understated estimate 2) The following data are taken from the financial statements of Dands Company: 2015 2014 Monthly average accounts receivable$ 565,000$ 700,000 Net […]

1) A mixed cost has both selling and administrative cost elements. 2) In a process cost system, materials, labor and overhead are only added in the first production department. Answer: F 3) If inventories are valued using the LIFO cost […]

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 2) If the present value of lease payments equals or […]

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 […]

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 2) Bish Company […]

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. […]

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 […]

1) The periodicity assumption states that the business will remain in operation for the foreseeable future. 2) Restricted retained earnings are available for preferred stock dividends but unavailable for common stock dividends. Answer: F 3) Cash which is restricted for […]

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 […]

1) A flexible budget is a series of static budgets at different levels of activities. 2) The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased. Answer: T 3) If the unit […]

1) The double-entry system is a logical method for recording transactions and results in equal debits and credits for each transaction. 2) Standard costs may be incorporated into the accounts in the general ledger. Answer: T 3) A credit balance […]

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 […]

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, […]

1) All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account. 2) The complete effect of a transaction on the accounts is disclosed in the journal. Answer: […]

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 […]

1) A corporation acts under its own name rather than in the name of its stockholders. 2) Bonds are a form of interest-bearing notes payable. Answer: T 3) In using variance reports, top management normally looks carefully at every variance. […]

1) Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance. 2) A major advantage of the partnership form of organization is that the partners have unlimited liability. Answer: F 3) The […]

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 […]

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. 2) Every adjusting entry affects one balance sheet […]

1) A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks. 2) Long-term investments would appear in the property, plant, and equipment section of the balance sheet. Answer: F 3) A budget […]

1) The budgeted balance sheet is prepared entirely from the budgets for the current year. 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 […]

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 […]

1) A note payable must always be paid before an account payable. 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: T 3) 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 […]

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 […]

1) A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at maturity. 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. […]

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 2) […]

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 […]

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. 2) Hamilson Company’s static budget at 4,000 units of production includes […]

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 […]

1) The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year. 2) If a retailer accepts a national credit card such as Visa, the retailer must maintain […]

1) The responsibility for keeping the records for an asset should be separate from the physical custody of that asset. 2) A contingent liability is a liability that may occur if some future event takes place. Answer: T 3) Two […]

1) Earnings per share is reported for both preferred and common stock. 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 […]

1) A detailed listing of all the assets invested by a partner in a partnership appears on the Partners’ Capital Statement. 2) Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments […]

1) The high-low method is often employed in analyzing a.fixed costs b.mixed costs c.variable costs d.conversion costs 2) Blitzen Corporation had net income of $500,000 and paid dividends to common stockholders of $40,000 in 2014 . The weighted average number […]

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. 2) The percentage of receivables basis of estimating expected uncollectible […]

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 […]

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 […]

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 2) Autumn Company purchased a building on January 2 by signing a long-term […]

1) A company that produces motion pictures would likely use a process cost system. 2) Transactions are recorded in alphabetic order in a journal. Answer: F 3) The owner’s drawings account is a permanent account whose balance is carried forward […]

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 2) Under management by exception, which differences between planned and actual results should be investigated? a.Material and noncontrollable […]

1) Incremental analysis is synonymous with a.difficult analysis b.differential analysis c.gross profit analysis d.derivative analysis 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, […]

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 […]

1) The account balances appearing in the adjusted trial balance columns are extended to the ______________ columns and the ______________ columns. 2) The following information was used to prepare the March 2014, bank reconciliation for Walker Machine Works. Identify the […]

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 […]

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 2) […]

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. 2) Instructions: Midland Medical Supplies Company […]

1) An income ratio based on ______________ balances may be appropriate when the amount of funds invested in the partnership is critical to the partnership. 2) Hayden Company purchased a machine on January 1, 2014, at a cost of $90,000. […]

1) A corporation that issues bonds at a discount will recognize interest expense at a rate which is greater than the market interest rate. 2) The expense recognition principle requires that efforts be matched with accomplishments. Answer: T 3) During […]

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 2) The largest companies in the United States are primarily […]

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? 2) […]

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 […]

1) Normal standards incorporate normal contingencies of production into the standards. 2) If a company is operating at full capacity, the incremental costs of a special order will likely include fixed manufacturing costs. Answer: T 3) The gross profit method […]

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. 2) Unit material cost is computed by taking total material costs charged […]

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 […]

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, […]

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. 2) An asset was purchased for […]

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 […]

1) The _________________ basis of estimating uncollectibles normally results in the best approximation of _______________ value and therefore emphasizes balance sheet relationships. 2) The process of transferring net income (or loss) for the period to Owner’s Capital is accomplished by […]

1) A lower discount rate produces a higher present value. 2) The more inventory a company has in stock, the greater the company’s profit. Answer: F 3) A merchandiser has a merchandise purchases budget rather than a production budget. Answer: […]

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 […]

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 2) Bell Food Store developed the following information in recording its […]

1) Activity-based costing (ABC) eliminates arbitrary assignments of overhead. 2) The starting point for determining the causes of an unfavorable materials price variance is the purchasing department. Answer: T 3) A static budget is most useful for evaluating a manager’s […]

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 2) Quasar Corporation had […]

1) The balanced scorecard approach attempts to maintain as little inventory on hand as possible. 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: […]

1) The difference between actual hours times the actual pay rate and actual hours times the standard pay rate is the labor _________________ variance. 2) On September 1, Reid Supply had an inventory of 15 backpacks at a cost of […]

1) The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost. 2) The annual rate of return technique requires dividing a project’s annual cash inflows by the economic […]

1) Retained earnings are a part of stockholders’ equity. 2) The accounts receivable turnover is computed by dividing total sales by the average net receivables during the year. Answer: F 3) Unit contribution margin is the amount that each unit […]

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 2) Niles Manufacturing estimates its sales at 220,000 […]

1) In general, adjusting entries are required each time financial statements are prepared. 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: F […]

1) The future value is the value now of a given amount to be paid or received in the future, assuming compound interest. 2) The accounting cycle begins at the start of a new accounting period. Answer: T 3) The […]

1) Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset. 2) A statement of cash flows indicates the sources and uses of cash during a period. Answer: T 3) A […]

1) A static budget is one that is geared to one level of activity. 2) The reconciling entry for depreciation expense in a worksheet is a credit to Accumulated Depreciation and a debit to Operating-Depreciation Expense. Answer: T 3) Dividends […]

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 2) Henson Company […]

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 […]

1) A hurdle rate is the rate of return set by applying ideal standards. 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: F […]

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. 2) Three quantitative […]

1) A company may use more than one inventory costing method concurrently. 2) Organizational costs are capitalized by debiting an intangible asset entitled Organization Costs. Answer: F 3) A ratio can be expressed as a percentage, a rate, or a […]

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 […]

1) Equivalent units of production must be calculated before the unit production costs can be computed. 2) The process of determining the present value is referred to as discounting the future amount. Answer: T 3) The amounts appearing 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 […]

1) Why is it important to report discontinued operations separately from income from continuing operations? 2) The principle of internal control that prevents one individual from being responsible for all the related activities of a given task is ______________. Answer: […]

1) Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year. 2) A corporation is not an entity which is separate and distinct from its owners. Answer: F 3) Operating […]

1) Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. 2) A loss on disposal of a plant asset can only occur if the cash proceeds received from the asset sale are […]

1) Liabilities of a company are owed to a.debtors b.benefactors c.creditors d.underwriters 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 […]

1) Internal control is defined, in part, as a plan that safeguards a.all balance sheet accounts b.assets c.liabilities d.capital stock 2) The per share amount normally assigned by the board of directors to a small stock dividend is a.the market […]

1) A liabilityrevenue account relationship exists with an unearned rent revenue adjusting entry. 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 […]