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CHAPTER 1 Accounting—Present and Past CHAPTER OUTLINE: I. What Is Accounting? A. Definition B. Uses of Accounting Information C. Classifications 1. Financial Accounting 2. Managerial Accounting / Cost Accounting 3. Auditing — Public Accounting 4. Internal Auditing 5. Governmental and […]

1-1 Chapter 01 Accounting-Present and Past Answer Key Multiple Choice Questions 1. Which of the following entities would not require accounting information pertaining to their economic activities? 2. A. Securities and Exchange Commission (SEC) B. International Accounting Standards Board (IASB) […]

CHAPTER 10 Corporate Governance, Notes to the Financial Statements, and Other Disclosures CHAPTER OUTLINE: I. Corporate Governance A. General background and perspective 1. Impact of stock market and corporate failures 2. Variety of reform measures B. Sarbanes-Oxley Act (SOX) of […]

Chapter 10 Corporate Governance, Notes to the Financial Statements, and Other Disclosures Answer Key Multiple Choice Questions 1. Corporate governance includes concerns about: 2. A. the Sarbanes-Oxley Act (SOX) of 2002. B. the creation of the American Institute of Certified […]

11-1 Chapter 11 Financial Statement Analysis Answer Key Multiple Choice Questions 1. Which of the following is not a category of financial statement ratios? 2. A. liquidity. B. activity. C. leverage. D. book value. AACSB: Analytical Thinking AICPA: BB Critical […]

CHAPTER 11 Financial Statement Analysis CHAPTER OUTLINE: I. Interpretation of Financial Condition and Results of Operations A. Liquidity Measures 1. Review of working capital, current ratio, and acid-test ratio B. Activity Measures 1. Turnover a. Significance and general model 2. […]

© McGraw-Hill Education, 2017 11-19 C11.16 (continued) d. expectations formed in part b. As expected, PepsiCo is more leveraged than is Coca Cola, but the debt ratio portrays the extent to which this is true more clearly than does the […]

© McGraw-Hill Education, 2017 11-11 P11.11. e. By selling inventory for cash, Arch Company will improve its acid-test ratio to 1.7 because a current asset that is included in the acid-test numerator (Cash of $180,000) will replace a current asset […]

67. During the months of January through June, the following total utility costs were paid at various production volumes: Month Total Utility Costs Total Production Volume January $10,000 32,000 units February 14,000 52,000 units March 16,000 64,000 units April 12,000 […]

12–31 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C12.33. (continued) 4. The following solution screen is from the dinkytown.net site: b. and the presentation of the results. […]

12–37 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. C12.33. (continued) e. To: Dominic From: Your Cost-Volume-Profit Analysis Person Subject: Analysis Results per pizza with the related cost […]

12–11 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. E12.13. a. Use the model, enter the known data, and solve for the unknown. Per Unit * Volume = […]

12–21 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. P12.25. (continued) c. Break-even point in sales dollars = Fixed expenses / Contribution margin ratio = $70,000 / 50% […]

12-1 CHAPTER 12 Managerial Accounting and Cost-Volume-Profit Relationships CHAPTER OUTLINE: I. Managerial Accounting Contrasted to Financial Accounting A. The Management Process 1. Variety of firm’s objectives 2. Planning and Control B. Differences Between Financial and Managerial Accounting 1. Future orientation […]

Chapter 12 Managerial Accounting and Cost-Volume-Profit Relationships Answer Key Multiple Choice Questions 1. Managerial accounting supports the management process most significantly by: 2. A. planning, organizing, controlling. B. planning, operating, reporting. C. preparing, operating, creating. D. preparing, organizing, converting. AACSB: […]

38. Operating income using the contribution margin format income statement is calculated as: AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Accessibility: Keyboard Navigation Blooms: Analyze Difficulty: 2 Medium Learning Objective: 12-07 Explain and illustrate the difference between […]

13–34 55. AAA Plumbing Co. incurred the following costs during August: Raw materials $90,000 Direct labor 230,000 Manufacturing overhead 112,000 Selling expenses 70,800 Administrative expenses 45,200 Interest expense 25,000 During the month, 9,000 units of product were manufactured and 8,500 […]

Chapter 13 Cost Accounting and Reporting C13.30. (continued) d. EI 27,000 Solving for the missing amount, raw materials used = $252,000 Raw material purchases and usage will differ by the amount of change in the inventory of raw material. Materials […]

© McGraw-Hill Education, 2017 13-11 E13.18. a. Total cost for 4,200 toy flutes produced: Raw materials …………………………………………………………… $490.00 Direct labor (21 direct labor hours)………………………………………. 357.00 Overhead applied based on machine hours (36 hours * $5.60)………….. 201.60 Overhead applied based on […]

CHAPTER 13 Cost Accounting and Reporting CHAPTER OUTLINE: I. Cost Management A. Value Chain Functions II. Cost Accumulation and Assignment A. Cost Objects B. Cost Pools C. Cost Assignment III. Cost Classifications A. Cost Relationship to Product or Activity 1. […]

13-1 Chapter 13 Cost Accounting and Reporting Answer Key Multiple Choice Questions 1. The term “cost” means: 2. A. accumulation and determination of product, process or service cost. B. income measurement and inventory valuation. C. generally accepted accounting principles. D. […]

41. The use of activity-based costing information to support the decision-making process is known as: A. value chain analysis. B. cost distortion analysis. C. activity-based management. D. cost-based management. AACSB: Analytical Thinking AICPA: BB Industry AICPA: FN Decision Making Accessibility: […]

14-1 Chapter 14 Cost Planning Answer Key Multiple Choice Questions 1. An example of a committed cost is: 2. A. budgets provide a benchmark for judging performance. B. budgeting requires little effort by non-accounting managers. C. budgeting requires management to […]

© McGraw-Hill Education, 2017 14-11 E14.16. (continued) Manufacturing overhead: Overhead cost for 12 pads (16 direct labor hours * $16 per hour / 1,800 pads * 12).. 1.707 Standard absorption cost for a package of 12 pads……………………… $3.330 b. The […]

CHAPTER 14 Cost Planning CHAPTER OUTLINE: I. Introduction A. Why Budgets are Useful B. Definition of Performance Reporting II. Cost Classifications A. Relationship of Cost to Volume of Activity 1. Variable cost 2. Fixed cost 3. Mixed cost B. According […]

© McGraw-Hill Education, 2017 14-20 P14.24. (continued) Note: In the total column, the beginning and ending inventory figures represent the number of units on hand at October 1, 2016 and December 31, 2016, respectively. Thus, the “goods available for sale” […]

(1) Units sold based on sales forecast. (2) Ending inventory = 70% of the next month’s forecast. (3) Goods available for sale = units sold (based on sales forecast) + ending inventory. (4) Beginning inventory = ending inventory from the […]

41. The concept of a standard used for planning and control purposes is most like a: A. measure of ideal performance. B. unit budget. C. measure of maximum efficiency. D. measure of historical performance. AACSB: Analytical Thinking AICPA: BB Industry […]

41. Which of the following is true about an unfavorable variance appearing in a performance report? AACSB: Analytical Thinking AICPA: BB Industry AICPA: FN Decision Making Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 3 Hard Learning Objective: 15-02 Discuss how performance […]

Chapter 15 Cost Control Answer Key Multiple Choice Questions 1. ________________ is a technique used to filter cost information contained in performance reports to each manager within the organization at an appropriate level of detail or summarization. 2. A. implies […]

Instructor’s Manual / Solutions Manual e. To achieve the greatest increase in contribution margin from an increase in revenues, the product with the greatest contribution margin ratio should be advertised, which is the BV19 model. E15.16. (continued) E15.17. a. DuPont […]

© McGraw-Hill Education, 2017 15-18 C15.28. (continued) b. quantities as frequently and promptly as feasible to facilitate cost control. The raw material price and direct labor rate variances might best be reported monthly. Unless the overhead variances are controllable, there […]

CHAPTER 15 Cost Control CHAPTER OUTLINE: I. Cost Classifications A. Relationship of Cost to Volume of Activity 1. Variable cost 2. Fixed cost 3. Mixed cost B. According to a Time-Frame Perspective 1. Controllable cost 2. Noncontrollable cost II. Performance […]

53. The standards for one case of Peardrax are: Direct materials 8 lbs. @ $3.50/lb. Direct labor 4 hrs. @ $15.00/hr. Variable overhead (based on machine hours) 2 hrs. @ $5.00/hr. During the week ended June 7, the following activity […]

1 = $550,000 × .9091 500,005 2 = $900,000 × .8264 743,760 3 = $1,400,000 × .7513 1,051,820 4 = $1,800,000 × .6830 1,229,400 Salvage value = $300,000 × .6830 204,900 Release of WC = $500,000 × .6830 341,500 Net […]

Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 16-05 Explain why present value analysis is appropriate and use it in capital budgeting. Topic: Capital Budgeting 34. Depreciation expense is not a cash flow item but it will affect […]

© McGraw-Hill Education, 2017 16-21 P16.31. a. Investment……… $(280,000) Annual cash flow……………………………. $42,000 per year Salvage value……………………………………………………………… $30,000 0 1 2 3 4 5 6 7 8 9 10 6.1446 (Table 6-5 0.3855 (Table 6-4 $(280,000) 10 periods, 10 periods, […]

Chapter 16 Costs for Decision Making C16.39. which was the most recent annual report available at the time we were preparing the 11th edition of Accounting: What the Numbers Mean. Over the years, Campbell Soup has been very consistent in […]

© McGraw-Hill Education, 2017 16-11 E16.17. Product A Product B Contribution margin per unit………………………….. $ 300 $ 400 Machine hours required per unit………………………. 6 8 Contribution margin per machine hour………………… $ 50 $ 50 Since both products generate the same […]

CHAPTER 16 Costs for Decision Making CHAPTER OUTLINE: I. Cost Classifications A. Classifications for Other Analytical Purposes 1. Differential cost 2. Allocated cost 3. Sunk cost 4. Opportunity cost II. Short Run Decision Analysis A. Relevant Costs B. Irrelevant Costs […]

16-1 Chapter 16 Costs for Decision Making Answer Key Multiple Choice Questions 1. A cost that will differ according to the alternative activity being considered is called a(n): A. sunk cost. B. allocated cost. C. differential cost. D. opportunity cost. […]

64. (a.) Target cost = Selling price – Desired profit Target cost = ($400 * 100,000) – ($28,000,000 * .15) Target cost = $40,000,000 – $4,200,000 Target cost = $35,800,000 Target cost per unit = $35,800,000/100,000 units Target cost per […]

CHAPTER 2 Financial Statements and Accounting Concepts/Principles CHAPTER OUTLINE: I. Financial Statements A. From Transactions to Financial Statements B. Financial Statements Illustrated 1. Explanations and Definitions a. Balance Sheet b. Income Statement c. Statement of Changes in Stockholders’ Equity d. […]

© McGraw-Hill Education, 2017 2-19 P2.22. (continued) e. recorded on August 29th. In other words, her stockholder’s equity was increased by revenues, and it was decreased by expenses and dividends. Interest is an expense because it represents a necessary payment […]

Instructor’s Manual / Solutions Manual E2.14. SE . A = L + PIC + RE Beginning: ? = $320,000 + $ 30,000 + ? Changes: +65,000 = -18,000 + ? + ? (net income or loss) -25,000 (dividends) Ending: ? […]

2-1 Chapter 02 Financial Statements and Accounting Concepts/Principles Answer Key Multiple Choice Questions 1. Which of the following is not a transaction to be recorded in the accounting records of an entity? 2. A. Statement of Financial Position. B. Statement […]

38. Which of the following is not a limitation of financial statements? A. Financial statements report quantitative economic information; they do not reflect qualitative economic variables. B. The cost principle requires assets to be recorded at their original cost; thus, […]

Chapter 03 Fundamental Interpretations Made from Financial Statement Data Answer Key Multiple Choice Questions 1. A. when viewed for a single year. B. when viewed as a trend of entity data. C. when compared to an industry average for the […]

Instructor’s Manual / Solutions Manual C3.23. a. possible to quickly calculate margin, turnover, and ROI. Total current assets or total current liabilities may or may not be disclosed within the trend data, but these numbers can be found easily enough […]

Instructor’s Manual / Solutions Manual E3.15. b. Current liabilities ….. ……….. ……….. ……….. (100,000) (160,000) Working capital ……. ……….. ……….. ……….. $ 80,000 $ 80,000 Current ratio . ……….. ……….. ……….. ……… 1.8 1.5 If the loan is taken after […]

CHAPTER 3 Fundamental Interpretations Made From Financial Statement Data CHAPTER OUTLINE: I. Financial Ratios and Trend Analysis A. Company Data Over Time B. Company Data Compared to Industry Data Over Time II. Return on Investment A. Significance B. Method of […]

Chapter 04 The Bookkeeping Process and Transaction Analysis Answer Key Multiple Choice Questions 1. An expanded version of the accounting equation could be: 2. A. increase assets and increase expenses. B. increase assets and decrease liabilities. C. increase assets and […]

© McGraw-Hill Education, 2017 4-11 E4.6. (continued) Month-end totals: Assets $25,350 = Liabilities $15,800 + Stockholders’ Equity $9,550 Net income (loss) for the month: Revenues $16,250 – Expenses $12,700 = Net Income $3,550 * Ordinarily, the Wages Payable account would […]

© McGraw-Hill Education, 2017 4-1 CHAPTER 4 The Bookkeeping Process and Transaction Analysis CHAPTER OUTLINE: I. The Bookkeeping/Accounting Process II. The Balance Sheet Equation: A = L + SE A. Stockholders’ Equity expanded: 1. SE = Paid-in Capital + Retained […]

© McGraw-Hill Education, 2017 4-31 P4.22. (continued) b. Note to Instructor: Students should be able to determine the net loss amount because there are so few transactions to analyze in Problem 4-21 (the solution to these transactions is provided on […]

© McGraw-Hill Education, 2017 4-21 E4.12. (continued) Journal entries: e. f. g. h. i. j. k. Dr. Cash ……. ……….. ……….. ……….. ……….. ……….. ……….. ……….. 750 Cr. Accounts Receivable ……….. ……….. ……….. ……….. ……… 750 Dr. Cash ……. ……….. […]

© McGraw-Hill Education, 2017 4-39 C4.29. (continued) f. to stockholders. For DeBauge Realty, Inc., the corporation incurred $48,000 of Income Tax Expense (based on $150,000 of earnings before taxes), and Jeff and Kristi will have to pay additional individual income […]

20. The accountant at Abco, Inc. made an adjusting entry at the end of February to accrue interest on a note receivable from a customer. The effect of this entry is to: AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: […]

© McGraw-Hill Education, 2017 5-11 E5.11. c. decreases both the accounts receivable asset and the allowance account contra-asset for equal amounts. Net income was affected when the bad debt expense was recognized. (continued) The write-off will not have any effect […]

CHAPTER 5 Accounting for and Presentation of Current Assets CHAPTER OUTLINE: I. Preliminary topics A. Operating Cycle B. Expansion of the Horizontal Model: Statement of Cash Flows column II. Cash and Cash Equivalents A. Balance sheet valuation — amount available […]

Instructor’s Manual / Solutions Manual P5.27. (continued) b. 1. Working capital would not be affected because the write-off entry decreases both the accounts receivable asset and the allowance account contra-asset by equal amounts. Balance Sheet Income Statement . Assets = […]

© McGraw-Hill Education, 2017 5-30 Pearson’s financial statements must instead be prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) of which the UK is a member nation. As a result, there will […]

5-1 Chapter 05 Accounting for and Presentation of Current Assets Answer Key Multiple Choice Questions 1. The current assets of most companies are usually made up of: 2. A. Cash, inventories, account receivables, prepaid expenses. B. Cash equivalents, cash, other […]

Blooms: Understand Difficulty: 2 Medium Learning Objective: 05-04 Explain how short-term marketable securities are reported on the balance sheet. Topic: Short-Term Marketable Securities 39. A. Manufacturing firms are required to use FIFO. B. Service firms are required to use LIFO. […]

CHAPTER 6 Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets CHAPTER OUTLINE: I. Property, Plant, and Equipment A. Land 1. Capitalizing versus expensing B. Buildings and Equipment 1. Cost of assets acquired 2. Depreciation for […]

© McGraw-Hill Education, 2017 6-29 C6.35. (continued) c. the entry above would include a debit (decrease) to the Retained Earnings account for those accounts identified for immediate write-off. In effect, although the company has an Allowance for Bad Debts account […]

© McGraw-Hill Education, 2017 6-11 E6.14. (continued) c. out-of-pocket cash cost of using the truck is not affected by the depreciation method used. If the truck is no longer useful to Kleener Co., it should be sold; if it is […]

© McGraw-Hill Education, 2017 6-21 P6.27. a. Depreciation expense for 2017 is the increase in the amount of accumulated depreciation from the beginning balance sheet to the ending balance sheet, or $90,000 ($240,000 – $150,000). b. be $90,000, as was […]

Chapter 06 Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets Answer Key Multiple Choice Questions 1. When a firm buys land on which there is a building, and the building is torn down so that […]

22. Present Value of $1 Discount Rate Present Value of an Annuity of $1 Discount Rate Periods 8% 10% 8% 10% 5 0.6806 0.6209 3.9927 3.7908 7 0.5835 0.5132 5.2064 4.8684 9 0.5002 0.4241 6.2469 5.7590 The present value of […]

Chapter 07 Accounting for and Presentation of Liabilities Answer Key Multiple Choice Questions 1. A transaction that is likely to cause an increase in a current liability is: 2. A. decrease net income. B. decrease working capital. C. increase working […]

© McGraw-Hill Education, 2017 7-11 E7.10. (continued) a. To accrue estimated warranty expense for the year. Dr. Estimated Warranty Liability ……………………………………………. 19,400 Cr. Cash or Inventory ………………………………………………………. 19,400 To record the actual costs of servicing products under warranty. b. At […]

© McGraw-Hill Education, 2017 7-21 E7.24. (continued) Liability for Liability for Health Retiree Retiree Care Health Care Health Care Expense +36,000 +310,000 –346,000 Transaction/ Current Noncurrent Current Noncurrent Stockholders’ Net Adjustment Assets Assets Liabilities Liabilities Equity Income f. Estimated Estimated […]

© McGraw-Hill Education, 2017 7-31 P7.32. (continued) b. Dr. Interest Expense ……………………………………………………. 4,840,000 Dr. Premium on Bonds Payable ……………………………………. 60,000 Cr. Cash………………………………………………………………. 4,900,000 To record the semiannual cash payment and amortization of premium. The semiannual premium amortization, straight-line basis = […]

CHAPTER 7 Accounting for and Presentation of Liabilities CHAPTER OUTLINE: I. Current Liabilities A. Short–term debt 1. Used to finance working capital needs 2. Interest calculation methods (Business in Practice) 3. Interest accrual B. Current maturities of long–term debt C. […]

35. Many airlines have frequent flyer programs that permit travelers to accumulate credits that can be applied to the cost of tickets for future flights. Most airlines recognize the cost of their frequent flyer programs when the credits are used […]

29. If a firm sells treasury stock for more than its cost: A. a gain is recognized in the income statement. B. retained earnings is increased. C. additional paid-in capital is increased. D. total stockholders’ equity does not change. AACSB: […]

© The McGraw-Hill Education, 2017 8-21 C8.34. f. Treasury stock ……….. ……….. ……….. ……….. ……….. ……….. ……….. ……….. (5,040,000) Total stockholders’ equity ….. ……….. ……….. ……….. ……….. ……….. ……….. $60,000,000 Solving for the unknown amount, retained earnings = $19,920,000 (shown […]

© The McGraw-Hill Education, 2017 8-11 E8.22. a. 700 shares * 3/2 = 1,050 shares after the stock split b. Dividend income before the stock split = $1.89 * 700 shares = $1,323 $1,323 / 1,050 shares = $1.26 dividend […]

CHAPTER 8 Accounting for and Presentation of Stockholders’ Equity CHAPTER OUTLINE: I. Paid–in Capital A. Common Stock 1. Rights and obligations of common stockholders 2. Par value/no par value 3. Shares authorized, issued, and outstanding B. Preferred Stock 1. Differences […]

8-1 Chapter 08 Accounting for and Presentation of Stockholders’ Equity Answer Key Multiple Choice Questions 1. Which of the following is not a right or attribute of common stock ownership? 2. Which of the terms is not used to identify […]

Essay Questions 25. Net sales for the year were $300,000 and cost of goods sold was $174,000 for the company’s existing products. A new product is presently under development and has an expected selling price of not more than $55 […]

© McGraw-Hill Education, 2017 9-11 E9.11. management has done from its ongoing, central, core business. Net income is important, but includes non-recurring items such as discontinued operations and other unusual or infrequently occurring items. Thus, trends in operating income data […]

CHAPTER 9 The Income Statement and the Statement of Cash Flows CHAPTER OUTLINE: I. Income Statement A. Revenues 1. Revenue recognition a. Realized or realizable b. Earned 2. Revenue from sales a. Sales returns and allowances b. Net sales 3. […]

© McGraw-Hill Education, 2017 9-21 P9.27. (continued) b. Decrease in inventory ……….. ……….. ……….. ……….. ……….. ……….. ……….. 10,000 Increase in note payable ……… ……….. ……….. ……….. ……….. ……….. ……….. 15,500* Decrease in accounts payable ……….. ……….. ……….. ……….. ……….. […]

9-1 Chapter 09 The Income Statement and the Statement of Cash Flows Answer Key Multiple Choice Questions 1. The first caption in most income statements in annual reports is: 2. A. are not a result of the entity’s ongoing, central […]