1) Harker Company manufactures DVD players and other similar electronic products.
Indicate whether the cost is a product cost or period (selling, general, and
administrative) cost AND whether its cost behavior is fixed, variable, or mixed by
placing X’s in the appropriate boxes. As an example, commissions paid to sales staff
would be classified as a period cost and variable.
Salaries paid to supervisors working in the factory
2) Joe’s Messenger Service provided $200 of services to customers on account. How
does this transaction affect the statement of cash flows? The income statement?
3) Indicate whether each of the following statements about accounting information is
true or false.
1>Financial statements are prepared to meet the information needs of managers
2>Generally accepted accounting principles are developed by the United States
Congress
3>Financial accounting is used only by banks and brokerage firms
4>Managerial accounting is intended to satisfy the information needs of internal users
5>Financial accounting is intended to satisfy the information needs of external
stakeholders
4) If a company offers a warranty on the merchandise it sells, how should it account for
the warranty?
5) Indicate how the event affects the elements of the financial statements. Use the
following letters to record your answer in the box shown below each element:
You do not need to enter amounts.
Hale Company issued a note payable to purchase a truck.
6) If total fixed costs increase while variable costs and sales price are unchanged, what
happens to the break-even point?
7) What factors affect the amount of depreciation recorded on a building in a given
year?
8) What is an ordinary annuity?
9) Indicate how each event affects the elements of financial statements. Use the
following letters to record your answer in the box shown below each element. You do
not need to enter amounts.
Liu Co. prepaid its fire insurance for three years. The amount of cash paid for the
insurance was $21,000.