1) Define the term, “cost driver,” and give an example of a cost driver.
2) For each of the following transactions, indicate the type by entering “AS” for asset
source transaction, “AU” for asset use transaction, “AE” for asset exchange transaction,
and “CE” for claims exchange transaction.
1>Recorded the accrual of $1,000 in salaries to be paid later
2>The company issued common stock for $20,000 in cash
3>The business incurred operating expense on account
4>Paid the salaries accrued in #2 above
5>The business paid off its accounts payable
6>The business received cash from customers in #6 above
7>The company paid $10,000 for a plot of land
8>The company paid $2,000 in dividends to its stockholders
9>Borrowed money from a local bank
10>The business earned revenue to be collected next year
3) What type of account is Prepaid Rent?
4) Company A makes and sells a single product. For each of the following changes,
indicate whether the break-even point increases (i.e., break even would occur at a
higher volume of sales), decreases, is not affected, or the direction of change cannot be
determined from the information given. Assume that nothing changes except the given
item(s).
What happens to the break-even point when total fixed costs increase?
5) What is a fidelity bond, and what is its purpose?
6) Indicate whether each of the following statements is true or false.
1>The FIFO cost flow method assumes that the cost of items purchased last should be
assigned to ending inventory
2>The LIFO inventory flow method assumes that the cost of items purchased last
should be assigned to the ending inventory
3>Under the weighted average cost flow method, the average unit cost of the inventory
is determined by dividing the total inventory cost by the number of units
4>The LIFO cost flow method assumes that the cost of items purchased first is assigned
to cost of goods sold first
5>The cost flow assumption used in accounting for inventory must be consistent with
the physical flow of the inventory
7) Liu Corporation’s balance sheet reflected the following information.
Assuming all the stock was issued in a single transaction, what was the issue price per
share of the stock?
8) As a Certified Management Accountant, Zeke is bound by the Institute of
Management Accountant’s Standards of Ethical Conduct. Describe the actions Zeke
should take when faced with an ethical dilemma at work.
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.
During the reconciliation process an accountant for Shalimar Corporation discovered
that Check #4901 for $552 for an Accounts Payable payment was recorded in the
company books as $525.