Using bar codes to take a physical inventory is considered poor accounting practice.
Return on assets is a measure of liquidity.
Full product cost includes both nonproduction costs and production costs required to
satisfy customers.
Incremental analysis is a technique used not only by businesses but also by individuals
in day-to-day activities.
Net income is misleading when revenue is overstated or expenses are understated by
significant amounts.
Payables turnover measures the relative size of accounts payable.
The cost of goods sold decreases the balance in the Finished Goods Inventory account.
In just-in-time manufacturing, the basic cost classifications used in product costing are
materials and overhead costs.
Freight-in is considered a cost of merchandise purchased.
Closing entries result in the transfer of net income or net loss into the owner’s Capital
account.
In a company, there is no limit on the availability of resources such as machine time,
labor hours.
Income from operations is the difference between gross margin and operating expenses.
The LIFO method agrees with the actual physical goods flow in most businesses.
The allowance method of handling bad debts violates the matching principle.
One of the benefits of forming a partnership is limited liability.
Accounting periods of greater than a year are called interim periods.
The book value of one share of callable preferred stock is equal to the call value of the
preferred share minus any dividends in arrears.
Callable preferred stock is preferred stock that may be redeemed or retired at the option
of the issuing corporation.
The perpetual inventory system provides an up-to-date amount of inventory on hand.
Which of the following terms apply to materials and supplies that can be traced
conveniently to specific products?
A.Indirect materials
B.Indirect manufacturing costs
C.Direct costs
D.Manufacturing overhead
Which of the following accounts contain only one type of product cost?
A.Work in Process Inventory
B.Materials Inventory
C.Finished Goods Inventory
D.Cost of Goods Sold
The entry to record the sale of equipment costing $40,000, with accumulated
depreciation of $34,000 and sale price of $7,700, will include
A.a gain on sale of equipment of 1,700.
B.a gain on sale of equipment of 7,700.
C.a loss on sale of equipment of 32,300.
D.a loss of sale of equipment of 26,300.
Assuming that net cost of purchases was $39,000 during the year and that ending
merchandise inventory was $1,000 less than the beginning merchandise inventory of
$12,500, how much was cost of goods sold?
A.$50,500
B.$52,500
C.$40,000
D.$38,000
Fill in the missing data for Company C:
Which of the following is a business event that is considered a recordable transaction?
A.A company hires a new employee.
B.A customer purchases merchandise.
C.A company orders a product from a supplier.
D.An employee sends a purchase requisition to the purchasing department.
Discounting calculates the __________ value of an amount to be received.
A.future
B.compounded
C.present
D.book
Land and a building on the land are purchased for $310,000. The appraised values of
the land and building are $66,000 and $264,000, respectively. The cost allocated to the
building should be
A.$25,200.
B.$109,800.
C.$135,000.
D.$248,000.
Knollwood Corporation issued $278,000 of 30-year, 8 percent bonds at 106 on one of
its semiannual interest dates. The straight-line method of amortization is to be used.
After 11 years, what is the carrying value of the bonds?
A.$286,340
B.$286,896
C.$284,950
D.$288,564
Which of the following activities is a manager likely to carry out everyday?
A.Establishing selling prices for products
B.Ensuring quality of products produced
C.Estimating overhead costs to be incurred
D.Preparing financial statements for a period
How is Accumulated Depletion disclosed in the financial statements?
A.Contra-asset account
B.Expense account
C.Contra-liability account
D.Contra-revenue account
Peng Corporation has been authorized to issue bonds with interest payment dates of
March 1 and September 1. If the bonds are sold at face amount on April 1, the amount
of cash to be received by the issuer is equal to the face amount of the bonds
A.minus the interest accrued from March 1 to April 1.
B.plus the interest accrued from April 1 to September 1.
C.minus the interest accrued from April 1 to September 1.
D.plus the interest accrued from March 1 to April 1.
The entry to record a sales return from a customer would require a(n)
A.decrease to Sales.
B.increase to Sales.
C.decrease to Sales Returns and Allowances.
D.increase to Sales Returns and Allowances.
Which of the following is not an application of accrual accounting?
A.Recording advertising fees earned at the time the work is done.
B.Adjusting unearned advertising fees to the proper balance at the end of the month.
C.Recording advertising fees earned at the time the cash payment is received.
D.Recording telephone expense in the accounting period covered by the monthly bill.
Which of the following most appropriately describes depreciation?
A.Decline in value of a plant asset
B.Gradual allocation of the cost of a plant asset over periods of usefulness
C.Physical deterioration of a plant asset
D.Gradual obsolescence of a plant asset
Outstanding shares of stock are
A.authorized shares that have not yet been issued.
B.also called treasury shares.
C.issued shares that have not yet been authorized.
D.issued shares that are still in circulation.