1) Sanuk purchased on credit £20,000 worth of parts from a British company when the
exchange rate was £1.66 per British pound. At the year-end balance sheet date the
exchange rate increased to $1.69. Sanuk must record a gain of $600.
2) Departmental contribution to overhead is the amount of revenues for that department
less its direct expenses.
3) The process cost summary is an important managerial accounting report produced by
a process cost accounting system.
4) The equity section of the balance sheet of a partnership can report the separate
capital account balances of each partner.
5) Process cost accounting systems consider direct costs to include those costs that can
be readily identified with a particular process.
6) Another name for a static budget is a variable budget.
7) Consolidated statements are prepared as if a company is organized as one entity, with
the amounts allocated for subsidiaries reported in the investment accounts.
8) Recording of a stock dividend does not result in a liability being recorded.
9) Least-squares regression is a statistical method for deriving an estimated line of cost
behavior.
10) A rough guideline states that for a company with no discounts offered, days’ sales
uncollected should not exceed 1 1/3 times the days in its credit period.
11) Minimum legal capital requirements are intended to protect creditors by requiring a
minimum level of legal minimum.
12) Under the perpetual inventory system, the cost of merchandise purchased is
recorded in the Merchandise Inventory account.
13) In a period of rising purchase costs, FIFO usually gives a lower taxable income and
therefore, yields a tax advantage.
14) What is the main difference between the income statement of a manufacturer and
that of a merchandiser?
15) ___________________ refer to reductions in the selling price of merchandise sold
to customers, often involving damaged or defective merchandise that a customer is
willing to purchase with a decrease in the selling price.
16) On June 3, a company received and recorded a $4,500 invoice for merchandise on
which the terms were 2/10, n/60. The company records invoices at net amounts. On
June 23, the company discovered that the invoice had been incorrectly filed and the
discount lost. Prepare the June 3 general journal entry to record the purchase, the June
23 entry to record the discount lost, and the August 2 entry to record payment of the
invoice.
17) _____________________ rejects the notions of “good enough” or “acceptable” and
challenges employees and managers to continuously experiment with new and
improved business practices.
18) Using the information given below, prepare the general journal entry to record the
March 16 sale assuming a cash sale and the LIFO method is used:
19) What are the four steps in accounting for production activity in a period?
20) Black Company’s unadjusted and adjusted trial balances on December 31 of the
current year are as follows
Present the four adjusting journal entries that were recorded by Black Company.