1) The document issued by the seller that informs the buyer of the details of sales
returns is called a debit memorandum.
2) All bank memorandums reported on the bank reconciliation require entries in the
depositor’s accounts.
3) Only a single line, which represents the difference between total sales revenues and
total costs, is plotted on the cost-volume-profit chart.
4) Property tax expense for a department store’s store equipment is an example of a
direct expense.
5) When standard costs are used in applying the cost-plus approach to product pricing,
the standards should be based upon normal levels of performance.
6) If merchandise costing $2,500, terms FOB destination, 2/10, n/30, with
transportation costs of $100, is paid within 10 days, the amount of the purchases
discount is $52.
7) If Division Inc. expects to sell 200,000 units in 2012, desires ending inventory of
24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted
volume of production for 2012 is 198,000 units.
8) In preparing a bank reconciliation, the amount of deposits in transit is deducted from
the cash balance per bank.
9) The excess of divisional income from operations over a minimum amount of desired
income from operations is termed residual income.
10) During the first year of operations, employees earned vacation pay of $50,000. The
vacations will be taken during the second year. The vacation pay expense should be
recorded in the first year of operations.
11) The fact that workers are unable to meet a properly determined direct labor standard
is sufficient cause to change the standard.
12) A current asset account must be increased for revenue expenditures since they
benefit only the current period.
13) The balanced scorecard evaluates managers on financial and nonfinancial measures
of performance.
14) Receivables not expected to be collected within one year are reported in the fixed
assets section of the balance sheet.
15) The cash budget summarizes future plans for acquisition of fixed assets.
16) Intangible assets do not exist physically.
17) The primary purpose of a stock split is to reduce the number of shares outstanding
in order to encourage more investors to enter the market for the company’s shares.
18) A budget performance report compares actual results with the budgeted amounts
and reports differences for possible investigation.
19) The objective of most businesses is to maximize profits.