Classify the following activities according to the appropriate section of the statement of
cash flows.
a. Operating activity
b. Investing activity
c. Financing activity
1) Cash paid for withdrawals by owners.
2) Cash paid for utilities.
3) Cash received from a one-time sale of used office equipment.
4) Cash paid for a delivery van to be used in the business.
5) Cash received from owner contributions.
6) Cash received from customers.
During the month of February, Hoffer Company had cash receipts of $7,500 and cash
disbursements of $8,600. The February 28 cash balance was $1,800. What was the
January 31 beginning cash balance?
A.$700.
B.$1,100.
C.$2,900.
D.$0.
E.$4,300.
Revenue is properly recognized:
A.When the customer’s order is received.
B.Only if the transaction creates an account receivable.
C.At the end of the accounting period.
D.Upon completion of the sale or when services have been performed and the business
obtains the right to collect the sales price.
E.When cash from a sale is received.
A company’s internal control system:
A.Eliminates the company’s risk of loss.
B.Monitors company and employee performance.
C.Eliminates human error.
D.Eliminates the need for audits.
E.All of these.
Based on the information provided in question #81, Thomas Enterprises should
recognize what amount of depreciation expense in 2012?
A.$4,440
B.$6,610
C.$1,524
D.$5,520
E.$2,000
A financial statement analysis report:
A.Enables readers to see the process and rationale of analysis.
B.Forces preparers to organize their reasoning and to verify the logic of analysis.
C.Serves as a method of communication to users.
D.Helps users and preparers to refine conclusions based on evidence from key building
blocks.
E.All of these.
Source documents:
A.Include the ledger.
B.Are the sources of accounting information.
C.Must be in electronic form.
D.Are based on accounting entries.
E.Include the chart of accounts.
A direct cost is a cost that is:
A.Identifiable as controllable.
B.Variable with respect to the volume of activity.
C.Fixed with respect to the volume of activity.
D.Traceable to a cost object.
E.Sunk with respect to a cost object.
Which of the following items is not likely an extraordinary item?
A.Loss from an unexpected union strike.
B.Condemnation of property by the city government.
C.Loss of use of property due to a new and unexpected environmental regulation.
D.Loss due to an earthquake in Florida.
E.Expropriation of property by a foreign government.
A classified balance sheet differs from an unclassified balance sheet in that
A.a unclassified balance sheet is never used by large companies.
B.a classified balance sheet normally includes only three subgroups.
C.a classified balance sheet presents information in a manner that makes it easier to
calculate a company’s current ratio.
D.a classified balance sheet will include more accounts than an unclassified balance
sheet for the same company on the same date.
E.a classified balance sheet cannot be provided to outside parties.
Long-term investments can include:
A.Held-to-maturity debt securities.
B.Available-for-sale debt securities.
C.Available-for-sale equity securities.
D.Equity securities giving an investor significant influence over an investee.
E.All of these.
A company earned $2,000 in net income for October. Its net sales for October were
$10,000. Its profit margin is:
A.2%.
B.20%.
C.200%.
D.500%.
E.$8,000.
Damaged and obsolete goods:
A.Are never counted as inventory.
B.Are included in inventory at their full cost.
C.Are included in inventory at their net realizable value.
D.Should be disposed of immediately.
E.Are assigned a value of zero.
Match the following terms with the appropriate definition(s).
1) Computer network
2) Relevance principle
3) Cash disbursements journal
4) Enterprise resource planning
5) Information processor
6) Schedule of accounts receivable
7) Control principle
8) Accounting information system
9) Cash receipts journal.
10) Business segment
A) The special journal that is used to record all payments of cash.
B) A list of each customer from the accounts receivable ledger with their balances and
the total.
C) An information system principle requiring that an accounting system report useful,
understandable, timely, and pertinent information for decision making.
D)The people, records, methods, and equipment that collect and process data from
transactions and events, organize them in useful forms, and communicate results to
decision makers.
E) Links among computers giving different users and different computers access to
common databases and programs.
F) An information system principle requiring that an accounting information system aid
managers in controlling and monitoring business activities.
G) A part of a company that can be separately identified by the products or services that
it provides, or by the geographic market that it serves.
H) The component of an accounting system that interprets, transforms, and summarizes
information for use in analysis and reporting.
I) Programs that manage a company’s vital operations which range from order-taking to
manufacturing to accounting.
J) The special journal used to record all receipts of cash.
A job cost sheet includes:
A.Direct materials, direct labor, operating costs.
B.Direct materials, overhead, administrative costs.
C.Direct labor, overhead, selling costs.
D.Direct material, direct labor, overhead.
E.Direct materials, direct labor, selling costs.
When a bond sells at a premium:
A.The contract rate is above the market rate.
B.The contract rate is equal to the market rate.
C.The contract rate is below the market rate.
D.It means that the bond is a zero coupon bond.
E.The bond pays no interest.
Shamrock Company had net income of $30,000. On January 1, the number of shares of
common stock outstanding was 8,000. The company declared a $2,700 dividend on its
noncumulative, nonparticipating preferred stock. There were no other stock
transactions. The company’s earnings per share is:
A.$2.87.
B.$2.73.
C.$3.41.
D.$3.16.
E.$3.75.
A partnership agreement:
A.Is not binding unless it is in writing.
B.Is the same as a limited liability partnership.
C.Is binding even if it is not in writing.
D.Does not generally address the issue of the rights and duties of the partners.
E.Is also called the articles of incorporation.
On September 30, the Cash account of Value Company had a normal balance of $5,000.
During September, the account was debited for a total of $12,200 and credited for a
total of $11,500. What was the balance in the Cash account at the beginning of
September?
A.A $0 balance.
B.A $4,300 debit balance.
C.A $4,300 credit balance.
D.A $5,700 debit balance.
E.A $5,700 credit balance.
When raw materials are purchased on account for use in a process costing system, the
corresponding journal entry that should be recorded will include:
A.A debit to Goods in Process Inventory.
B.A debit to Accounts Payable.
C.A credit to Cash.
D.A debit to Raw Materials Inventory.
E.A credit to Raw Materials Inventory.
A company paid $200,000 ten years ago for a specialized machine that has no salvage
value and is being depreciated at the rate of $10,000 per year. The company is
considering using the machine in a new project that will have incremental revenues of
$28,000 per year and annual cash expenses of $20,000. In analyzing the new project,
the $10,000 depreciation on the machine is an example of a(n):
A.Incremental cost.
B.Opportunity cost.
C.Variable cost.
D.Sunk cost.
E.Out-of-pocket cost.
A corporation sold 14,000 shares of its $10 par value common stock at a cash price of
$13 per share. The entry to record this transaction would include:
A.A debit to Paid-in Capital in Excess of Par Value, Common Stock for $42,000.
B.A debit to Cash for $140,000.
C.A credit to Common Stock for $182,000.
D.A credit to Common Stock for $140,000.
E.A credit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000.
The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments
columns contain entries for the following:
1) Office supplies used during the period, $1,200.
2) Expiration of prepaid rent, $700.
3) Accrued salaries expense, $500.
4) Depreciation expense, $800.
5) Accrued service fees receivable, $400.
The Adjusted Trial Balance columns total is:
A. $80,400.
B. $84,000.
C. $85,700.
D. $85,900.
E. $87,600.
A department that incurs costs without directly generating revenues is a:
A.Service center.
B.Production center.
C.Profit center.
D.Cost center.
E.Performance center.
If Griffith Corporation’s income tax rate is 40%, compute the number of units that must
be sold in order to achieve a target pretax income of $130,000.
A.53,165.
B.81,250.
C.36,207.
D.50,000.
E.58,621.
The statement of changes in stockholders’ equity:
A.Is part of the statement of retained earnings.
B.Shows only the ending balances in stockholders’ equity.
C.Describes changes in paid-in capital and retained earnings subcategories.
D.Does not include changes in treasury stock.
E.Is reported by very few companies.
Goods on consignment:
A.Are goods shipped by the owner to the consignee who sells the goods for the owner.
B.Are reported in the consignee’s books as inventory.
C.Are goods shipped to the consignor who sells the goods for the owner.
D.Are not reported in the consignor’s inventory since they do not have possession of the
inventory.
E.Are always paid for by the consignee when they take possession.
Wayward Enterprises manufactures and sells three distinct styles of bicycles: the Youth
model sells for $300 and has a unit contribution margin of $105; the Adult model sells
for $850 and has a unit contribution margin of $450; and the Recreational model sells
for $1,000 and has a unit contribution margin of $500. The company’s sales mix
includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm’s
annual fixed costs total $6,500,000, calculate the firm’s break-even point in sales
dollars.
A.$13,250,000.
B.$13,000,000.
C.$12,750,000.
D.$12,900,050.
E.$12,750,625.
The following information is available for Hardy Co. for the current year:
Hardy Co.’s cost of goods manufactured for the current year is:
A.$12,000.
B.$16,100.
C.$17,100.
D.$18,100.
E.$13,600.
Total contribution margin in dollars divided by pretax income is the:
A.Degree of operating leverage.
B.Contribution margin ratio.
C.Margin of safety.
D.Sales mix.
E.Break-even point in units.
The internal document prepared by a department manager that informs the purchasing
department of its needs that lists the merchandise needed and requests that it be
purchased is the
A.Purchase requisition.
B.Purchase order.
C.Invoice.
D.Receiving report.
E.Invoice approval.
Della’s Donuts had cash inflows from operating activities of $27,000; cash outflows
from investing activities of $22,000, and cash outflows from financing activities of
$12,000. Calculate the net increase or decrease in cash.
A company reported net income of $100,000 and average total assets of $425,000.
Calculate its return on total assets.
______________________ provide the basic information processed by an accounting
system, and can include bank statements, billings to customers, and employee earnings
records.
In a manufacturing operation with two process departments (1 and 2), the flow of costs
would proceed from Goods in Process, Dept #1 to ________________.
The interest rate specified in the bond indenture that is paid by the issuer of the bond is
called the ___________________ of interest.
Identify the items that are included in merchandise inventory. (In your answer address
the special situations of goods in transit, consigned goods, and damaged goods.)
_______________________ are responsible for and have final authority for managing a
corporation’s activities.
Presented below is selected financial information for Stanley’s Bike Shop. Use the
appropriate information to prepare balance sheet at December 31, 2009.
Define and explain significant noncash investing and financing activities and the
method of reporting them on the statement of cash flows.
Describe employer responsibilities for reporting payroll taxes. (To the extent possible,
reference the form to be filed for each tax.)
A company is considering a proposal to invest $30,000 in a project that would provide
the following net cash flows:
Compute the project’s payback period.
Discuss the important accounting features of a periodic inventory system including
accounts and procedures used.
Cool Tours had beginning equity of $72,000; net income of $25,000, and withdrawals
by owners of $9,000. Calculate the ending equity.
Stock that is not assigned a value per share by the corporate charter is called
__________________.