1) A trend percent, or index number, is calculated by dividing the analysis period
amount by the base period amount and multiplying the result by 100.
2) An unclassified balance sheet provides more information to users than a classified
balance sheet.
3) A fiscal year refers to an organization’s accounting period that spans twelve
consecutive months or 52 weeks.
4) Indirect materials are accounted for as factory overhead because they are not easily
traced to specific units or batches of production.
5) To avoid the time-consuming process of taking an inventory each year, most
companies use the gross profit method to estimate ending inventory.
6) Crediting an expense account decreases it.
7) The net present value decision rule is: When an asset’s expected cash flows are
discounted at the required rate and yield a positive net present value, the asset should be
acquired.
8) Admitting a partner by accepting assets is a personal transaction between one or
more current partners and the new partner.
9) The statement of cash flows explains how transactions and events impact the
end-of-period cash balance to produce the end-of-period net income.
10) In order to streamline the purchasing process, department managers should place
orders directly with suppliers.
11) A stock split is the distribution of additional shares of stock to stockholders
according to their percent of ownership.
12) A ___________________ is a record containing all accounts for a company along
with their balances.
13) The ____________ concept is the idea that cash paid (or received) in the future has
less value now than the same amount of cash paid (or received) today.
14) Describe the three important guidelines for revenue recognition.
15) In preparing flexible budgets, the costs that remain constant in total are
_______________ costs. Those costs that change in total are _______________ costs.
16) An employer has an employee benefit package that includes employer-paid health
insurance and an employer-paid retirement program. During January, the employer paid
$7,500 for health insurance, and contributed to the employee retirement program 10%
of the employees’ $150,000 gross salaries. Prepare the journal entry to record these
employee benefits.
17) The following unadjusted and adjusted trial balances were taken from the current
year’s accounting system for High Point.
In general journal form, present the six adjusting entries that explain the changes in the
account balances from the unadjusted to the adjusted trial balance.
18) A firm produces and sells a product with a contribution margin of $32 per unit. The
firm is presently selling 90,000 units and earning $240,000 in after-tax income. Taxes
are $80,000 at a 25% tax rate. If the firm desires to increase its after-tax income to
$300,000, how many more units must it sell?
19) Under traditional cost allocation methods, low-volume complex products are often
__________________ and high-volume simpler products are likely to be
______________.
20) Briefly describe the procedure of management by exception.
21) What is an important feature that must be remembered when using cost identifying
and behavior methods?