Reports and analyses prepared in traditional management settings will match the
requirement of the new manufacturing environment.
When an asset lasts longer than its estimated useful life, depreciation no longer should
be recorded.
The average costing method matches cost flow with the physical flow of production.
An influential but noncontrolling investment is defined as ownership of between 20 to
50 percent of the stock of another company.
The logical linking of goals to measurable objectives and targets, and the tying of
appropriate compensation incentives to the achievement of such objectives and targets
are critical to the successful coordination of goals.
For residual income figures to be comparable on a companywide basis, all investment
centers must have equal access to resources and similar asset investment bases.
The change in merchandise inventory level from the beginning to the end of the year
affects cost of goods sold.
The stockholders of a corporation elect the board of directors.
Working capital equals current assets divided by current liabilities.
Recording an account with a debit balance as a credit, or vice versa, will cause the trial
balance to be out of balance by an amount that is evenly divisible by two.
Which of the following accounts would be found on the debit side of the adjusted trial
balance?
A.Accumulated Depreciation’“Equipment
B.Owner’s Capital
C.Owner’s Withdrawals
D.Wages Payable
Other things remaining constant, which of the following will improve the return on
investment?
A.Decreasing assets
B.Increasing sales
C.Decreasing costs
D.All of these choices
When applying the retail method, which of the following would not be a component of
the cost-to-retail percentage?
A.Purchases
B.Beginning inventory
C.Sales
D.Freight-in
Assume the direct method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Decrease in Accrued
Liabilities’”indicate the effect on cash payments for operating expenses by choosing one
of the following:
A.Add to operating expenses to arrive at cash payments for operating expenses.
B.Subtract from operating expenses to arrive at cash payments for operating expenses.
C.Not used to adjust operating expenses to arrive ay cash payments for operating
expenses.
Which of the following is not an enhancing qualitative characteristic?
A.Verifiability
B.Timeliness
C.Understandability
D.Neutrality
If an asset costs $41,000, has a residual value of $3,000, and has a useful life of five
years, the entry to record depreciation in the second year, using the
double-declining-balance method, is
A.debit to Depreciation Expense, 9,430; credit to Cash, 9,430.
B.debit to Depreciation Expense, 9,840; credit to Accumulated Depreciation, 9,840
C.debit to Depreciation Expense, 10,250; credit to Accumulated Depreciation, 10,250
D.debit to Accumulated Depreciation, 10,660; credit to Depreciation Expense, 10,660
Sales Tax Payable is an example of a(n)
A.estimated liability.
B.contingent liability.
C.trade liability.
D.definitely determinable liability.
Foxworth Company sold plant assets that had accumulated depreciation of $20,000.
These assets cost Foxworth $70,000 when purchased 4 years ago. The sale of the assets
resulted in a gain for Foxworth of $2,000. The amount of cash reported for this
transaction on Foxworth’s statement of cash flows is:
A.$70,000 outflow.
B.$52,000 inflow.
C.$72,000 inflow.
D.$2,000 inflow.
Which of the following represents normal cost measurement?
A.Actual Direct Materials + Actual Direct Labor + Actual Overhead
B.Actual Direct Materials + Actual Direct Labor + Estimated Overhead
C.Estimated Direct Materials + Estimated Direct Labor + Actual Overhead
D.Actual Direct Materials + Estimated Direct Labor + Estimated Overhead
Which of the following is included in full product cost?
A.All direct labor and direct material costs and all production and nonproduction costs.
B.Only nonproduction costs.
C.Only the costs of direct material.
D.Only the costs of direct labor.
Which of the following accounts would be found on the credit side of the adjusted trial
balance?
A.Accumulated Depreciation’“Equipment
B.Prepaid Insurance
C.Owner’s Withdrawals
D.Depreciation Expense
On a corporate balance sheet, earned capital is also known as
A.common stock.
B.paid-in capital.
C.retained earnings.
D.contributed capital.
Which of the following transactions is most likely not to result in an adjusting entry at
the end of the period?
A.Performance of a service for which payment was not received in advance.
B.Purchase of inventory for sale in the subsequent period.
C.Purchase of office equipment.
D.Purchase of a two-year insurance policy.
Usually, failure to record a liability means failure to record a(n)
A.revenue.
B.note.
C.expense.
D.asset.
Which of the following pairs of accounts could not be included in the same adjusting
entry?
A.Unearned Revenue and Service Revenue
B.Wages Expense and Wages Payable
C.Interest Expense and Interest Receivable
D.Rent Expense and Rent Payable
Which of the following is not a measurement issue in accounting?
A.When to record a business transaction.
B.How to classify the items of a business transaction.
C.How to classify the items of a business transaction.
D.Where to record a business transaction.
When a partner withdraws from a partnership taking assets that represent less than his
or her capital balance,
A.the remaining partners receive a bonus
B.no bonus results
C.the remaining partners owe the withdrawing partner the difference
D.the withdrawing partner receives a bonus
The exclusive right to sell a product within a certain geographic area is called a
A.leasehold.
B.franchise.
C.patent.
D.copyright.
Purchases of buildings and equipment are formally planned in the
A.depreciation budget.
B.budgeted balance sheet.
C.selling and administrative expense budget.
D.capital expenditures budget.
From Jolier’s year-end income statement, you observe that the finished goods inventory
has doubled during the year. This would indicate that during the year Jolier
A.sold more goods than were produced.
B.produced more goods than last year.
C.produced more goods than were sold.
D.sold more goods than last year.
In a fully integrated standard costing system, standard costs eventually flow into the
A.Cost of Goods Sold account.
B.Standard Cost account.
C.Selling and Administrative Expenses account.
D.Sales account.
The value at which one share of stock can be bought or sold is called
A.book value.
B.call value.
C.par or stated value.
D.market value.
A truck that cost $24,000 and on which $18,000 of accumulated depreciation has been
recorded was disposed of on January 1. Assume that the truck was disposed of for
$4,000 cash. The entry to record this event would include
A.a debit to Cash.
B.a debit to Accumulated Depreciation.
C.a debit to Loss on Sale of Truck.
D.all of these choices.
Use the following information to calculate the ratios requested below. Round answers to
two decimal places. Show your work.
Up to the date of a fire that completely destroyed Hummer’s inventory, Hummer had
sales of $1,000,000, purchases of $900,000, and freight-in of $40,000. The cost of
beginning inventory was $70,000 and the company’s typical gross profit was 40
percent. Using the gross profit method, estimate Singer’s inventory loss from the fire.
(Show your work.)
Gravel Manufacturing had supplies on hand costing $480 on December 31. During the
same year, supplies costing $320 were purchased, and $640 in supplies were consumed
during the year. What was the cost of supplies on hand on January 1 of that year?
Define outstanding stock.
Assume that on July 24, Adele Company had a sale on credit totaling $22,038 with a
related cost of goods sold of $15,208. Record this transaction in journal form assuming
the perpetual inventory system was in use.
Use the numbers corresponding to the accounts below to indicate the entries for the
transactions below. You may debit or credit more than one account. Dollar amounts
have been omitted. The first one (x-y) has been done for you.
1) Accounts Receivable
2) Owner’s Capital
3) Withdrawals
4) Cash
5) Income Summary
6) Legal Fees Earned
7) Rent Expense
8) Salaries Expense
9) Salaries Payable
10) Unearned Legal Fees
x-y. To record cash invested by the owner
a-b. To record the reversal of the entry that adjusted for accrued legal fees
c-d. To close the Income Summary account when net income has been realized
e-f. To record the closing of expense account(s)
g-h. To record payment of salaries for which an adjusting entry was made a few days
before. The appropriate reversing entry also was made.
Assume that the sales made by Rios Company for the month ended February 28, 20×5,
were made to customers using credit cards and totaled $11,332. Prepare one entry in
journal form to record these sales assuming that all of the credit card companies charge
Rios Company a 2.5 percent discount fee. (Omit date.) Round to the nearest whole
dollar.
Meredith Marshall owns a home inspection business, offering her services to
homeowners. She currently charges $180 per inspection but wants to know if her fee
should be raised. She has provided the following data from the past six months:
Meredith takes her daughter with her on all inspections and pays her $40 per inspection.
Due to slower business in the cooler months, Meredith estimates she will average 60
inspections per month for the next six months. Prepare a schedule showing Meredith ‘s
estimated total cost per inspection.
On the right side of the accounting equation are two types of claims against resources.
Explain what they are and give an example of an item that would increase each. Which
type of claim has priority?
Waldo Ralph Company issued $40,000 of bonds with a 9 percent face rate. The bonds
are due in 5 years and interest is paid semiannually. The market rate of interest on the
date the bonds are issued is 12 percent. Calculate the present value of the bond issue,
using present value tables.
