What is discounting?
Answer:
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?
Answer:
On November 1, a company established a $90 petty cash fund. On November 12, the
petty cash fund contains $3 in cash and the following paid petty cash receipts:
transportation-in on merchandise inventory $14.25; postage, $34.50; and office
supplies, $36. Give the entry to reimburse the fund and to increase its amount to $150
on November 12.
Answer:
On October 1 of the current year, Morton Company paid $9,600 cash for a one-year
insurance policy that took effect on that day. On the date of the payment, Morton
recorded the following entry:
Prepare the required adjusting entry at December 31 of the current year.
Answer:
Steve’s Skateboards uses the perpetual inventory system and had the following sales
transactions during April:
Prepare the journal entries that Steve’s Skateboards must make to record these
transactions.
Answer:
In competitive markets, price is established through the forces of _______________
and _______________.
Answer:
A seller usually prepares a ____________________ to confirm a buyer’s return or
allowance that informs the buyer of the seller’s credit to the buyer’s account receivable
on the seller’s books.
Answer:
A company uses four special journals: purchases, sales, cash receipts, and cash
disbursements (perpetual inventory method). The following transactions were incurred
during August:
Record these transactions in the appropriate special journals below:
Answer:
Differences between actual costs and standard costs are known as
___________________. These differences may be subdivided into
_________________ and _________________.
Answer:
A company purchases a machine for $1,000,000. The machine has an expected life of
nine years and no salvage value. The company anticipates a yearly net income of
$60,000 after taxes of 30% to be received uniformly throughout each year. What is the
accounting rate of return?
Answer:
Hasbro had net sales of $7,875 and average accounts receivables of $1,350. Calculate
Hasbro’s accounts receivable turnover:
Answer:
Explain how to calculate total asset turnover. Describe what it reveals about a
company’s financial condition, whether a higher or lower ratio is desirable, and how it
is best applied for comparative purposes.
Answer:
A corporation reported net income of $3,730,000 and paid preferred cash dividends of
$100,000 during the current year. There were 600,000 shares of common stock
outstanding and the market price per common share was $88.33 at year-end. Calculate
the company’s price-earnings ratio.
Answer:
Describe the information found on a responsibility accounting performance report.
Answer:
Explain the purpose and format of the statement of cash flows. Also, describe its use to
decision makers.
Answer:
What are the checks that must be completed prior to the completion of invoice
approval and voucher preparation?
Answer:
A company is considering a five-year project. It plans to invest $60,000 now and
forecasts cash flows of $16,200 for each year. The company requires a hurdle rate of
12%. Calculate the internal rate of return to determine whether it should accept this
project. Selected factors for a present value of an annuity of 1 for five years are shown
below:
Answer:
Define liabilities and explain the differences between current and long-term liabilities.
Answer: