The replacement of tires on a truck is considered an ordinary repair.
For tax purposes, small businesses may expense the first $250,000 of equipment
expenditures, rather than having to allocate their costs over a number of years.
Management accounting provides reports that are future oriented.
The International Accounting Standards Board is the primary and most important
determinant of generally accepted accounting principles.
During the closing process, expenses are transferred to the debit side of the Income
Summary account.
A small stock dividend normally results in a transfer from Retained Earnings to
Contributed Capital of an amount equal to the market value of the stock.
Additions and betterments are examples of capital expenditures.
A work cell is an autonomous production line that can perform only one required
operation efficiently at a time.
In the JIT environment, direct materials and conversion costs will vary significantly for
each product in a work cell.
An adjusted trial balance proves the balance of the ledger accounts after the adjusting
entries have been posted.
A cost-to-retail percentage must be calculated when applying the gross profit method.
The interest coverage ratio measures the degree of protection a company has from
default on interest payments.
Use this information to answer the following question.
A periodic inventory system is used; ending inventory is 147 units.
What is ending inventory under FIFO?
A.$1,382
B.$1,582
C.$1,282
D.$1,482
Answer the following questions. (Show your work.)
a. A machine was purchased on July 1, 20×9. It had a cost of $36,000 and an estimated
useful life of nine years with zero value at that time. What is the machine’s carrying
value after four years?
b. On April 1, 20×0, a company paid in advance $54,000 for three years’ insurance.
How much Prepaid Insurance remains on the balance sheet on December 31, 20×0?
c. A company began the year with $800 in supplies, purchased $2,000 in supplies, and
ended the period with $600 in supplies. How much is Supplies Expense for the period?
d. A company was paid $1,800 in advance for services to be performed. At year end,
one-third had not yet been earned. How much in Service Revenue should be recorded?
A disadvantage of the corporate form of business is
A.centralized authority and responsibility.
B.its status as a separate legal entity.
C.government regulation.
D.continuous existence.
The adjusting entry for the expiration of prepaid advertising, originally recorded as an
asset,
A.Advertising Expense ‘“ Debit; Prepaid Advertising ‘“ Credit
B.Prepaid Advertising ‘“ Debit; Cash ‘“ Credit
C.Advertising Expense ‘“ Debit; Cash ‘“ Credit
D.Prepaid Advertising ‘“ Debit; Advertising Expense ‘“ Credit
The matching rule is applied
A.because it is required by the Internal Revenue Code.
B.by expensing certain items immediately and in their entirety.
C.to help make the bookkeeper’s job easier.
D.to help produce an accurate measurement of a company’s performance.
Which of the following is not a characteristic of a process costing system?
A.A specific time period is used
B.Several Work in Process Inventory accounts are used
C.Product costs are grouped by processes, departments, or work cells
D.Customized products are manufactured
A project is accepted under the net present value method when
A.the net present value is zero or negative.
B.the total amount of cash inflows exceeds the purchase price of the asset.
C.the purchase price of the asset is less than the present value of net cash inflows.
D.the present value of net cash inflows exceeds a predetermined minimum amount.
Neverlate is world famous for its precision pocket watches. The company has estimated
that variable manufacturing costs and variable selling costs per watch will be $72 and
$43, respectively, for 2014. Also during 2014, the company is expecting fixed
manufacturing costs to total $291,600 and fixed general and administrative expenses to
amount to $253,175. The anticipated selling price of each watch is $500. Compute (a)
the breakeven point in sales units and (b) the breakeven point in sales dollars.
Which of the following topics involves a contingent liability?
A.Installment accounts receivable
B.A discounted note receivable
C.Securitization
D.Credit card sales
The adjustment for estimated property taxes would include a
A.credit to Property Taxes Payable.
B.debit to Unearned Property Taxes.
C.credit to Property Taxes Expense.
D.credit to Cash.
Lincoln Company engaged in this transaction:
Purchased 30-day U.S. Treasury bill.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Does not represent a cash flow.
B.Operating activities section.
C.Investing activities section.
D.Financing activities section.
A contingent liability is best described as a(n)
A.current liability.
B.probable liability.
C.potential liability.
D.estimated liability.
When a direct cause-and-effect relationship cannot be established between revenues and
costs, the costs are
A.not expensed and remain as assets on the balance sheet.
B.expensed among the accounting periods that benefit from the costs.
C.expensed immediately in their entirety.
D.expensed equally each year.
Denapasa Manufacturing leases a vacuum cleaning system for a basic monthly fee plus
an additional cost per hour used above a given minimum for each month. Given below
is the information for the most recent six-month period on the number of machine hours
of use and the total cost under this lease.
You are to provide information for planning concerning the variable and fixed cost
elements in this lease. Use the high-low method to (a) determine the variable cost per
machine hour and (b) compute the fixed and variable costs for months 7 and 8.
Mozilla Mining Company purchased land containing an estimated 10,000,000 tons of
ore for a cost of $750,000. The land without the ore is estimated to be worth $150,000
(the residual value). Buildings costing $45,000 with an estimated useful life of 20 years
were erected on the site. Because of the remote location, the buildings have no residual
value. The company expects that all the usable ore can be mined in eight years. During
its first year of operation, the company mined 1,000,000 tons of ore and at the end of
the year had an inventory of 200,000 tons. Determine the following amounts for the
first year: (a) depletion charge per ton; (b) depletion expense for year; and (c)
depreciation expense for buildings, using the straight-line method. (Show your work.)
Erin, Rachel, and Travis are partners in ERT Company, with average capital balances
for the year of $60,000, $80,000, and $40,000, respectively. They share remaining
income and losses in a 2:5:3 ratio, respectively, after each receives a $30,000 salary and
10 percent interest on his or her average capital balance. In the journal provided,
prepare the entries without explanations to close income or loss into their Capital
accounts, assuming (a) net income of $148,000, (b) net income of $28,000, and (c) net
loss of $12,000.
A physical inventory is usually taken
A.in the middle of the fiscal year.
B.at the peak of the busy season.
C.at the end of the fiscal year.
D.at December 31.
The purpose of a statement of stockholders’ equity is to
A.disclose the computation of book value per share of stock.
B.budget the transactions expected to occur during the forthcoming period.
C.replace the statement of retained earnings.
D.summarize the changes in the components of stockholders’ equity for a period of
time.
An adjusted trial balance is prepared to
A.test that the ledger is in balance after the accounts have been adjusted.
B.facilitate preparation of the adjusting entries.
C.both test that the ledger is in balance after the accounts have been adjusted and
facilitate preparation of the financial statements.
D.facilitate preparation of the financial statements.
Insuring a factory is classified as a(n) __________-level activity in an activity-based
costing system.
A.operations
B.batch
C.unit
D.facility
Which of the following represents the product costs on the income statement?
A.Cost of goods sold
B.Sales revenue
C.Sales commissions
D.None of these
In standard costing,
A.the standards are developed only for overhead costs.
B.the standards are developed primarily from past costs.
C.comparisons with actual costs usually are not performed.
D.debit and credit entries to inventory accounts are made at standard costs.
A company has $450,000 in bonds payable with an unamortized discount of $10,500. If
two-thirds of the bonds are converted to common stock, the carrying value of the bonds
payable will decrease by
A.$146,500.
B.$293,000.
C.$307,000.
D.$314,000.
Graczyk Company uses a periodic inventory system. During October, it sold 360 units
of Product Z. Its beginning inventory and purchases during the month were as follows:
Compute the cost of goods sold under each of three methods: (a) average-cost, (b)
LIFO, and (c) FIFO. (Show your work.)
Collin’s Auto Parts had cash sales of $20,000 for the month of September. Sales are
subject to a 6.5 percent sales tax and an 8 percent excise tax. In the journal provided,
prepare a compound entry without explanations to record Collin’s sales and related sales
and excise taxes for the month.
When using a just-in-time system, what qualities should be a supplier posses?
What is the financing period? Is a longer or shorter financing period most desireable?
A company purchases 600 shares of its $100 par value common stock at $110 per share.
It then reissues 100 shares at $114 per share. The entry upon reissue of the stock is
What is the responsibility of the independent auditor? Who is responsible for the
content of the published financial statements?
A $200,000 bond issue with a carrying value of $206,000 is called at 101 and retired.
The entry to record the retirement of bonds is: