If insured goods are shipped FOB destination, the seller should file a claim for goods
damaged in transit.
Periodic and perpetual are examples of inventory costing systems.
If a management accountant gives information about a future merger of his or her
company to a relative, the accountant has acted ethically.
The relevance of accounting information means that the information has a direct
bearing on a decision.
Overhead applied is calculated by multiplying predetermined activity rate and actual
cost driver activity.
The common costs shared by two or more products before they are split off are called
joint costs.
Reversing entries can be made for accruals, but not for deferrals.
Assets purchased under a deferred payment plan should be recorded at the present value
of the installment payments.
When the equity method is used to account for an investment in stock, the investor will
report its share of the investee’s annual earnings as income in proportion to how much
the investee distributes in the form of dividends.
‘A favorable direct materials price variance is always good for a company.’ Is this
statement TRUE? Justify your answer.
Practitioners of management accounting and financial management have a
responsibility to communicate information fairly and objectively.
Per the Sarbanes-Oxley Act of 2002, a compensation committee, comprised of a public
corporation’s top executives, must be established to determine the salaries and wages of
its employees.
Myrid Inc. sells each crystal goblet that it produces for $75. The contribution margin
per goblet is $20. Total monthly fixed costs are estimated to be $82,600. How many
units should Myrid sell in a month to breakeven? (Round your answer to the nearest
whole number.)
A.4,130 goblets.
B.1,101 goblets.
C.1,502 goblets.
D.869 goblets.
Each of the following companies is a merchandising business except a
A.candy store.
B.car wash.
C.wholesale parts company.
D.furniture store.
Which of the following is included in prime costs?
A.Overhead costs
B.Indirect materials costs
C.Selling and administrative costs
D.Direct labor costs
Applying the lower-of-cost-or-market rule follows which of the following accounting
conventions?
A.Full disclosure
B.Matching
C.Materiality
D.Conservatism
Lincoln Company engaged in this transaction:
Paid income taxes.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Schedule of noncash investing and financing transactions.
B.Investing activities section.
C.Operating activities section.
D.Financing activities section.
Equipment might be depreciated over 15 years because
A.it will lose most of its market value in 15 years.
B.it will be paid for in 15 years.
C.it will help to generate revenue for the company over 15 years.
D.income tax provisions require depreciation over 15 years.
The higher the interest rate assumed, the
A.higher the present value of an ordinary annuity.
B.more one must deposit today to accumulate to a desired sum.
C.lower the future value of a sum invested in the bank today.
D.lower the present value of a sum due in the future.
The controller for Tires and More, Inc. has recorded the following transactions during
the month: the purchase of equipment for $8,500 cash; payment of $6,300 for 3 months
rent; and, collection of $2,400 from a customer for services performed. At the
beginning of the month the owner established the business by making an investment of
$15,000 cash. What is the balance in the Cash account at the end of the month, and is
the balance a debit or a credit?
A.$2,600 debit.
B.$2,600 credit.
C.$6,800 debit.
D.$15,200 debit.
The Sarbanes-Oxley Act of 2002 requires management to acknowledge its
responsibility for internal control
A.in the company’s annual report.
B.in a public statement posted on social media.
C.in a posted notice at the front of company headquarters.
D.in all of these.
Which of the following bank reconciliation items would result in a journal entry?
A.Checks outstanding
B.An adjustment for a check recorded for the wrong amount
C.Deposits in transit
D.A bank error on the bank statement
Sleepy Monk Coffee Company operates a chain of retail coffee shops and also sells its
signature roasted coffee to local resorts. Which of the following accounting estimates
would be most important for Sleepy Monk Coffee Company?
A.Uncollectible accounts receivable.
B.Warranty claims.
C.Depreciable lives for its operating assets.
D.Sales returns.
Which of the following is a regulatory agency?
A.IASB
B.SEC
C.FASB
D.GASB
Unit costs for each job are computed by dividing
A.estimated total costs by planned units to be produced.
B.actual costs by actual units sold.
C.cost of direct materials, direct labor, and overhead by number of units produced.
D.estimated total costs by actual units sold.
The formula used to compute budgeted total cost at any level of activity is presented in
the
A.flexible budget.
B.performance report.
C.static budget.
D.cash flow forecast.
A direct labor rate variance would occur in which of the following?
A.When a production employee takes an unplanned break
B.When a production employee spends more time producing one product than was
expected
C.When a low-paid production employee performs a task higher than his or her
assigned level
D.When a production employee incurs overtime hours at the same hourly rate as regular
pay
Which of the following accounts probably would contain a smaller dollar amount on
the adjusted trial balance than on the trial balance?
A.Office Supplies
B.Accumulated Depreciation’“Equipment
C.Cash
D.Wages Expense
According to generally accepted accounting principles, goodwill is recorded as an asset
A.when favorable factors combine to create goodwill.
B.when a company has superior earning power.
C.when it is paid for as part of the purchase of a business.
D.under no circumstances.
In some liquidations, a partner’s share of the loss is greater than his or her capital
balance. In such a situation,
A.the partner must make up the deficit in his or her Capital account from personal
assets.
B.if the partner does not have the cash to cover his or her obligations, the deficit is
distributed according to the partners’ stated ratios.
C.all partners have unlimited liability.
D.All of these choices.
Use this balance sheet and income statement to answer the following question. Use
ending balances whenever average balances are required for computing ratios.
The asset turnover for National Textile is
A.1.00 times.
B.1.33 times.
C.0.83 times.
D.1.20 times.
The following unit data were assembled for the heating process of Morgan Processing
Inc. for the month of August. Direct materials are added at the beginning of the process.
Conversion costs are added uniformly over the production process. The company uses
the FIFO process costing method.
The number of equivalent units produced by Morgan Processing with respect to direct
materials costs is
A.39,500.
B.44,000.
C.49,000.
D.48,500.
Recording estimated product warranty expense in the year of the sale best follows
which of the following accounting principles?
A.Matching
B.Consistency
C.Historical cost
D.Full disclosure
If the indirect method is used, which of the following is a proper adjustment to net
income to arrive at net cash flows from operating activities?
A.deducting a decrease in Prepaid Expenses.
B.deducting an increase in Salaries Payable.
C.adding an increase in Accounts Receivable.
D.adding a decrease in Inventory.
Accountants must have high professional ethics. List and briefly describe five ethical
standards that management accountants subscribe to that, in your opinion, help maintain
the impression that accountants are highly ethical.
In general, how does one determine whether or not an expenditure should be included
in the acquisition cost of property, plant, and equipment?
Why is it important for a company to maintain the same accounting methods and
practices from period to period?
Brandi and Hunter divide partnership income and losses solely on the basis of their
average capital balances. Brandi had $90,000 invested during all of 20×5; Hunter had
$60,000 invested from January 1 to September 30, and he invested another $40,000 on
October 1. If income was $400,000 during 20×5, how much should each partner
receive?
A $300,000 bond issue with a carrying value of $311,000 is called at 103 and retired.
The entry to record the retirement of bonds is: