The cost of debt, the cost of preferred stock, the cost of common stock, and the cost of
retained earnings are the components of cost of capital.
For accounting purposes, stated value is treated the same way as par value.
Creditors are those who lend money to others or deliver goods and services before
being paid.
An $80,000 bond issue priced at 97 is sold for $77,600.
It is difficult to track costs to individual products in a continuous flow manufacturing
process.
The entry required to record start-up and organization costs will cause a increase in
assets.
The Federal Reserve Board is an example of a consumer group.
Asset turnover measures how efficiently assets are used to produce revenues.
When the terms are FOB destination, the title passes at the destinationand the seller
pays the transportation costs.
A a rule of thumb, a business starts to have trouble when its current liabilities to net
worth ratio exceeds 50%.
Manufacturing costs behave as variable or fixed costs.
Cash is a nominal account.
Managerial accounting reports should be prepared when they are needed, without
regard to calendar dates or regularity of issue.
The management process and management accounting are identical.
The Securities and Exchange Commission instituted rules requiring the chief executive
officers and chief financial officers of all publicly traded companies to certify that, to
their knowledge, the quarterly and annual statements that their companies file with the
SEC are
A.100 percent accurate and contain no misstatements, errors, or mistakes.
B.accurate and complete.
C.subject to interpretation due to the many accounting rules and regulations.
D.not to be used except by individuals working for the company.
Which of the following categories of investments can be both debt and equity
securities?
A)Available-for-sale securities
B)Trading securities
C)Held-to-maturity securities
D)Both available-for-sale and trading securities
Use this information to answer the following question.
The total dollar amount of assets to be classified as current assets is
A.$105,000.
B.$145,000.
C.$95,000.
D.$120,000.
Cash flows to sales and cash flows to assets are measured in terms of
A.times.
B.a percentage.
C.dollars.
D.days.
The amortization of a bond discount will result in reporting an amount of interest
expense for an interest period that
A.exceeds the amount of cash to be paid for interest for the period.
B.is less than the amount of cash to be paid for interest for the period.
C.has no predictable relationship with the amount of cash to be paid for interest for the
period.
D.equals the amount of cash to be paid for interest for the period.
Richard Inc. expects to sell 28,000 units. Each unit requires 4 pounds of direct materials
at $15 per pound and 3 direct labor hours at $12 per direct labor hour. The overhead rate
is $9 per direct labor hour. The beginning inventories are as follows: direct materials,
2,500 pounds; finished goods, 3,100 units. The planned ending inventories are as
follows: direct materials, 4,000 pounds; finished goods, 3,200 units.
What is the planned production of Richard?
A.21,700
B.28,100
C.27,900
D.34,300
Which of the following items will not be disclosed on a statement of stockholders’
equity?
A.Net income
B.Issuance of common stock for cash
C.Extraordinary gains and losses
D.Issuance of common stock in exchange for noncash assets
The use of the FIFO costing method would result in a company’s process cost report
showing
A.units transferred out as one amount with no distinction made for beginning inventory.
B.units transferred out as two amounts: one for beginning inventory and the other for
units started and completed during the month.
C.units transferred out as two amounts: one for units completed during the period and
one for ending inventory.
D.units transferred out as three amounts: one for beginning inventory, one for units
started and completed during the period, and one for ending inventory.
A building was purchased for $250,000. It has accumulated depreciation of $40,000 and
an expected residual value of $50,000. Assuming the use of straight-line depreciation,
its estimated useful life must be
A.15 years.
B.10 years.
C.5 years.
D.impossible to determine from the facts given.
Use this information to answer the following question.
A periodic inventory system is used.
Using the specific identification method and assuming that 50 of the items left are from
the October 13 purchase and the rest are from the October 20 purchase, the cost
assigned to ending inventory is
A.$3,840.
B.$3,312.
C.$3,372.
D.$3,176.
When using backflush costing, product costs are first accumulated in the __________
account.
A.Cost of Goods Sold
B.Work in Process Inventory
C.Conversion Costs
D.Finished Goods Inventory
If sales for 20×4 (the base year), 20×5, and 20×6 are $40,000, $31,200, and $49,200,
respectively, the index numbers assigned to 20×5 and 20×6, respectively, are
A.62.4 and 128.
B.156 and 118.
C.128.2 and 133.
D.78 and 123.
Which of the following conditions is not a requirement by the SEC for the recognition
of revenue?
A.Delivery has occurred or services have been rendered.
B.Collectibility is reasonably certain.
C.A written agreement has been signed.
D.The seller’s price to the buyer is fixed or determinable.
Lincoln Company engaged in this transaction:
Transferred cash to money market account.
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.
Which of the following inventory methods when used for income tax purposes must
also be used for reporting purposes?
A.Specific identification
B.LIFO
C.FIFO
D.Average-cost
Use this information to answer the following question.
A periodic inventory system is used; ending inventory is 150 units.
What is ending inventory under the average-cost method?
A.$900
B.$1,050
C.$1,350
D.$1,200
A company purchases an oil well for $400,000. It estimates that the well contains
500,000 barrels, has a ten-year life, and has no salvage value. If the company extracts
and sells 40,000 barrels during the first year, how much depletion expense should be
recorded?
A.$32,000
B.$40,000
C.$80,000
D.$200,000
Which of the following is not a stage in the management process?
A.Evaluating
B.Communicating
C.Planning
D.Recording
Use this information to answer the following question.
Panadora Company has the following information for the pay period of January 1-15,
2014. Payment occurs on January 20.
Salaries Payable would be recorded for
A.$21,520.
B.$23,968.
C.$25,952.
D.$28,400.
Which of the following is incorrect regarding partnerships?
A.Legally, there is no economic separation between a partnership and its owners.
B.A partnership is a voluntary association of individuals.
C.If the partnership agreement does not describe the method of income and loss
distribution, the partners must share income and losses equally.
D.When individuals invest property in a partnership, they co-own the property with the
partnership.
All of the following are used in estimating a depreciable asset’s useful life except
A.the asset’s present condition.
B.the useful life required by the government for tax purposes.
C.experience with similar assets.
D.current technology and industry trends.
Which of the following equations is correct?
A.Total Manufacturing Costs = Direct Materials + Direct Labor + Selling Costs
B.Total Manufacturing Costs = Direct Materials + Direct Labor + Overhead
C.Total Manufacturing Costs = Direct Labor + Overhead + Selling Costs +
Administrative Costs
D.Total Manufacturing Costs = Product Costs + Period Costs
Excerpts from cost-volume-profit analysis of Nutshell Inc. indicate fixed costs of
$85,000, a contribution margin per unit of $40, a selling price of $95, and a sales level
of 4,000 units. What must be the targeted level of profit?
A.$116,875
B.$103,125
C.$85,000
D.$75,000
J & C Stacy Enterprises is expecting to earn a profit of $180,000 in 2014. The company
manufactures wrought iron lamps. Each lamp requires variable costs of $13 for direct
materials, $9 for direct labor, and $12 for overhead. Total variable costs are thus $34 per
lamp. Fixed costs for 2014 are expected to be $630,000. Each lamp will sell for $79.
a. Determine how many lamps the company must sell to earn its targeted profit, and
convert this amount to sales dollars.
b. Compute breakeven sales in dollars.
c. Explain the dollar difference between breakeven sales dollars and the sales dollars
necessary to earn the targeted profit. Use the contribution margin as part of your
explanation.
Using the following information reported in an annual report, prepare a horizontal
analysis of the consolidated balance sheets. (Round percentage answers to one decimal
place.)
Knollwood Corporation issued $286,000 of 30-year, 8 percent bonds at 106 on one of
its semiannual interest dates. The straight-line method of amortization is to be used.
The entry to record the bond interest expense on the next interest payment date is:
Jonathan Inc. is analyzing its sales mix to find out if it is maximizing its profits. The
company produces three similar items: Regular, Deluxe, and Luxury. All three of these
products are made with the same equipment, but the machine hours available to make
these products are limited. Product line statistics are as follows:
Determine whether the existing sales mix is the most profitable one possible. If your
answer is no, offer your suggestion to improve the sales mix. Round answers to two
decimal places.
Although a corporation may have sufficient cash and retained earnings to pay a
dividend, its board of directors may not declare dividends. Name at least two reasons
why a board of directors might not declare dividends.
What are the steps in the posting process for the debit side of an entry?
Prepare in proper form the stockholders’ equity section of the balance sheet from the
following selected accounts and balances taken from the adjusted trial balance of
Thomas Corporation on June 30, 20×5.
X, Y, and Z are partners who share profits and losses in a ratio of 1:2:3, respectively. Z’s
Capital account has a $60,000 balance. X and Y have agreed to let Z take $78,000 of the
company’s cash when he retires. Prepare an entry in journal form without explanation to
record Z’s exit, including the recognition of a bonus to Z
Use the following information to calculate the ratios requested below. Round answers to
two decimal places. Show your work.
There are several types of business organizations that mimic the characteristics of a
partnership. Describe two of these business organizations.