Acc 63527

subject Type Homework Help
subject Pages 9
subject Words 1269
subject Authors Carl S. Warren

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page-pf1
The following units are available for sale during the year:
January 1Beginning Inventory10 units at $18 each
April 3Purchase30 units at $20 each
August 31Purchase28 units at $25 each
September 29Purchase17 units at $30 each
December 31Ending Inventory21 units
Determine ending inventory cost by (a) FIFO method, (b) LIFO method, and (c)
average cost method.
The matching concept requires expenses to be recorded in the same period that the
related revenue is recorded.
a. True
b. False
Cash investments made by the stockholders of the business are reported on the
statement of cash flows in the:
a. financing activities section.
b. investing activities section.
c. operating activities section.
d. supplemental statement.
page-pf2
Match each statement with the appropriate accounting concept. (Some items may not be
used. Others may be used more than once.)
a.Accounting period concept
b.Adequate disclosure concept
c.Business entity concept
d.Cost concept
e.Going concern concept
f.Matching concept
g.Objectivity concept
h.Unit of measure concept
(1)Owners' transactions are separate from business transactions.
(2)Financial statements are prepared at the end of each year.
(3)Land purchased for $50,000, 10 years ago, is reported on the Balance Sheet at
$50,000.
(4)December rent expense paid in January is reported with the December revenues.
(5)All transactions are recorded and reported in dollars.
(6)Providing a summary of significant accounting policies
(7)Assumes that IBM will continue as a corporation forever
(8)The length of time left on debt obligations is shown.
The purpose of an audit is to:
a. render an opinion on the fairness of the statements.
b. determine whether or not a company has a good credit risk.
c. determine whether or not a company complies with income tax regulations.
d. determine whether or not a company is a good investment.
page-pf3
In which of the following cost accounting systems are perpetual inventory records
maintained for materials, workinprocess, and finished goods inventories?
a. Process costing
b. Batch costing
c. Activity based costing
d. Job order costing
The return on stockholders' equity is computed as:
a. income from operations divided by average operating assets.
b. net income divided by preferred dividends.
c. net income divided by average total stockholders' equity.
d. gross income divided by total retained earnings.
Expenditures made to extend an asset's life are called revenue expenditures.
a. True
b. False
page-pf4
Which transaction would be recorded in a cash basis system of accounting?
a. Purchase of equipment by signing a note
b. Purchase of supplies on credit
c. Sale of goods against a note
d. Sale of goods for cash
Operating expenses incurred for the entire business as a unit that are not subject to the
control of individual department managers are called indirect expenses.
a. True
b. False
During inflationary periods, the use of the LIFO method of costing inventory will result
in a lesser amount of net income than would result from the use of the average method
of inventory costing.
a. True
b. False
page-pf5
Division R reported operating income of $800,000 and total service department charges
of $275,000. Therefore its:
a. net income was $1,075,000.
b. gross profit margin was $525,000.
c. operating income before service department charges was $1,075,000.
d. consolidated non operating income was $420,000.
Profitability ratios such as _____ can be used to analyze and assess a company's
financial performance.
a. fixed assets turnover
b. current ratios
c. dividend payout ratios
d. return on assets
If prior to the last weekly payroll period of the calendar year, the cumulative earnings
for an employee are $75,200, earnings subject to social security tax are $106,800, and
the tax rate is 7.5%, the employer's social security tax on the $800 gross earnings paid
on the last day of the year is $60.
a. True
b. False
page-pf6
Which of the following conditions would cause the breakeven point to increase?
a. Increase in total fixed costs
b. Increase in unit selling price
c. Decrease in unit variable cost
d. Decrease in total fixed costs
The effect of a customer refund and allowance is a reduction in sales revenue and a
decrease in cash or accounts receivable.
a. True
b. False
The reduction in the ability of a fixed asset to provide service over time is called:
a. deferral recognition.
b. depreciation.
c. consolidation.
d. accumulation.
page-pf7
When standard costs are used in applying the costplus approach to product pricing, the
standards should be based upon ideal levels of performance.
a. True
b. False
If the cost of employee wages is not a significant portion of the total product cost, the
wages are classified as factory overhead cost.
a. True
b. False
If the profit margin for a division is 11% and the investment turnover is 1.5, the rate of
return on investment computed would be 16.5%.
a. True
b. False
During deflationary periods, the use of the LIFO method of costing inventory will result
in a greater amount of net income than would result from the use of the FIFO method of
inventory costing.
a. True
page-pf8
b. False
The anticipated purchase of a fixed asset for $400,000 with a useful life of 5 years and
no residual value is expected to yield total income of $150,000 (recognition is given to
the effect of straightline depreciation on the investment). The expected average rate of
return is 15%.
a. True
b. False
Qualitative considerations in capital investment decisions are most appropriate for
strategic investments or those that are designed to affect a company's longterm ability to
generate profits.
a. True
b. False
Land is an example of a current asset.
a. True
b. False
page-pf9
Below is budgeted production and sales information for Octofic Cans, Inc. for the
month of March:
AluminumTin
Estimated beginning inventory 12,000 units 6,000 units
Desired ending inventory 15,000 units 4,000 units
Region I, anticipated sales 380,000 units 85,000 units
Region II, anticipated sales 125,000 units 25,000 units
The unit selling price for aluminum cans is $0.15 and for tin cans is $0.20.
Budgeted production for tin cans during the month is:
a. 108,000 units.
b. 83,000 units.
c. 112,000 units.
d. 120,000 units.
A current asset account must be increased for revenue expenditures since they benefit
only the current period.
a. True
b. False
page-pfa
Which of the following is a selling expense?
a. Advertising expense
b. Cost of goods sold
c. Rent expense
d. Depreciation of land and building

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