1) Cost-volume-profit analysis can be presented in both equation form and graphic
form.
2) The average cost method will always yield results between FIFO and LIFO.
3) An income statement is a summary of the revenues and expenses of a business as of a
specific date.
4) Service companies can effectively use multiple department overhead rate costing to
compute product (service) costs.
5) The higher the times interest earned ratio, the better the creditors protection.
6) When computing the rate earned on total common stockholders’ equity, preferred
stock dividends are subtracted from net income.
7) A budget procedure that provides for the maintenance at all times of a twelve-month
projection into the future is called continuous budgeting.
8) The cost concept is the basis for entering the exchange price into the accounting
records.
9) If fixed costs are $450,000 and the unit contribution margin is $50, the sales
necessary to earn an operating income of $50,000 are 10,000 units.
10) Current assets are also called as plant assets.
11) If the bondholder has the right to exchange a bond for shares of common stock, the
bond is called a convertible bond.
12) When selling a piece of equipment for cash, a loss will result when the proceeds of
the sale are less than the book value of the asset.
13) Trendsetter Travel Services began business on January 1, 2014. Balances at
December 31, 2014, are listed below.
Prepare an income statement, retained earnings statement, and a balance sheet for
Trendsetter Travel Services.
14) Morocco Inc. reported the following results for the year ending April 30, 2014:
Prepare a retained earnings statement for the fiscal year ended April 30, 2014.
15) Journalize the following five transactions for Nexium & Associates, Inc. Omit
explanations.
16) A project is estimated to cost $248,400 and provide annual cash flows of $50,000
for eight years. Determine the internal rate of return for this project, using the following
table.
17) Amos Companys molding department opened on October 1, 2012. During October,
35,000 units were completed and transferred out to the next department. On October 31,
2012, the 9,000 units which remained in inventory were 40% complete with respect to
conversion costs and 100% complete with respect to materials.
Required:
How many equivalent units of work did the molding department complete during
October for materials and conversion costs?
18) The inventory at April 1, 2012, and the costs charged to Work in
Process–Department B during April for Hawk Company are as follows:
During April, all direct materials are transferred from Department A, the units in
process at April 1 were completed, and of the 10,000 units entering the department, all
were completed except 1,200 units which were 25% completed as to conversion costs.
Inventories are costed by the first-in, first-out method.
Prepare a cost of production report for April.
