Operating budgets are limited to service organizations.
In moving toward the just-in-time continuous work flow concept, a key objective is the
reduction in the use of raw materials for manufacturing a product.
The Income Summary account appears in the income statement.
Gains and losses on the sale of assets in a liquidation are divided among partners
according to the stated ratios.
In accounting, depreciation means the decline in value of an asset.
The cost of a sewage system should be included in the Land Improvements account.
Preferred stock is considered the residual equity of a corporation.
A contingent liability eventually becomes either a
Accelerated methods of depreciation result in lower net income in the last years of an
asset’s life compared to the straight-line method.
For notes payable whose interest is stated separately, the adjusting entry would consist
of a debit to Interest Expense and a credit to Interest Payable.
The primary purpose of the statement of cash flows is to provide information about a
company’s cash receipts and cash payments during an accounting period.
James Corporation’s controller has developed the cost and usage data listed below in
preparation of standard unit cost information for the coming year.
Using the above information provided for James Corporation, the standard unit cost for
direct materials is
A.$45.
B.$10.
C.$24.
D.$33.
Average inventory equals $200,000, and cost of goods sold equals $442,000. Days’
inventory on hand equals
A.165.2 days.
B.Not enough information available to answer the question.
C.154.3 days.
D.188.7 days.
Use this information to answer the following question.
A periodic inventory system is used.
Cost of goods sold under the average-cost method is
A.$444.
B.$333.
C.$435.
D.$222.
Costs assigned to the building of a ship should appear on the income statement when
A.the ship is completed.
B.the ship is sold.
C.the purchase order to manufacture the ship is received.
D.cash is collected for the sale of the ship.
The indirect method of preparing a statement of cash flows
A.is the overwhelming choice of most companies.
B.begins with net income in the operating activities section.
C.will produce the same net figure as the direct method.
D.All of these choices.
A company with a current ratio of 2.4 times will see that ratio decrease when the
company
A.pays a large current liability.
B.declares a 10 percent stock dividend on its common stock.
C.borrows cash by issuing a short-term note payable.
D.converts a short-term liability to a long-term liability.
A retail store prices its goods to achieve a gross margin of 35 percent. Up to the date of
a fire that destroyed the store’s inventory, sales were $250,000 and cost of goods
available for sale was $175,000. The estimated cost of the inventory destroyed is
A.$12,500.
B.$43,750.
C.$62,500.
D.$75,000.
Which of the following characteristics applies to process costing, but does not apply to
job order costing?
A.The use of single Work in Process accounts
B.The use of equivalent units
C.Separate, identifiable jobs
D.The use of predetermined overhead rates
During April, Department A started 400,000 units of product in a particular production
process. The beginning work in process inventory was 40,000 units, and the ending
inventory was 50,000 units. Direct materials are introduced at the start of processing,
and beginning and ending inventories are considered to be 40 percent complete with
respect to conversion costs. Department A uses the FIFO costing method.
The number of equivalent units produced in Department A with respect to conversion
costs were
A.530,000.
B.394,000.
C.370,000.
D.354,000.
When a company has a net loss, the net loss amount is entered on the work sheet on the
A.credit side of both the Income Statement and the Balance Sheet columns.
B.credit side of the Income Statement columns and the debit side of the Balance Sheet
columns.
C.debit side of the Income Statement columns and the credit side of the Balance Sheet
columns.
D.debit side of both the Income Statement and the Balance Sheet columns.
The Equipment account would include all of the following costs except
A.installation costs.
B.maintenance costs.
C.equipment test runs.
D.freight charges.
Use this information to answer the following question.
The general ledger account for Accounts Receivable shows a debit balance of $50,000.
Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the
year were $500,000. In the past, 2 percent of sales have proved uncollectible, and an
aging of accounts receivable accounts results in an estimate of $11,700 of uncollectible
accounts.
Using the accounts receivable aging method, the Allowance for Uncollectible Accounts
balance would be credited for
A.$10,700.
B.$11,700.
C.$12,200.
D.$12,700.
When there is a net loss, the entry to close the Income Summary account is
A.debit Owner’s Capital and credit Income Summary.
B.debit Income Summary and credit Owner’s Capital.
C.debit Net Loss and credit Income Summary.
D.debit Income Summary and credit Net Loss.
Speed Zone Inc., dealers in automobiles, pays its employees a commission of 5 percent
on each sale. What is the proper classification of the cost of sales commissions?
A.Scattered cost
B.Variable cost
C.Mixed cost
D.Fixed cost
A corporation issues bond certificates to
A.owners.
B.principals.
C.creditors.
D.debtors.
After each of the following transactions is a ratio. Mark an X in the appropriate space to
indicate the effect of the transaction on the ratio.
Transaction Ratio Effect
Increase Decrease None
a. Payment of cash dividend. Quick ratio
b. Accrual of an account payable. Current ratio (>1)
c. Collected an account receivable. Receivable turnover
d. Collected an account receivable. Return on assets
e. Purchased merchandise on account. Current ratio (>1)
f. Recorded utilities expense. Profit margin
g. Converted bonds into stock. Debt to equity ratio
h. Purchased merchandise on account. Inventory turnover
i. Paid previously declared dividend. Dividend yield
j. Purchased treasury stock. Return on equity
The Finished Goods Inventory and the Cost of Goods Sold for a manufacturing
company for the year 2014 are as follows: May 1 Finished Goods Inventory, $470,500;
May 31 Finished Goods Inventory, $125,000; Cost of Goods Sold for the year,
$1,110,000. The cost of goods manufactured for the month was
A.$1,455,500.
B.$595,500.
C.$985,000.
D.$764,500.
Comparing the goals of activity-based management (ABM) and lean operations we can
say that __________ aim(s) to simplify activities.
A.JIT
B.ABM
C.both ABM and JIT
D.neither ABM nor JIT
Cardsheet Company
The following partially completed T accounts summarize the transactions of Cardsheet
Company for last year:
The cost of goods manufactured is
A.$62,300
B.$64,000
C.$18,000
D.$1,700
The total fixed overhead variance is comprised of the
A.variable overhead efficiency and fixed variances.
B.fixed overhead budget and volume variances.
C.labor efficiency and rate variances.
D.fixed overhead spending and efficiency variances.
If net cash flows from operating activities were $296,000, net income were $200,000,
and sales were $2,000,000, cash flows to sales would equal (Round amounts to one
decimal place)
A.10.0 percent.
B.$96,000.
C.14.8 percent.
D.0.7 times.
Holiday Corporation provided these figures for the year ended December 31, 20×5:
Cost of goods sold, $516,117; change in inventory, $67,483 decrease; average accounts
payable, $58,209.
What is the company’s payables turnover? Round your answer to one decimal place.
A.8.3 times
B.7.7 times
C.10.1 times
D.7.2 times
Elliot and Jessica are about to liquidate their partnership. They each have $40,000
capital balances, and they share income and losses in a 3:1 ratio, respectively. In
addition, the partnership has $50,000 in cash, $90,000 in noncash assets, and $60,000 in
accounts payable. Assuming that the noncash assets are sold for $34,000 and that both
partners are personally solvent, prepare all the liquidation entries in the journal
provided.
Mention a few reasons for an unfavorable direct labor cost variance.
Taylor Company manufactures guitars and uses a job order costing system with a
predetermined overhead rate of 110 percent per direct labor dollar.
On September 11, 2014, Those Guys ordered 200 beginner guitars which were
completed on October 13, 2014. The Job Order number is 1031. Complete the job order
cost card based on the following information:
Describe three benefits budgeting provides to an organization’s success.
On June 3, Lakeland Company sold merchandise worth $1,600 on credit, terms 2/10,
n/30. The merchandise sold had cost $1,100. The customer paid the amount on June 10.
What is the required journal entry to record the payment received under the periodic
inventory system?
Assuming a perpetual inventory system is used, use the following information to
calculate cost of goods sold on an average-cost basis.
