Dividends in arrears are disclosed as liabilities of a corporation.
The heading of an adjusted trial balance might contain the line ‘For the Month Ended
May 31, 20xx.’
A tractor held by a farm equipment company for sale to farmers is classified as a
long-term asset.
Determining the percentage change in an item from one year to the next is a type of
horizontal analysis.
Partner X purchases Partner Y’s $25,000 interest from Partner Y for $30,000. The entry
to record the transaction is for $30,000.
Cash inflows and outflows are not netted in the investing activities section of the
statement of cash flows but are separately disclosed to give the reader full information.
Net cash flows from operating activities would be needed to calculate cash flow yield,
cash flows to assets, and cash flows to sales.
Both profit margin and asset turnover affect a company’s return on assets.
Held-to-maturity securities are valued on the balance sheet at cost adjusted for the
effects of interest.
Regression analysis takes into consideration only the highest and the lowest level of
activities to predict cost behavior.
A manager should focus on the purpose of a report while preparing it.
One of the steps in preparing the process cost report requires dividing current costs
charged to the Work in Process Inventory account of each department or production
process by equivalent units to calculate the cost per equivalent unit.
There is sufficient information on a post-closing trial balance to prepare a balance sheet.
The minimum rate of return is also known as the hurdle rate.
A sell or process-further decision is a decision about whether to sell a joint product at
the split-off point or sell it after further processing.
When a business sells an item and collects a state sales tax on it, a current liability to
the state arises.
Availability of funds is one of the criteria for deciding on the capital investment
proposals.
Use this information to answer the following question.
If the income statement were prepared in a multistep form, excess of other expenses
over other revenues would be
A.$12,750.
B.$6,500.
C.$19,000.
D.$6,250.
Clark Manufacturing had the following transactions during March. There were no
beginning inventory balances.
a. Purchased $86,000 of direct materials, on account.
b. Incurred direct labor costs, $75,000.
c. Applied $80,000 of overhead to production.
d. Completed units costing $240,000.
e. Sold units costing $230,000.
Using backflush costing, show the flow of costs using the T accounts below. Label each
entry with the appropriate letter.
San Joaquin Manufacturing Company specializes in the production of precision tools.
Management is in the process of selecting a new drill press. The press under
consideration will cost $180,000 plus necessary installation charges of $25,000. Past
experience indicates that the press will last for ten years and should have a residual
value at the end of that period of about $15,000. Expected annual cash revenues from
the press should average $66,000, and related cash operating costs should be around
$30,000. Management has decided on a minimum desired before-tax rate of return of 12
percent.
Present value multipliers:
a. Using before-tax information and the net present value method to evaluate this
capital investment, determine whether the company should purchase the drill press.
Support your answer.
b. If management had decided on a minimum desired before-tax rate of return of 14
percent, should the drill press be purchased? Show all computations to support your
answer.
Which of the following measures the difference between the quantity of materials
actually used to make the product and what the design standard called for?
A.Direct labor efficiency variance.
B.Direct materials price variance.
C.Direct labor rate variance.
D.Direct materials usage variance.
During 20×5, Oates Company had sales of $250,000, net income of $25,000, average
total assets of $350,000, dividend payments of $17,500, net cash flows from operating
activities of $26,000, purchases of plant assets of $37,500, and sales of plant assets of
$45,000. Cash flow yield equals (Round amounts to one decimal place)
A.1.5 times.
B.1.0 times.
C.2.1 times.
D.1.3 times.
Dana Klammer is the manager of the Cutting Department in the Northwest Division of
Steel Products. Which of the following costs is Dana’s controllable cost?
A.Salaries of cutting workers
B.Cost of electricity for the Northwest Division
C.Lumber Department hauling costs
D.Vice president’s salary
The cash payments in November for payment for the new machine of Great Lake are
expected to be
A.$500.
B.$1,500.
C.$4,500.
D.$5,000.
Preparing the work sheet
A.is done rather than preparing financial statements.
B.provides a mechanism for applying the going concern concept.
C.provides a mechanism for applying the periodicity concept.
D.All of these choices.
The manager of Center C is only responsible for generating and processing online
orders of a large retailer. What type of responsibility center is Center C?
A.Discretionary cost center
B.Profit center
C.Revenue center
D.Investment center
The owner’s Capital, Withdrawals, and Income Summary accounts for Harmon Repair
Company for the accounting period are presented below in T account form after the
recording and posting of closing entries:
The total amount of expenses for the period is
A.$500.
B.$700.
C.$400.
D.$100.
Which of the following accounts might be placed first in a journal entry?
A.Interest Payable, when it has been decreased.
B.Accounts Receivable, when it has been decreased.
C.Unearned Revenue, when it has been increased.
D.Service Revenue, when it has been increased.
The owner’s Capital, Withdrawals, and Income Summary accounts for Laurel Repair
Company for the accounting period are presented below in T account form after the
recording and posting of closing entries:
The Fran Laurel, Capital balance on 1/1 was
A.$2,000.
B.$1,800.
C.$2,400.
D.$2,200.
Which of the following accounts could appear in an adjusting entry, closing entry, and
reversing entry?
A.Accumulated Depreciation’“Buildings
B.Interest Income
C.Salaries Payable
D.Depreciation Expense’“Buildings
Which of the following is an example of an accrual?
A.Debit Office Supplies Expense, credit Office Supplies
B.Debit Wages Expense, credit Wages Payable
C.Debit Rent Expense, credit Prepaid Rent
D.Debit Unearned Revenue, credit Service Revenue
Which of the following must be reported by diversified companies for each of their
operating segments?
A.Segment profit or loss, expenses, and earnings per share
B.Segment profit or loss, certain revenue and expense items, and segment assets
C.Assets, liabilities, and earnings per share
D.Segment profit or loss, expenses, and unidentifiable assets
Trading securities are valued on the balance sheet at
A)lower of cost or market.
B)cost.
C)market value.
D)cost, adjusted for the effects of interest.
A business accepts a 9 percent, $50,000 note due in 120 days. Assuming simple interest,
how much (amount rounded) will the business receive when the note falls due?
A.$50,000
B.$50,150
C.$51,480
D.$54,520
All manufacturing costs incurred and assigned to products that are being produced are
classified as
A.variable costs.
B.allocated costs.
C.product costs.
D.overhead costs.
Which of the following costs is considered overhead?
A.Indirect labor costs only
B.Direct materials costs only
C.Both indirect materials and indirect labor costs
D.Direct materials and direct labor costs
In a just-in-time environment using backflush costing, the entry to record the use of
materials for the month’s production is debit __________ and credit __________.
A.Work in Process Inventory; Materials Inventory
B.Cost of Goods Sold; Finished Goods Inventory
C.Conversion Costs; Accounts Payable
D.No entry
The board of directors of Lark Corporation declared a cash dividend of $3.50 per share
on 57,000 shares of common stock on June 14, 20×5. The dividend is to be paid on July
15, 20×5, to shareholders of record on July 1, 20×5. The proper entry to be recorded on
July 15, 20×5 is,
In the journal provided, prepare entries for the following (assume a calendar-year
accounting period). Omit explanations.
At year end, Korkin Design Company has a $900 credit balance in Allowance for
Uncollectible Accounts. If an accounts receiving aging method analysis indicates that
an estimated $5,700 of year-end receivables are uncollectible, what will be the balance
in Allowance for Uncollectible Accounts after the appropriate adjusting entry for
uncollectible accounts has been made? Indicate if the balance is a debit or credit.
How does the statement of owner’s equity relate to the income statement and the
balance sheet?
Prepare closing entries for December without explanations from the following Income
Statement columns of the work sheet of Duffy Cleaning Service, assuming that a $250
owner withdrawal was made during the period.
Stuart had a $100,000 capital balance for eight months and a $130,000 balance for four
months. Cathy had a $76,000 capital balance for five months and a $100,000 balance
for seven months. If the net income of the year is $160,000, and income is distributed
based on average capital balances, the entry to show the distribution of income to each
partner is:
