1) Depreciation expense on factory equipment is part of factory overhead cost.
2) The Limited Liability Company may elect to be manager managed rather than
member managed which means that only authorized members may legally bind the
corporation.
3) Accrued expenses are ordinarily listed on the balance sheet as current assets.
4) The master budget of a small manufacturer would normally include all necessary
component budgets except the budgeted balance sheet.
5) Conversion cost is the combination of direct labor cost and factory overhead cost.
6) Unearned revenue is a liability.
7) Equivalent units of production are always the same as the total number of physical
units finished during the period.
8) During periods of increasing costs, the use of the FIFO method of costing inventory
will yield an inventory amount for the balance sheet that is higher than LIFO would
produce.
9) Consulting the persons affected by a budget when it is prepared can provide an
effective means of motivation and cooperation.
10) The manner of reporting cash flows from investing and financing activities will be
different under the direct method as compared to the indirect method.
11) Accumulated Depreciation is reported on the income statement.
12) Detailed supplemental schedules based on department responsibility are often
prepared for major items in the operating expenses budget.
13) Separating the responsibilities for purchasing, receiving, and paying for equipment
is an example of the control procedure: separating operations, custody of assets, and
accounting.
14) To record a bond investment between interest payment periods, Investment in
Bonds would be debited and Cash and Interest Revenue would be credited.
15) A sale of $750 on account, subject to a sales tax of 6%, would be recorded as an
account receivable of $750.