Depending on the mixture of sources of capital, a company’s cost of capital will vary.
When no-par common stock has a stated value, the stated value of the shares issued
normally is considered the legal capital of the corporation.
Under the FIFO method, the equivalent units will always equal the actual units in
beginning work in process inventory, plus the actual units started and completed during
the current period, plus the actual units in ending work in process inventory during the
current period.
Value ‘“based systems are information systems that provide customer- related, activity
‘“based information.
The net cost of purchases is found by adding freight-in to net purchases.
Stock options often are granted by a corporation to management personnel as a means
of additional compensation and motivation of these employees.
The proposals that will either meet company strategic goals or produce the minimum
rate of return will not be reviewed in the process.
Freight-in is treated as an addition in the cost of goods sold section of the income
statement.
The terms ‘bookkeeping’ and ‘accounting’ are not synonymous.
General-purpose external financial statements that are divided into subcategories are
called classified financial statements.
Under the allowance method, Uncollectible Accounts Expense is recorded
A.for an estimated amount.
B.several times during the accounting period.
C.when an individual account is written off.
D.for a known amount.
Which of the following errors will cause the trial balance to be out of balance?
A.An entire transaction was entered in the general journal as $27 instead of $72.
B.An entire transaction was omitted from the general journal.
C.The balance of an account was incorrectly computed.
D.A debit entry was entered in the wrong debit account.
Use this information to answer the following question.
A periodic inventory system is used.
Using FIFO, the cost assigned to ending inventory is
A.$8,112.
B.$2,664.
C.$3,480.
D.$8,928.
Use this information to answer the following question.
If the income statement were prepared in a multistep form, operating expenses would
be
A.$46,000.
B.$16,000.
C.$22,250.
D.$40,000.
If the report is urgently needed, it is sometimes necessary to sacrifice accuracy in the
interest of
A.timeliness
B.personal feelings.
C.profits.
D.expectations.
The statement of cash flows would disclose the withdrawal of cash by the owner
A.in the financing activities section.
B.in the investing activities section.
C.in the operating activities section.
D.nowhere on the statement.
As production decreases, fixed costs per unit will
A.increase.
B.decrease.
C.remain the same.
D.either increase or decrease, depending on the variable cost.
Lincoln Company engaged in this transaction:
Collected accounts receivable.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Does not represent a cash flow.
B.Operating activities section.
C.Financing activities section.
D.Investing activities section.
Fantastic Futons manufactures futons. The estimated number of futon sales for the first
three months of 2014 are as follows:
Finished goods inventory at the end of 2013 was 10,000 units. On average, 25 percent
of the futons to be sold in the next month are produced and kept as ending balance in
finished goods inventory. The planned selling price is $150 per unit.
What would be the sales budget for March of Fantastic Futons?
A.$7,200,000
B.$8,000,000
C.$6,750,000
D.$9,000,000
A nonvalue-adding activity is defined as a(n)
A.administrative or support activity that adds overhead cost to the product and increases
its market value.
B.activity that adds cost to a product but does not increase its market value.
C.activity that adds no cost to the product but increases its market value.
D.wasteful but unavoidable production activity.
The general journal does not have a column titled
A.Description.
B.Account Balance.
C.Date.
D.Post. Ref.
A bond premium has the effect of
A.lowering the carrying value of the bond.
B.raising the effective interest rate above the face interest rate.
C.increasing the amount of cash paid for interest each six months.
D.lowering the effective interest rate below the face interest rate.
When special-purpose journals are used, which of the following is an entry that would
be recorded in the general journal rather than in a special journal?
A.Sale of merchandise on account.
B.Cash purchase of merchandise for resale.
C.A return of merchandise bought on account.
D.Cash receipt from a customer for payment on their account.
A ‘big bath’
A.often occurs in years when there is a change in management.
B.occurs in the current year so management can show improved results in future years.
C.is often an indication of poor management decisions in the past.
D.All of these choices.
All of the following are examples of internal control activities except
A.adequate supervision.
B.rotation of key personnel.
C.customer satisfaction surveys.
D.insistence that employees take earned vacations.
Which of the following is a characteristic of partnerships?
A.Unlimited life
B.Limited liability
C.Involuntary association
D.Mutual agency
Using the following information, calculate for 20×5 (a) net sales, (b) cost of goods sold,
(c) gross margin, and (d) net income.