Unrealized Loss (Gain) on Short-Term Investments is a contra-asset account that will
appear on the balance sheet.
Assets are converted to revenues as they benefit the company.
The portion of cost of goods available for sale that is not assigned to ending inventory
is assigned to work in process.
The market interest rate is also called the face interest rate.
Drilling equipment with a ten-year useful life is used solely in conjunction with an oil
well that has an eight-year life. The equipment should be depreciated over eight years
using the production method.
If the market interest rate at the date of issuance of a bond exceeds the face interest rate,
the bond will probably be sold at a discount.
In a journal entry, debits are always indented.
If a company is operating at a capacity below its normal capacity in units, the fixed
overhead volume variance will be favorable.
A capital lease is a lease of property, plant, or equipment that is in effect an installment
purchase.
The operating cycle is the average days’ inventory on hand minus the average number
of days to collect credit sales.
The minimum rate of return on a capital investment is set by the management of a
company.
A formal request for a purchase from a requesting department of a business is known as
a purchase order.
An adjusted trial balance provides all the data needed to record the closing entries.
A deferral is the recognition of an expense that has arisen but has not yet been recorded.
The lower the interest rate, the lower the future value factor.
Natural resources, such as coal mines and oil wells, are classified as intangible assets.
The lower the debt to equity ratio, the greater the financial risk the company is taking.
If a U.S. company purchases goods for a fixed number of British pounds, and the
exchange rate has fallen from $1.55 per pound to $1.50 per pound by the time payment
is made, the U.S. company would record an exchange gain.
Which of the following is a business event that is not considered a recordable
transaction?
A.A company receives a product previously ordered.
B.A company pays an employee for work performed.
C.A customer inquires about the availability of a service.
D.A customer purchases a service.
Which of the following budgets must managers prepare before they can prepare a direct
materials purchases budget?
A.Labor budget
B.Overhead budget
C.Production budget
D.Cost of goods manufactured budget
Unearned Revenue was $600 at the end of February and $750 at the end of March.
Service Revenue was $3,600 for the month of March. How much cash was received
from revenue during March?
A.$4,950
B.$3,450
C.$2,250
D.$3,750
Engineering design is an activity vital to the success of any motor vehicle manufacturer.
Identify the level at which engineering design would be classified in the cost hierarchy
used with ABC for a maker of a line of automobiles sold throughout the world.
A.Batch-level activity
B.Product-level activity
C.Facility-level activity
D.Unit-level activity
A company wishes to make annual contributions into a fund intended to retire $700,000
in debt five years from now. The amount to contribute each year equals $700,000
A.divided by the appropriate future value of an ordinary annuity factor.
B.times the appropriate present value of an ordinary annuity factor.
C.times the appropriate future value of an ordinary annuity factor.
D.divided by the appropriate present value of an ordinary annuity factor.
Mesquite, Inc. engaged in the following transactions during October:
What is the amount of cash still to be received?
A.$2,300
B.$1,500
C.$1,900
D.$400
Stock categorized as trading securities is purchased for $52,000. At year end, when the
market value of the stock is $61,000, the balance of the Short-Term Investments
account appearing on the balance sheet will be
A)$9,000
B)$52,000
C)$61,000
D)none of these
Awards are often used to encourage
A.intermediate performance.
B.short-term performance.
C.long-term performance.
D.both short-term and long-term performance.
When bonds payable are converted into stock, the carrying value of the bonds should be
A.credited to Retained Earnings.
B.credited to contributed capital accounts.
C.debited to Retained Earnings.
D.debited to Loss on Conversion of Bonds.
You have calculated, using the high-low method, a variable cost per machine hour of
$0.80 for your production power costs. Power costs at 6,000 machine hours are $5,400;
at 9,000 machine hours, they are $7,800. What are the total fixed costs that you would
use to estimate production power costs for your company at any level within your
relevant range?
A.$600
B.$6,400
C.$2,400
D.$4,800
Which of the following is not a condition required by the SEC for the recognition of
revenue?
A.Delivery of goods or rendering of services.
B.Transfer of cash from the buyer to the seller.
C.Fixed or determinable price.
D.Existence of an arrangement.
K & K Enterprises pays wages of $16,000 every other Friday ($1,600 per weekday).
a. In the journal provided, prepare the following entries for the fiscal year ended May
31, 20×5 (omit explanations):
b. What would the June 8 entry be if no reversing entry was made? Use the journal
provided.
Camping for Fun Inc. produces a variety of camping products on a year-round basis.
The best-selling item is a compact portable camping stove made from sheets of rust-free
aluminum. Production of this stove requires two main operations: cutting/assembly and
coating. The basic direct materials used are aluminum sheeting, a polyurethane base
coating, and a gas jet assembly. Quantity, time, and cost standards for the camping stove
are as follows:
Direct materials consist of sheet aluminum (two 2-by-3-meter sheets per stove at $1.15
per sheet), 1.2 liters of coating materials per stove at $0.80 per liter, and a gas jet
assembly purchased at $11.30. Direct labor in the Cutting/Assembly Department is
expected to produce 50 stoves per hour at $9.50 per hour. Direct labor in the Coating
Department can handle 32 stoves per hour at $8 per hour. Normal capacity is 126,000
stoves per year.
The firm actually produced 120,000 units during the year, and the production records
contain the following information:
For direct materials, the firm used 241,200 sheets of aluminum at $1.10 per sheet,
148,500 liters of coating at $0.77 per liter, and 120,100 gas jet assemblies costing a total
of $1,369,140. Direct labor in the Cutting/Assembly Department amounted to 2,800
hours at $9.25 per hour; in the Coating Department, it amounted to 3,560 hours at $7.50
per hour.
Using the information provided, determine the following (remember to indicate whether
the variance is favorable or unfavorable):
a. Standard hours allowed for the Cutting/Assembly and Coating Departments for the
year (by department)
b. Direct materials price variances (by material)
c. Direct materials quantity variances (by material)
d. Direct labor rate variances (by department)
e. Direct labor efficiency variances (by department)
Win Shield International manufactures trophies. Each trophy goes through two
departments in the production process and requires two direct labor hours in
Department A and one hour in Department B. Labor cost is $8 per hour in Department
A and $10 per hour in Department B.
If the labor capacity for a normal eight-hour shift for a month is 50,000 direct labor
hours each for both Departments A and B, what would be the budgeted direct labor cost
of Win Shield for the month where production is expected to be 30,000 units? The
company pays overtime at time and a half.
A.$900,000
B.$780,000
C.$820,000
D.$420,000
Which of the following does not represent a liability?
A.An obligation for estimated income taxes payable
B.Interest that has accrued on a bank loan
C.An obligation to pay for goods purchased, payable one year after purchase
D.An obligation for future purchases of goods
A graph depicting yearly depreciation expense under the production method will
contain a line that
A.goes horizontally across.
B.goes down as one goes from left to right.
C.cannot be predicted.
D.goes up as one goes from left to right.
Hang12 manufactures surfboards. During the upcoming quarter, it expects to sell 4,100
surfboards, after which it plans to have 500 surfboards remaining in inventory. If it
currently has 200 surfboards on hand, how many surfboards will Hang12 have to
produce for the upcoming quarter?
A.4,400
B.3,800
C.4,100
D.3,400
A general rule in choosing among alternative investments is the greater the risk taken,
the
A.greater the return required.
B.lower the potential expected.
C.greater the price of the investment.
D.lower the profits expected.
Which of the following accounts is not closed?
A.Income Summary
B.Withdrawals
C.Owner’s Capital
D.Interest Income
Hike Sports Corporation’s income statement data for last year is as follows:
What is Hike’s breakeven point in dollars?
A.$100,000
B.$18,000
C.$142,000
D.$48,000
Suppose the standard for a given cost during a period was $80,000. The actual cost for
the period was $72,000. Under what circumstances would you consider the variance
from budget to be a positive performance indication?
A.The cost is fixed, and actual production was 90 percent of the standard level of
budgeted production.
B.The cost is variable, and the standard cost noted above is the cost at a production
level lower than the actual production level.
C.The cost is variable, and actual production was 90 percent of the standard level of
production.
D.The cost is variable, and actual production was 75 percent of the standard level of
production.
Describe how a dissolution of a partnership is different from a liquidation of a
partnership.
Stock categorized as trading securities is purchased for $52,000. At year end, when the
market value of the stock is $61,000, the adjusting entry that would be recorded is:
Record the following transactions, using proper form, in the journal provided.
The following information is available from the controller’s records for Penelope Ltd.:
All sales are on credit. Records show that 80 percent of the customers pay during the
month of the sale, 15 percent pay the month after the sale, and the remaining 5 percent
pay the second month after the sale. Purchases are all paid the following month at a 1
percent discount. Cash disbursements for operating expenses in July were $8,000.
Prepare a cash budget for July.
Financial statements for Pelican Corporation are presented below.
