Just-in-time manufacturing systems are also known as:
A. Supply push systems.
B. Supply pull systems.
C. Demand push systems.
D. Demand pull systems.
As of January 31, Princess Company owes $500 to Butler Co. for equipment rented
during January. If no adjustment is made for this item at January 31, how will Princess’s
financial statements be affected?
A. Cash will be overstated at January 31.
B. Net income for January will be overstated.
C. Owners’ equity will be understated.
D. The financial statements will be accurate since the $500 does not have to be paid yet.
Just-in-time manufacturing
Candycane Co. is trying to determine how long it takes for one of its products to pass
through the production process. The following information was assembled regarding
how many days the product spends in various production activities:
(a) Which of the above activities are value-added activities?
(b) What is Candycane’s total cycle time?
(c) Determine Candycane’s manufacturing efficiency ratio.
To appear in a balance sheet of a business entity, an asset need not:
A. Be an economic resource.
B. Have a ready market value.
C. Be expected to benefit future operations.
D. Be owned by the business.
Which of the following is a major component of a master budget?
A. A production throughput schedule.
B. A machinery maintenance schedule.
C. A cash budget.
D. An employee training budget.
Controlling the materials price variance is usually the responsibility of:
A. The purchasing agent.
B. The marketing director.
C. The production supervisor.
D. The cost accountant.
If a bond is issued at par and between interest dates:
A. The cash received by the corporation will be less than the face value of the bond.
B. The cash received by the corporation will be greater than the face value of the bond.
C. The cash received by the corporation will be the same as the face value of the bond.
D. Interest receivable will be debited.
If $9,600 cash and a $31,000 note payable are given in exchange for some office
machines to be used in a business:
A. Total assets are increased.
B. Total liabilities are decreased.
C. Total assets are decreased.
D. The owners’ equity is increased.
The break-even point in a cost-volume-profit graph is always found:
A. At 50% of full capacity.
B. At the sales volume resulting in the lowest average unit cost.
C. At the volume at which total revenue equals total variable costs.
D. At the volume at which total revenue equals total fixed costs plus total variable costs.
There will be a favorable materials price variance if:
A. The standard price per unit is less than the actual price per unit.
B. The standard price per unit is greater than the actual price per unit.
C. The actual quantity purchased is greater than expected.
D. The actual quantity purchased is less than expected.
If the trial balance has a higher debit balance than credit balance, it signifies:
A. Assets are more than liabilities.
B. A profit.
C. A loss.
D. An error has been made.
A 2-for-1 stock split will:
A. Increase the total par value of the stock and increase the number of shares
outstanding.
B. Decrease the total par value of the stock and increase the number of shares
outstanding.
C. Not change the total par value of the stock and increase the number of shares
outstanding.
D. Increase total stockholders’ equity.
During July, the equivalent units of direct materials added to the product worked on by
Department A amounted to a total of 90,000 applied as follows: beginning inventory,
20,000 units; units started and completed in July, 60,000 units; and ending inventory,
10,000 units. Assuming that the cost of direct materials requisitioned by the department
in July was $135,000; the amount of the materials cost to be assigned to the ending
inventory would be: (Do not round intermediate calculations)
A. $16,875.
B. $54,000.
C. $15,000.
D. $18,000.
Capital budgeting computations
A project costing $80,000 has an estimated life of 3 years and no salvage value. The
estimated net income and net after tax cash flows from the project are as follows:
The company’s minimum desired rate of return for discounted cash flow analysis is
10%. The present value of $1 at compound interest of 10% at 1, 2, and 3 years is 0.909,
0.826, and 0.751 respectively. The present value of a $1 annuity for three years at 10%
is 2.487. The company uses straight-line depreciation.
Compute
(a) Net present value of the project _________________________.
(b) The rate of return on average investment __________________.(rounded)
Calculations
Investments in available for sale marketable securities:
A. Only include investments in the capital stock of publicly traded corporations.
B. May be reported in the balance sheet at market values lower than cost, but never at
values in excess of original cost.
C. Are adjusted to current market value at the end of each accounting period.
D. Are carried in the accounting records at current market values, and therefore do not
generate gains or losses when sold at market values.
On November 1, Year 1, Noble Co. borrowed $80,000 from South Bank and signed a
12%, six-month note payable, all due at maturity. The interest on this loan is stated
separately.
Refer to the information above. How much must Noble pay South Bank on May 1, Year
2, when the note matures?
A. $80,000.
B. $89,600.
C. $84,800.
D. $82,400.
Each of the following transactions would be reflected in both the income statement and
the statement of cash flows for the current period, except:
A. The adjustment of marketable securities to their current market value.
B. Receipt of dividends earned on investments.
C. Payment of interest on bonds.
D. Sale of merchandise for cash.
Green Leaf Company had the following information available on December 31:
Management applies the LCM rule on the basis of inventory category and includes
wheelbarrows and hoses in the large implement category and shovels and gloves in the
small implement category. What is the write-down required?
A. $864.
B. $556.
C. $576.
D. $710.
Standard cost system labor variance
The following computations of March labor variances for Sam’s Supply Company are
incomplete. The missing items are labeled (a) through (d). If necessary, round your
answers.
Labor rate variance = 4,800 hours [(a) – $8.50] = $350 favorable
Labor efficiency variance = (b) [5,000 hours – (c)] = $(d)
On the appropriately labeled line, identify each missing item by name (a through c) and
show the missing value (a through d). Show supporting computations in the space
provided.
(a) _________________________ $_______________
(b) _________________________ $_______________
(c) _______________________________ hours
(d) $______________ F or U (Circle the correct term.)
(e) During March, the supervisor left for vacation without arranging for a replacement.
Which variances would have been most affected by this situation?
_________________________
Computations
Capital investments decisions are not affected by:
A. Income taxes.
B. Non-financial considerations.
C. Depreciation methods.
D. Inventory levels.
The basic types of cost accounting systems are:
A. Job order cost systems, activity based cost systems, and process cost systems.
B. Direct cost systems and indirect cost systems.
C. Completed job cost systems and work in process cost systems.
D. Fixed cost systems and variable cost systems.
On November 1, Year 1, Noble Co. borrowed $80,000 from South Bank and signed a
12%, six-month note payable, all due at maturity. The interest on this loan is stated
separately.
Refer to the information above. How much interest expense will Noble recognize on
this note in Year 2?
A. $9,600.
B. $4,800.
C. $2,400.
D. $3,200.
Many companies view performance margin as a more useful tool than responsibility
margin for evaluating segment managers. This is because:
A. Managers have no control over traceable fixed costs.
B. Performance margin is not affected by the size of the department.
C. Performance margin indicates the change in operating income that would result from
closing the department.
D. Performance margin includes only those revenue and costs under the manager’s
direct control.
Beech Soda, Inc. uses a perpetual inventory system. The company’s beginning
inventory of a particular product and its purchases during the month of January were as
follows:
On January 14, Beech Soda, Inc. sold 25 units of this product. The other 28 units
remained in inventory at January 31.
Refer to the information above. Assuming that Beech Soda uses the FIFO cost flow
assumption, the 28 units of this product in inventory at January 31 have a total cost of:
A. $400.
B. $395.
C. $405.
D. $410.
Hoffman, Inc. adjusts its books each month but closes its books at the end of the year.
The trial balance at March 31 before adjustments is as follows:
Refer to the information above. On March 1, Hoffman paid in advance for four months’
insurance. The necessary adjusting entry at March 31 includes which of the following?
A. A credit to Prepaid Insurance for $2,340.
B. A credit to Prepaid Insurance for $780.
C. A debit to Prepaid Insurance for $2,340.
D. A debit to Prepaid Insurance for $780.
Which of the following is not a step in the accounting cycle?
A. Prepare a trial balance.
B. Prepare a purchase order.
C. Prepare financial statements.
D. Prepare an adjusted trial balance.
Cooper Corporation produces decorator wall coverings. Budgeted production is
240,000 square feet per month, and the standard direct labor requirement to make this
amount is 6,000 hours. All overhead is allocated based on direct labor hours. The
following information is available:
Refer to the information above. The overhead volume variance for the month in
question was:
A. $250 unfavorable.
B. $1,125 favorable.
C. $3,375 favorable.
D. $1,125 unfavorable.
Preparing a journal entry in proper form involves all the following except:
A. Listing all accounts debited before any credits.
B. Computing the balances in accounts involved in the transaction.
C. Indicating the date of the transaction.
D. Providing a brief written explanation of the transaction.
Which of the following transactions would cause an increase in both assets and owners’
equity?
A. Investment of cash in the business by the owner.
B. Sale of land for a price less than its cost.
C. Borrowing money from a bank.
D. Sale of land for cash at a price equal to its cost.
When a promissory note is issued, you would expect to find:
A. Notes payable and interest expense in the financial statements of the maker of the
note throughout the life of the note.
B. Notes receivable and interest revenue in the financial statements of the maker of the
note throughout the life of the note.
C. Notes receivable in the financial statements of the maker of the note throughout the
life of the note, but interest revenue only when interest payments are received.
D. Notes payable in the financial statements of the payee of the note throughout the life
of the note, but interest expense only when interest payments are made.
The debt ratio is used primarily as a measure of:
A. Short-term liquidity.
B. Creditors’ long-term risk.
C. Profitability.
D. Return on Investment.
Cash flows from operating activities-indirect method
In the computation of net cash flows from operating activities for 2015 by the indirect
method, determine whether each of the following items would be added to net income,
deducted from net income, or omitted from the computation. Indicate your answer by
using the following symbols: + (added to net income), – (deducted from net income), or
0 (omitted from computation).
____ (a) A decrease in accounts payable to suppliers of merchandise during 2015.
____ (b) A loss recognized on the sale of office equipment during 2015.
____ (c) Depreciation expense for 2015.
____ (d) Dividends, declared at the end of last year, paid to shareholders during the
current year.
____ (e) An increase in inventory levels during 2015.
____ (f) A decrease in accounts receivable from customers during 2015.
Refer to the information above. At the beginning of August, 2014, owners’ equity in
Astoria was $160,000. Given the transactions of August, what will be the owners’
equity be at the end of the month?
A. $167,500.
B. $150,500.
C. $193,500.
D. $158,000.