Partnership liquidation is not the same as partnership dissolution.
When the effective interest method of amortization is used for a bond premium, the
amount of premium to be amortized for a period is calculated by subtracting the amount
of bond interest expense for the period from the amount of cash to be paid for interest
for the same period.
Financial statements referred by external stakeholders compare actual unit costs with
targeted unit costs.
Activity costs per unit equal total volume divided by total activity costs.
The evaluation stage of management process includes comparing actual with the
established standards.
Under the perpetual inventory system, the Cost of Goods Sold and Merchandise
Inventory accounts are updated with each sale.
The effective interest method produces a constant dollar amount of bond interest
expense to be reported each interest period.
When bonds are called for retirement, any excess of the bonds’ call price over the
bonds’ carrying value is reported as a gain on the income statement.
A natural resource is expensed in the year it is extracted rather than when it is sold.
Under the allowance method, uncollectible accounts must be estimated if the matching
rule is to be followed.
Which of the following items most likely would be manufactured using a process
costing system?
A.Advertising services
B.Fruit juices
C.Construction of a shopping mall
D.Wedding gowns
The following steps in the accounting cycle are presented out of order below. Arrange
the steps in proper order by placing a number from 1 through 6 in the blanks provided.
Also identify each step as either a recurring activity (RA) ‘”one that would be repeated
during the fiscal period’”or an end-of-period activity (EOP)’”one performed at the end
of the accounting period.
______ a. Prepare an adjusted trial balance.
______ b. Record entries in the journal.
______ c. Adjust the accounts.
______ d. Prepare a trial balance.
______ e. Analyze business transactions from source documents.
______ f. Post entries to the ledger.
During October, Department A of Answer Inc. started 320,000 units of product in a
particular manufacturing process. The beginning work in process inventory was 50,000
units, and the ending inventory was 30,000 units. Direct materials are introduced at the
start of processing, and beginning and ending inventories are considered to be 50
percent complete with respect to conversion costs. Department A uses the FIFO costing
method.
The number of units started and completed by department A of Answer during October
was
A.350,000.
B.360,000.
C.290,000.
D.320,000.
During April, Department A started 400,000 units of product in a particular production
process. The beginning work in process inventory was 40,000 units, and the ending
inventory was 50,000 units. Direct materials are introduced at the start of processing,
and beginning and ending inventories are considered to be 40 percent complete with
respect to conversion costs. Department A uses the FIFO costing method.
Units transferred out from Department A during April were
A.390,000.
B.400,000.
C.410,000.
D.490,000.
Use the following information to perform the calculations requested below, assuming
that the FIFO costing approach to a process costing system is being used.
Beginning work in process inventory: 6,000 units, 100 percent complete as to direct
materials, 75 percent complete as to conversion costs
Ending work in process inventory: 18,000 units, 100 percent complete as to direct
materials, 65 percent complete as to conversion costs
Units started during the month: 44,000
a. Calculate units started and completed during the month.
b. Calculate units to be accounted for during the month.
c. Calculate equivalent units for conversion costs.
d. Calculate equivalent units for direct materials.
How should dividends in arrears be shown on a corporation’s balance sheet?
A.As an increase in liabilities.
B.In a note or in the body of the financial statements.
C.As a decrease in assets.
D.As an increase in stockholders’ equity.
Nader Inc. has the following information available:
At the beginning of the period, there were 500 units in process that were 40 percent
complete as to conversion costs and 100 percent complete as to direct materials costs.
During the current period, 4,300 units were started and completed. Ending inventory
contained 320 units that were 80 percent complete as to conversion costs and 100
percent complete as to direct materials costs. (Assume that the company uses the FIFO
costing method.)
The equivalent units of production for direct materials and conversion costs,
respectively, of Nader Inc. were
A.5,120 for direct materials and 5,056 for conversion costs.
B.4,480 for direct materials and 4,544 for conversion costs.
C.4,120 for direct materials and 4,056 for conversion costs.
D.4,620 for direct materials and 4,856 for conversion costs.
Second National Bank computes interest semiannually. If the annualized interest rate
(APR) is currently 6 percent, the amount deposited today should be multiplied by which
future value factor to calculate the amount that will accumulate by the end of 10 years?
A.20 periods at 12 percent
B.20 periods at 3 percent
C.10 periods at 6 percent
D.10 periods at 3 percent
A jeweler probably would use which of the following inventory methods?
A.Specific identification
B.FIFO
C.Average-cost
D.LIFO
Which of the following costs is a variable manufacturing cost?
A.Machinery depreciation (calculated with the units-of-production method)
B.Rent expenses for factory building
C.Factory equipment depreciation (calculated with the straight line method)
D.Telephone charges
One of the best places to look for early signals of change in a company’s profitability is
the
A.Form 10-K.
B.Form 10-Q.
C.Form 8-K.
D.annual report sent to stockholders.
Gross margin is the difference between net sales and
A.net income.
B.cost of goods sold plus operating expenses.
C.operating expenses.
D.cost of goods sold.
Use the following figures (stated in millions of dollars) to compute the inventory
turnover and the days’ inventory on hand within one decimal point:
a. Inventory turnover = ___________________
b. Days’ inventory on hand = ___________________
As related to a job order costing system, answer the following questions:
a. What is a job order costing system? Identify three kinds of companies that would use
such as system.
b. What is a job order?
c. What is the purpose of a job order cost card? Identify the kinds of information
recorded in it.
A company that uses the allowance method writes off a specific account as
uncollectible, but then the customer pays. The entries made upon receiving payment
will
A.decrease Cash.
B.decrease Allowance for Uncollectible Accounts.
C.increase Allowance for Uncollectible Accounts.
D.decrease Uncollectible Accounts Expense.
The financing period
A.is the time it takes to purchase inventory, sell it, and collect the sales.
B.defines how much additional financing the company must have to support its
operations.
C.is calculated as days’ sales uncollected minus days’ inventory on hand minus days’
payable.
D.measures a company’s short-term debt-paying ability.
___________ is related to both the nature of an item and its size.
A.Neutrality
B.Materiality
C.Verifiability
D.Timeliness
Which of the following determines a company’s competitive advantage by comparing
its performance with that of its closest competitors?
A.Asset turnover
B.Organization chart
C.Cost center
D.Benchmarking
Which of the following is not considered an intangible asset?
A.License
B.Gas field
C.Customer list
D.Trademark
A trial balance proves that the accounts are in balance. Does a balanced trial balance
also prove that all the transactions are correctly analyzed and recorded? Why or why
not?
Use this information to answer the following question.
Pinnacle Corporation has 90,000 shares of $10 par value common stock outstanding.
The following transactions occurred during the year:
Mar. 17 Declared a 10 percent stock dividend to stockholders of record on March 20.
Market value of the stock was $22 on March 17.
Mar. 30 Distributed the stock dividend.
The entry to record the transaction of March 30 is:
Why is the book value of equipment irrelevant when considering the replacement of
equipment?
Parker Company has $1,000,000 worth of 7 percent convertible bonds outstanding. On
September 1, 20×5, there is $40,000 of unamortized discount associated with these
bonds. The bonds are convertible at the rate of 30 shares of $10 par value common
stock for each $1,000 bond. On September 1, 20×5, an interest payment date,
bondholders presented $700,000 of the bonds for conversion. Prepare an entry in
journal form without explanation to record the conversion of the bonds.
Partners B and I receive a salary allowance of $6,000 and $14,000, respectively, and
share the remainder equally. If the company earned $8,000 during the period, the entry
to close the income or loss into their capital accounts is: