1) During periods of increasing costs, the use of the FIFO method of costing inventory
will result in a greater amount of net income than would result from the use of the LIFO
cost method.
2) The main objective of a not-for-profit business is not to make a profit.
3) The amount of detail presented in a budget performance report for a cost center
depends upon the level of management to which the report is directed.
4) Computerized systems can be used to capture accounting information such as
accounts receivable, inventory items, accounts payable, and sales.
5) If income from operations for a division is $120,000, sales are $975,000, and
invested assets are $750,000, the investment turnover is 1.3.
6) Transactions are initially entered into a record called a journal.
7) Under accrual accounting, revenues and expenses should be recorded in the same
period to which they relate.
8) The excess of current assets over current liabilities is referred to as working capital.
9) The contribution margin ratio is computed as contribution margin divided by sales.
10) Operating expenses are product costs and are expensed when the product is sold.
11) A production supervisor’s salary that does not vary with the number of units
produced is an example of a fixed cost.
12) The vice presidents of production and sales and the controller hold line positions in
most large organizations.
13) Sellers and buyers are required to record trade discounts.
14) If the perpetual inventory system is used, the account entitled Merchandise
Inventory is debited for purchases of merchandise.
15) The order of the flow of accounting data is (1) record in the ledger, (2) record in the
journal, (3) prepare the financial statements.
16) In many retail businesses, inventory is the largest current asset.
17) If the ownership of merchandise passes to the buyer when the seller delivers the
merchandise for shipment, the terms are stated as FOB destination.
18) One of the two internal control procedures over inventory is to properly report
inventory on the financial statements.
19) Managerial accounting reports must be useful to the user of the information.
20) A corporation has 10,000 shares of $100 par value stock outstanding. If the
corporation issues a 5-for-1 stock split,the number of shares outstanding after the split
willbe40,000.