The time value of money is considered when calculating the payback period of an
investment.
A properly designed internal control system is a key part of systems design, analysis,
and performance.
The account form of the balance sheet matches the accounting equation. That is, assets
are on the left side of the statement, and liabilities and equity are on the right side of the
statement.
The profit margin ratio is gross margin divided by total assets.
Total asset cost plus depreciation expense equals book value.
Chuck Taylor withdrew $6,000 in cash from FastForward. This amount should be
included as an expense on the income statement.
An estimated liability is a known obligation of an uncertain amount that can at least be
reasonably estimated.
Gross pay is also called take-home pay.
To determine the slope of the variable cost from a scatter diagram, divide the change in
volume by the change in cost.
A time ticket is a source document used by an employee to record the number of hours
worked on a particular job during the work day.
Withdrawals are expenses.
Uncertainties from the development of new competing products are contingent
liabilities.
A large stock dividend is a distribution of more than 50% of previously outstanding
shares.
The contribution margin per unit is the price at which a unit must be sold in order for
the company to break even.
The direct method for preparing and reporting the statement of cash flows reports net
income and then adjusts it for items necessary to calculate net cash provided or used by
operating activities.
An important assumption in the analysis of a multiproduct situation is that the sales mix
is known and remains constant.
The three major types of business activities are operating, financing, and investing.
In process cost accounting, materials are always classified as indirect if they are not
physically incorporated into the final product.
Payment of payroll is usually done by check or an electronic funds transfer.
Limited liability partnerships are designed to protect innocent partners from malpractice
or negligence claims resulting from the acts of another partner.
The balance sheet reports the financial position of a company at a point in time.
The advantage of the allowance method of accounting for bad debts is that it identifies
the specific customers who will not pay their bills.
The base amount for a common-size balance sheet is usually total assets.
A spreadsheet can help organize the information needed to prepare a statement of cash
flows.
A process cost summary includes the amounts of equivalent finished units of production
for the period.
Control is the process of setting goals and determining ways to achieve them.
A salary owed to employees is an example of an accrued expense.
The break-even point is the sales level at which a company neither earns a profit nor
incurs a loss.
The last four steps in the accounting cycle include preparing the adjusted trial balance,
preparing financial statements and recording closing and adjusting entries.
Quick assets include cash, inventory, and current receivables.
The purchases journal is identical under both the periodic and the perpetual inventory
systems.
The steps in the closing process are (1) close credit balances in revenue accounts to
Income Summary; (2) close credit balances in expense accounts to Income Summary;
(3) close Income Summary to Owner’s Capital; (4) close Withdrawals to Owner’s
Capital.
Joint costs are a group of several costs incurred in producing or purchasing a single
product.
Costs that the manager has the power to determine or at least strongly influence are
called:
A.Uncontrollable costs.
B.Controllable costs.
C.Joint costs.
D.Direct costs.
E.Indirect costs.
A voucher is an internal file:
A.Prepared after an invoice is received.
B.Used as a substitute for an invoice.
C.Used to accumulate information needed to control cash disbursements and to ensure
that transactions are properly recorded.
D.Takes the place of a bank check.
E.Prepared before the company orders goods.
Ginger Company’s product has a contribution margin per unit of $11.25 and a
contribution margin ratio of 22.5%. What is the selling price of the product?
A.$ 5.
B.$20.
C.$30.
D.$40.
E.$50.
Accounts payable:
A.Are amounts owed to suppliers for products and/or services purchased on credit.
B.Are long-term liabilities.
C.Are estimated liabilities.
D.Do not include specific due dates.
E.Must be paid within 30 days.
When a partner is unable to pay a capital deficiency:
A.The partner must take out a loan to cover the deficient balance
B.The deficiency is absorbed by the remaining partners.
C.The partnership ends.
D.The deficient partner has a personal liability to pay the deficiency.
E.Both B and D.
Management anticipates fixed costs of $72,500 and variable costs equal to 40% of
sales. What will pretax income equal if sales are $325,000?
A.$ 57,500.
B.$122,500.
C.$130,000.
D.$181,250.
E.$252,500.
Cash investments by owners are listed on which of the following statements?
A.Balance sheet.
B.Income statement.
C.Statement of owner’s equity.
D.Statement of cash flows.
E.Both C and D.
On January 1, 2009, a company issued and sold a $400,000, 7%, 10-year bond payable,
and received proceeds of 396,000. Interest is payable each June 30 and December 31.
The company uses the straight-line method to amortize the discount. The journal entry
to record the first interest payment is:
A.
B.
C.
D.
E.
The break-even time (BET) method is a variation of the:
A.Payback method.
B.Internal rate of return method.
C.Accounting rate of return method.
D.Net present value method.
E.Present value method.
Refer to the figure above. Calculate the cost of goods manufactured for the period in
question.
A.$553,000.
B.$536,000.
C.$549,000.
D.$527,000.
E.$525,000.
A firm produces and sells two products, Mica and Plax. The following information is
available relating to setup costs (a part of factory overhead):
Use of activity-based costing would result in allocating the following amounts of setup
cost to each unit:
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
Shown below is Adventure Travel’s adjusted trial balance as of the end of its annual
accounting period:
(a) Prepare the necessary closing entries.
(b) Prepare a post-closing trial balance.
The following information is available for some of Coca-Cola’s segments (all amounts
are in millions):
a. Determine the segment return on assets for each geographic segment.
b. Comment on the results. How do the segments compare with respect to profitability?
The following data has been collected about a company’s stockholders’ equity accounts:
The treasury shares were all purchased at the same price.
The cost per share of the treasury stock is:
A.$1.15.
B.$1.28.
C.$11.50.
D.$10.50.
E.$10.00.
Which of the following budgets must be completed before a cash budget can be
prepared?
A.Capital expenditures budget.
B.Sales budget.
C.Merchandise purchases budget.
D.General and administrative expense budget.
E.All of these.
Stojko Corporation had a net decrease in cash of $10,000 for the current year. Net cash
used in investing activities was $52,000 and net cash used in financing activities was
$38,000. What amount of cash was provided (used) in operating activities?
A.$ 100,000 provided.
B.$(100,000) used.
C.$ 80,000 provided.
D.$ (80,000) used.
E.$ (10,000) used.
When the operating activities section of the statement of cash flows is reported using
the direct method, the FASB requires:
A.The preparation of the statement of cash flows under the indirect method be
completed and reported with the statement of cash flows prepared using the direct
method.
B.A reconciliation of net income to net cash provided or used by operating activities.
C.Footnotes to the financial statements disclosing the difference between net income
and the cash provided or used by financing activities.
D.The income statement to be prepared under the cash basis of accounting.
E.Noncash investing and financing activities be included in the statement of cash flows.
A company’s current assets were $17,980, its quick assets were $11,420 and its current
liabilities were $12,190. Its quick ratio equals:
A.0.94.
B.1.07.
C.1.48.
D.1.57.
E.2.40.
A firm produces and sells two products, Mica and Plax. The following information is
available relating to setup costs (a part of factory overhead):
Assume the cost per setup remains at $1,080 but that the batch size for Mica is changed
from 10 to 25. Separately using activity-based costing and traditional two-stage cost
allocation overhead, the amount of setup cost allocated to each unit of Mica would be:
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
On June 18, Johnson Company (a U.S. Company) sold merchandise to the Frater
Company of Denmark for 60,000 Euros, with a payment due in 60 days. If the
exchange rate was $1.14 per euro on the date of sale and $1.35 per euro on the date of
payment, Johnson Company should recognize a foreign exchange gain or loss in the
amount of:
A.$60,000 gain.
B.$60,000 loss.
C.$68,400 loss.
D.$12,600 gain.
E.$12,600 loss.
Acme-Jones Company uses a weighted-average perpetual inventory system.
August 2, 10 units were purchased at $12 per unit.
August 18, 15 units were purchased at $15 per unit.
August 29, 20 units were sold.
August 31, 14 units were purchased at $16 per unit.
What is the per-unit value of ending inventory on August 31?
A.$12.00.
B.$13.80.
C.$15.42.
D.$16.00.
E.$17.74.
Given the following information, determine the cost of the inventory at June 30 using
the LIFO perpetual inventory method.
The cost of the ending inventory is
A.$200.
B.$220.
C.$380.
D.$275.
E.$300.
Which of the following is never included in direct materials costs?
A.Invoice costs of direct materials.
B.Outgoing delivery charges.
C.Materials storage costs.
D.Materials handling costs.
E.All of these are direct material costs.
A method that estimates cost behavior by connecting the costs linked to the highest and
lowest volume levels on a scatter diagram with a straight line is called the:
A.Scatter method.
B.High-low method.
C.Least-squares method.
D.Break-even method.
E.Step-wise method.
A company has 500 shares of $50 par value preferred stock outstanding, and the call
price of its preferred stock is $60 per share. It also has 20,000 shares of common stock
outstanding, and the total value of its stockholders’ equity is $680,000. The company’s
book value per common share equals:
A.$31.71.
B.$32.50.
C.$32.75.
D.$33.17.
E.$60.00.
Present Value of 1
Future Value of 1
Present Value of an Annuity of 1
Future Value of an Annuity of 1
Sam has a loan that requires a single payment of $4,000 at the end of 3 years. The loan’s
interest rate is 6%, compounded semiannually. How much did Sam borrow?
A.$3,358.40
B.$4,000.00
C.$3,660.40
D.$4,776.40
E.$3,350.00
Net income:
A.Occurs when revenues exceed expenses.
B.Is the same as revenue.
C.Equals resources owned or controlled by a company.
D.Occurs when expenses exceed assets.
E.Represents assets taken from a company for an owner’s personal use.
An amount of assets defined by state law that stockholders must invest and leave
invested in a corporation, which is intended to protect the creditors of the corporation,
is called the:
A.Par value of preferred.
B.Minimum legal capital.
C.Premium capital.
D.Stated value.
E.Working capital.
The gross method of recording purchases refers to the method of recording:
A.Purchases at the invoice price less any cash discounts.
B.Specified amounts and timing of payments that a buyer agrees to make in return for
being granted credit.
C.Purchases at the full invoice price, without deducting any cash discounts.
D.Inventory at its selling price.
E.Inventory at the lower of cost or market.
If an issuer sells a bond at a date other than an interest payment date:
A.This means the bond sells at a premium.
B.This means the bond sells at a discount.
C.The issuing company will report a loss on the sale of the bond.
D.The issuing company will report a gain on the sale of the bond.
E.The buyers normally pay the issuer the purchase price plus any interest accrued since
the prior interest payment date.
The broad principle that requires expenses to be reported in the same period as the
revenues that were earned as a result of the expenses is the:
A.Recognition principle.
B.Cost principle.
C.Cash basis of accounting.
D.Matching principle.
E.Time period principle.
The wage bracket withholding table is used to:
A.Compute social security withholding.
B.Compute Medicare withholding.
C.Compute federal income tax withholding.
D.Prepare the W-4.
E.All of these.
What are the standards for comparisons in financial analysis? Give an example of each.
Identify and describe the four inventory valuation methods.
Explain the difference between honoring and dishonoring a note receivable.
Davison Company has fixed costs of $315,000 and a contribution margin ratio of 24%.
If sales are expected to be $1,500,000, what is the percentage of the margin of safety?
Dylan Lauren and Jeff Rubin of Dylan’s Candy Bar know good business practice
requires the use of effective internal controls. Identify some of the internal controls that
Dylan’s Candy Bar implemented and explain how those controls contributed to the
firm’s success.
A _______________ is a list of all the accounts used by a company and their
identification codes.
A __________ cost is one that includes both fixed and variable cost components; a
______________ cost is one that reflects a step pattern.
A _________________ cost changes in proportion to changes in the volume of activity.
Solving problems to determine the relationship of cost, volume, and profit often
commences with the measurement of the _____________ point. Further analysis
emphasizing profitability may be accomplished by measuring the _______________
and _________________.
A ___________ is an intermediary that buys products from manufacturers and sells to
retailers.
The cash flow on total assets ratio is computed by dividing _____________ by
____________.
A __________________ is an all-purpose journal that can record any transaction.