The practice of off-balance-sheet financing is illegal.
A new partner must have the consent of all the partners before being admitted into the
partnership.
The payables turnover is the number of times, on average, that a company pays its
accounts payable in an accounting period.
Residual income is excess of operating income over net income.
When discarding equipment, depreciation need not by updated.
There is no income tax imposed on a partnership.
Product storage time refers to the amount of time that a product spends in a production
cell.
The difference between gross sales and net sales is equal to the sum of sales discounts
and sales returns and allowances.
Once cash receipts and cash payments have been established, the cash increase or
decrease is added to the period’s beginning balance to arrive at a projected cash balance
at period end.
When the board of directors decides to issue bonds, it is necessary to make an entry to
record the SEC’s authorization of the bond issue.
Cost of goods sold would not be found on a single-step income statement.
Competition, availability and training of employees, and anticipated future
technological improvements are some of the examples of qualitative factors.
Maintaining consistent high product quality
A.is both required for and a by-product of the just-in-time environment.
B.is difficult to obtain in a just-in-time environment because of the severe time
constraints imposed by the just-in-time environment.
C.requires quality control inspectors at each step of the production process.
D.is too expensive to obtain in a just-in-time environment.
The following are costs for a selected period: direct materials used in production,
$75,000; direct labor cost of converting materials into product, $150,000; total indirect
costs of manufacturing, $45,000. What is the unit cost of manufacturing 30,000 units in
this period?
A.$7.50
B.$9.00
C.$6.00
D.$4.00
Which of the following statements is TRUE about investments categorized as trading
securities?
A)They are valued on the balance sheet at cost.
B)They can consist of debt, but not equity, securities.
C)They are purchased to be held to maturity.
D)Changes in market value are reflected in net income.
Bonds that mature in installments are called
A.term bonds.
B.debenture bonds.
C.zero coupon bonds.
D.serial bonds.
The matching rule relates the least to
A.income measurement.
B.the cash basis of accounting.
C.revenues and expenses.
D.a direct relationship between expenses and revenues.
Net income
A.is accumulated in Owner’s Capital.
B.is reported on the income statement.
C.occurs when revenues exceed expenses.
D.All of these choices.
Following are the financial statements for Flynn Corporation for the year ended
December 31, 20×5. Assume that all balance sheet amounts represent both average and
ending figures.
What is the current ratio for this corporation? Round your answer to two decimal
places.
A.0.66 times
B.1.50 times
C.1.70 times
D.2.00 times
What is the best way to study the relationship of the components of financial
statements?
A.Perform ratio analysis.
B.Perform trend analysis.
C.Perform horizontal analysis.
D.Prepare common-size statements.
The user can depend on the accuracy of financial information when which of the
following qualitative characteristics has been followed?
A.Relevance
B.Faithful representation
C.Understandability
D.Timeliness
Which of the following would not affect the balance of the Retained Earnings account?
A.Stock split
B.Net loss
C.Cash dividend declared
D.Stock dividend declared
While making capital investment decisions, companies set a minimum rate of return to
A.set the maximum expected returns.
B.guard their profitability.
C.cover their fixed costs.
D.comply with the government regulations.
The owner’s Capital, Withdrawals, and Income Summary accounts for Harmon Repair
Company for the accounting period are presented below in T account form after the
recording and posting of closing entries:
The amount of withdrawals for the period is
A.$550.
B.$300.
C.$600.
D.$1,500.
The communication stage of accounting is accomplished by
A.storing data.
B.reporting to decision makers.
C.processing data.
D.recording data.
The responsibility for receiving the proper amount of interest falls on the bondholder
most heavily in the case of
A.term bonds.
B.serial bonds.
C.coupon bonds.
D.registered bonds.
The _________ provides the most direct means of calculating unit costs for a job.
A.job order cost card
B.Finished Goods Inventory account
C.general ledger
D.Materials Inventory account
Loyal Enterprises has sales revenue of $125,000 for 2014. Its product sells for $10 and
has a 25 percent contribution margin. Fixed costs are $26,000. What is Loyal
Enterprises’ operating income for 2014?
A.$2,600
B.$26,000
C.$31,250
D.$5,250
Use this information to answer the following question.
Northbrook Corporation is preparing a statement of cash flows. The following
transactions occurred during the year:
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
Transaction 4 would be found on the statement of cash flows in the
A.cash flows from investing activities section.
B.cash flows from operating activities section.
C.cash flows from financing activities section.
D.noncash investing and financing transactions section.
Which of the following businesses most likely would have a large Unearned Revenue
account balance at all times?
A.Dry cleaners
B.Realtor
C.Magazine publisher
D.Department store
Which of the following ratios uses the market price of a company’s stock in the
denominator?
A.Price/Earnings.
B.Dividend yield
C.Cash flow yield
D.All of these choices.
Which of the following accounts is not considered an asset?
A.Accounts Receivable
B.Inventory
C.Accounts Payable
D.Trademark
The Chief Financial Officer (CFO) of your company has asked you to help her develop
a cost control report to be distributed within the company. She wants your input
concerning what she should think about before developing such a report. Discuss the
significant points, in detail, the CFO should consider before the cost control report is
prepared.
Identify the following and show the formula for calculating each:
What is the business purpose of the balanced scorecard, and how does it benefit an
organization?