The cost to defend a patent successfully should be expensed in the period incurred.
Margin of safety is the excess of actual sales over break even sales.
The alignment of an organization’s strategy with all the perspectives of the balanced
scorecard results in performance objectives that benefit all stakeholders.
Long-term bond investments that are classified as available-for-sale must be valued on
the balance sheet at fair value.
Financial accounting relies on the criterion of usefulness rather than formal guidelines
in reporting information.
The management accountant must be knowledgeable about all relevant laws,
regulations, and technical standards that pertain to his or her duties.
Standard costing is typically an inexpensive component to add to a company’s existing
cost accounting system.
The direct materials price standard is a carefully derived estimate of what a particular
type of direct material will cost when purchased during the next accounting period.
A bond agreement is referred to as the bond indenture.
Total interest cost for a bond issued at a premium equals the total of the periodic interest
payments plus the premium.
Working papers provide a written record of the work performed by the accountant or
auditor.
The Cal-Fruit Company specializes in decorative fruit baskets. Currently, the company
is analyzing purchase alternatives for a fruit-polishing machine. Data relevant to the
decision are as follows:
a. Compute the payback period for each of the alternatives. Round answers to two
decimal places.
b. Using the net present value method, prepare an analysis to determine which machine
the company should purchase. (The company uses a 12 percent minimum desired rate
of return.)
Which of the following accounts would appear on an adjusted trial balance but probably
would not appear on a trial balance?
A.Supplies Expense
B.Accounts Payable
C.Service Revenue
D.Cash
If a company uses a process costing system to account for costs in its three production
departments, how many Work in Process accounts will it use?
A.5
B.3
C.1
D.4
All of the following are conditions that could affect the valuation of investments on the
balance sheet except
A)changes in the general purchasing power of the dollar.
B)changes in the operations of investee companies.
C)changes in the market value or fair value of the investments.
D)changes caused by the passage of time.
When applying the lower-of-cost-or-market rule to inventory valuation, market
generally means
A.original cost, less physical deterioration.
B.replacement cost.
C.original cost.
D.resale value.
The following information is available at the end of May:
If $72,400 of materials were charged to Job 88’s job cost card, how much overhead was
applied to Job 88?
A.$35,100
B.$70,000
C.$72,400
D.$120,000
Suppose a management accountant becomes aware that a poor judgment he or she made
has resulted in the loss of one of the company’s clients. Is the accountant bound to share
this information with the company? (The accountant doubts that the company will ever
find out about it directly.)
A.The management accountant is bound to respond honestly to inquiries regarding the
adequacy of professional judgments but is not bound to communicate them if not
directly asked.
B.The management accountant is bound to communicate this error in judgment only if
another client cannot be found.
C.The management accountant is not bound to communicate this error.
D.The management accountant is bound to communicate unfavorable and favorable
judgments made, even if not directly asked.
Given equal circumstances, which inventory method probably would be the most time
consuming?
A.Specific identification
B.FIFO
C.Average-cost
D.LIFO
A cash budget
A.is an optional feature of a master budget.
B.requires input from all parts of the organization.
C.involves nonmonetary information.
D.can only be prepared at year end.
Financial budgets include
A.pro forma financial statements, a sales budget, and a cost of goods manufactured
budget.
B.a budgeted income statement and budgeted balance sheet only.
C.a budgeted income statement, budgeted balance sheet, and cash budget.
D.pro forma financial statements, a capital expenditures budget, and a cash budget.
Those who lend money or deliver goods and services before being paid are called
A.investors.
B.debtors.
C.underwriters.
D.creditors.
Underfoot Products uses standard costing. The following information about overhead
was generated during May:
Using the above information provided for Underfoot Products, compute the variable
overhead variance.
A.$42,000 (F)
B.$42,000 (U)
C.$30,000 (U)
D.$32,000 (F)
A customer’s promise to pay for goods or services
A.increases the company’s liabilities.
B.decreases the company’s Cash account.
C.creates a liability for the company.
D.increases the assets of the company.
Using the above information provided for Good Sleep, the total fixed overhead variance
is
A.$4,500 (U).
B.$30,500 (U).
C.$5,000 (U).
D.$45,000 (U).
The entry to record payment of a $3,000 purchase within the 2 percent discount period
would include a(n)
A.decrease to Accounts Payable for $2,940.
B.increase to Purchases Discounts for $60.
C.increase to Accounts Payable for $3,000.
D.increase to Cash for $3,000.
The applied overhead of a job is more than the actual overhead and it is considered
immaterial by the company. An entry to record this would involve a
A.debit to the Materials Inventory account.
B.credit to the Overhead account.
C.credit to the Cost of Goods Sold account.
D.debit to the Work in Process Inventory account.
Which accounting convention could cause an overload of information for the financial
statement user?
A.Consistency
B.Conservatism
C.Full disclosure
D.Materiality
Use this information to answer the following question.
If an accumulation of $16,000 is desired at the end of three years, what amount must be
deposited at the end of each of the three years, assuming an APR of 12 percent?
A.$4,742.15
B.$53,984.00
C.$11,387.90
D.$22,480.00
Which of the following accounting conventions would an accountant most likely apply
when facing major uncertainties?
A.Understandability
B.Conservatism
C.Materiality
D.Verifiability
A corporation records a dividend-related liability
A.on the payment date.
B.on the record date.
C.on the declaration date.
D.when the stock sells ex-dividend.
Choco Sweet Inc. gives you the following information:
The standard labor time of 0.75 labor hour is required to produce one unit. The standard
labor cost for a 10 pound bag of chocolate is $8 per labor hour. The following is data
relating to the actual cost and usage data.
Using the above information provided for Choco Sweet, compute the direct labor
efficiency variance for Choco Sweet.
A.$8,500 (U)
B.$2,500 (F)
C.$11,000 (F)
D.$1,375 (U)
The post-closing trial balance would not include which of the following accounts?
A.Unearned Legal Fees
B.Accumulated Depreciation’“Office Equipment
C.Withdrawals
D.Owner’s Capital
Which of the following creates a flexible work cell in a just-in-time manufacturing
environment?
A.Grouping similar machines together
B.Bringing people with differing work skills together into one work area
C.Placing together a complete set of machines that produce a complete product
D.Grouping people with similar skills together
Weston Company uses the FIFO method in its process costing system. The first
processing department, the Welding Department, started the month with 18,000 units in
its beginning work in process inventory that were 50 percent complete with respect to
conversion costs. The conversion costs in the beginning work in process inventory were
$52,200. An additional 55,000 units were started into production during the month.
There were 16,000 units in the ending work in process inventory of the Welding
Department that were 20 percent complete with respect to conversion costs. A total of
$284,160 in conversion costs were incurred in the department during the month. What
would be the cost per equivalent unit for conversion costs for the month on the
department’s process cost report? (Round to three decimal places.)
A.$5.550
B.$4.608
C.$5.800
D.$5.167
Which of the following are required to swear that financial reports are accurate and
complete?
A.accountants
B.managers
C.chief executives
D.board of directors
Partners K and R receive an interest allowance of $20,000 and $30,000, respectively,
and divide the remaining profits and losses in a 3:1 ratio. If the company sustained a net
loss of $22,000 during the year, the entry to close the income or loss into their capital
accounts is:
In 2014, Mansfield Mining purchased a mineral deposit for $12,000,000. It is estimated
that 15,000,000 tons can be extracted from the mine. Calculate depletion expense
during 2014 assuming 800,000 tons were extracted and 700,000 tons were sold.
Give two examples of each stage in the management process.
Use this information to answer the following question.
The transactions below pertain to Dunhill Company, whose fiscal year ends April 30.
The entry to record the April 10 transaction (amounts rounded) is:
Linkletter obtained a five-year sublease and paid $25,000 to the current tenant on
January 1, 20X1. The entry to record the transaction is:
Using the income statement below, develop a common-size statement by filling in the
blanks provided. Show your work. Round to one decimal place.
At the beginning of the year, Pullman Company’s assets were $270,000 and its owner’s
equity was $201,000. During the year, assets decreased by $35,000 and liabilities
increased by $10,000. What was owner’s equity at the end of the year?
Assume that on October 1, a note which has a face value of $2,000, bears interest at 6
percent for 90 days, received from a customer as an extension of his past-due account is
honored on its due date. The entry that would be made to record the receipt on due date
is: