Managerial accounting’s main emphasis is on full and accurate accounting for and
disclosure of a company’s operating results.
Computation of a partial year’s depreciation is often required for the proper
determination of net income.
The personal resources of any partner can be called upon to pay the obligations of the
partnership.
The entry to record the issuance of bonds between interest payment dates will include a
debit to Bond Interest Expense.
A budget can contain only financial information.
An advantage of the partnership form of business is that the life of the partnership is
limited.
Define activity-based costing. Explain why this approach to cost assignments is
superior to the traditional method of using a plantwide overhead cost rate. Will
activity-based costing always result in lower product costs? Justify your answer.
Upon making a credit card sale, a business should record the sale as an accounts
receivable until the customer pays his or her credit card bill.
Dividend income and interest income are examples of nonoperating revenues.
Costs incurred in storing inventory usually are not included in inventory costs.
A contribution margin income statement is formatted to emphasize cost behavior rather
than organizational functions.
The entry to record the retirement of treasury stock will include a debit to Common
Stock for the par value of the retired shares.
In preparing closing entries, which of the following columns of the work sheet are the
most helpful?
A.Adjusted Trial Balance columns
B.Income Statement columns
C.Adjustments columns
D.Balance Sheet columns
In segment profitability analysis, avoidable costs are costs that
A.are traceable to a specific segment of business.
B.cannot be eliminated if a segment is dropped.
C.are common to all the segments of a business.
D.have not been incurred and hence are irrelevant.
Which of the following is TRUE of budgets?
A.Every budget must contain both revenues and expenses.
B.Budgets reduce the comparability concept of accounting.
C.The data in budgets are presented in dollars only; nonfinancial data should be
excluded.
D.Budgets are synonymous with managing an organization.
Which of the following labor costs would be included in direct labor?
A.Maintenance workers
B.Machine operators
C.Managers and supervisors
D.Materials storeroom custodian
Quality Heating Company has the following liabilities at year end:
a. Which of these accounts probably was/were created at the end of the fiscal year as a
result of an accrual? Which probably was/were adjusted at year end? Explain your
answer.
b. Which adjustments probably reduced net income? Which probably increased net
income? Explain your answers.
A company sells merchandise on a deferred payment plan, ultimately receiving $6,000
on the account receivable. On the payment date, the company would
A.credit Accounts Receivable for less than $6,000.
B.debit Interest Income for the imputed amount.
C.credit Sales for less than $6,000.
D.debit the asset account for $6,000.
Which of the following is expressed in terms of a percentage?
A.Return on equity
B.Current ratio
C.Asset turnover
D.Working capital
The Additional Paid-in Capital account normally arises in the accounting records when
A.the number of shares issued exceeds par value.
B.the stated value of capital stock is greater than the par value.
C.the market value of the stock rises above par value.
D.capital stock is issued at an amount greater than par value.
An important purpose of closing entries is to
A.help achieve the goals of the matching principle.
B.set permanent account balances to zero to begin the next period.
C.update the nominal accounts at year end.
D.transfer net income or net loss to the owner’s Capital account.
Which of the following yields the standard direct material cost?
A.Multiplying the standard price of direct materials by the standard quantity for direct
materials
B.Adding the standard price of direct materials to the standard quantity for direct
materials
C.Multiplying the actual price of direct materials by the actual quantity for direct
materials
D.Adding the actual price of direct materials to the actual quantity for direct materials
Managers need to understand how long-term liabilities are
A.valued.
B.classified.
C.recognized.
D.All of these choices.
In 20×5, Horwitz Corporation issued ten-year, 9 percent bonds when the market interest
rate was 11 percent. Interest is payable annually. During 20×8, the market rate of
interest for similar bonds was 12 percent. Using the effective interest method of
amortization, what interest rate will be used to calculate interest expense for 20×8?
A.12 percent
B.9 percent
C.6 percent
D.11 percent
An unsecured bond is the same as a
A.term bond.
B.zero coupon bond.
C.debenture bond.
D.bond indenture.
Native American Pottery expects to earn a profit of $95,000 in 2014. The company
manufactures ornamental ceramic tiles. Each lot of 100 blocks requires variable costs of
$5.00 for direct materials, $3.50 for direct labor, and $4.50 for overhead. Total variable
costs are thus $13 per lot. Fixed costs for 2014 are expected to be $130,000. Each
hundred-block lot will sell for $33.
a. Determine how many lots of ceramic tiles the company must sell to earn its targeted
profit, and convert this amount to sales dollars.
b. Compute breakeven sales in dollars.
c. Explain the dollar difference between breakeven sales dollars and the sales dollars
necessary to earn the targeted profit. Use the contribution margin as part of your
explanation.
Which of the following most likely is a definitely determinable liability during interim
periods?
A.Estimated property tax payable
B.Accrued interest payable
C.Estimated product warranty liability
D.Estimated income taxes payable
If cost of goods sold is understated by $6,000 for this year, what effect will this have on
income before income taxes in the following year?
A.understated by $3,000
B.overstated by $6,000
C.understated by $6,000
D.no effect
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.
Units transferred out of Department A of Answer during October were
A.335,000.
B.370,000.
C.325,000.
D.340,000.
Which of the following is not one of the key questions to be addressed when preparing
an accounting report?
A.What is audience’s familiarity with accounting?
B.What information should be included?
C.When is it due and what method of presentation is best?
D.How long should the information be valid?