Managers prepare process cost reports in the evaluating stage of the management
process.
Dividends declared but unpaid are reflected in the financing activities section of the
statement of cash flows.
Accounting information contains numerous estimates, classifications, summarizations,
judgments, and allocations.
Stockholders who own preferred stock usually do not have voting rights, whereas
stockholders who own common stock usually have voting rights.
A company with a low asset turnover uses its assets more productively than one with a
high asset turnover.
Land held for speculative purposes should be classified as a short-term investment.
An organization’s theoretical operating capacity is the level at which its management
expects to operate during a normal business environment.
When developing performance measures, management must consider a number of
different issues besides what to measure and how to measure.
Flexible budgets are also called static budgets.
Based on past experience, it should be possible to estimate the amount that a product
warranty will cost the company in the future.
Standard costs are based solely on actual costs incurred in past.
By meeting certain conditions, a company that sets up an Special-purpose entity (SPE)
can legitimately avoid including the debt of the SPE on its balance sheet
A zero balance in Work in Process Inventory at the start of the period means all
previously completed products have been shipped.
Bonding means insuring a company against loss due to employee theft.
Equivalent units of production usually are determined for
A.direct materials costs only.
B.direct materials and conversion costs.
C.direct and indirect materials only.
D.conversion costs only.
As the usefulness of a plant asset expires,
A.an amount is transferred from one asset account to another.
B.a related expense account is reduced.
C.a liability is created.
D.the cost of the asset is allocated to an expense account.
Firehawk Corporation had net income of $560,000 in 20×5 and paid dividends of
$440,000 on 200,000 shares of outstanding common stock. Total stockholders’ equity at
the end of 20×5 was $2,060,000 and the market price for each share of Firehawk’s stock
was $58 throughout 20×5. Additionally, the company paid preferred dividends of $2.40
per share during 20×5. Based on this information, what is the dividend yield on
Firehawk’s stock?
A.21.36%
B.78.57%
C.3.79%
D.7.93%
Which of the following accounts probably would be greater in amount on an adjusted
trial balance than on a trial balance?
A.Wages Payable
B.Unearned Revenue
C.Prepaid Advertising
D.Painting Supplies
Current assets divided by current liabilities is known as the
A.profit margin.
B.current ratio.
C.working capital.
D.capital structure.
Inventory on hand is considered
A.a current asset.
B.a current liability.
C.a long-term asset.
D.an expense.
The projections of direct materials purchases that follow are for the Sombo
Corporation.
The company pays for 60 percent of purchases on account in the month of purchase and
40 percent in the month following the purchase.
What is the expected cash payment for direct materials for the month of January of
Sombo?
A.$27,000
B.$79,000
C.$96,000
D.$102,000
All of the following must certify that a public company’s financial statements are
accurate, complete, and not misleading, except for the
A.chief financial officer.
B.director of human resources.
C.chief executive officer.
D.independent auditor.
Which of the following statements is correctregarding the statement of cash flows?
A.Analysts prefer the direct method to the indirect method.
B.Companies prefer the direct method because it is easier and less expensive to prepare.
C.A survey of large companies showed 98% of them use the indirect method.
D.All of these choices.
For available-for-sale equity securities, the Unrealized Loss on Long-Term Investments
account should be reported as a(n)
A)realized loss item on the income statement.
B)prior period adjustment.
C)contra-asset on the balance sheet.
D)other comprehensive income (loss).
Which of the following qualifies as a capital lease?
A.Four-year cancelable lease on a company vehicle.
B.One-year lease on a computer with an option to renew for one more year.
C.Five-year lease on a machine that has a five-year useful life.
D.Monthly lease on office space that can be canceled with 30 days’ notice.
Which of the following transactions would be recorded in a multicolumn purchases
journal?
A.Credit purchase of supplies.
B.Credit purchase of equipment.
C.Credit purchase of merchandise for resale to customers.
D.All of these choices.
Companies listed on the stock exchanges must file financial statements with the
A.Financial Accounting Standards Board.
B.American Institute of Certified Public Accountants.
C.Securities and Exchange Commission.
D.Internal Revenue Service.
Which of the following best describes the payables turnover?
A.Cost of goods sold/Average accounts payable
B.Cost of goods sold +/-Change in inventory/Average accounts payable
C.Average accounts payable/Cost of goods sold
D.Average accounts payable/Cost of goods sold +/- Change in inventory
Lucas Company has set standards for the manufacturing of clay pots to be 2 pounds of
direct materials, per pot, at a cost of $3 per pound. During the current period, 600
pounds of direct materials were purchased for $1,872. All of the direct materials were
used to manufacture 295 pots. Lucas’ direct materials price variance was
A.$102 (U).
B.$72 (U).
C.$102 (F).
D.$70 (U).
Process costing is applicable to production operations that
A.utilize several processes, departments, or work cells in a series.
B.do not assign overhead costs to operations.
C.produce products that are made to order.
D.produce unique products.
Which of the following is TRUE of standard costing?
A.It uses estimates that are based only on past costs.
B.It is the same as normal costing.
C.It cannot be used to manage cost centers.
D.It can be used in any type of business.
A note receivable dated May 23 and due in 90 days would be due on
A.August 20.
B.August 21.
C.August 23.
D.August 22.
Which of the following is an illustration of the classification issue?
A.At what amount should land be shown on the balance sheet?
B.At what point should the payment of salaries to employees be recorded?
C.Should supplies be recorded as an asset or as an expense?
D.At what point should a bill be paid for the purchase of an item?
How is it possible for a company to show a net loss for a given year, yet produce
positive net cash flows from operating activities?
The activity in the Plant Assets and related Accumulated Depreciation accounts for
20×5 is shown below. In addition, the income statement shows a gain on sale of plant
assets of $16,000.
Based on the information given, compute the amounts to be shown and indicate how
they would appear on the statement of cash flows. Assume that the indirect method is
being used and that the plant assets were purchased for cash.
Dyana Julian, president of Julian Juices, Inc., has approached you with the following
questions: ‘Why must we use the process costing method to compute product unit costs
for three lines of fruit juices? Why can’t we consider using a job order costing
approach?’
Prepare a written response to Ms. Julian.
Novack Company has current assets of $100,000, total assets of $300,000, current
liabilities of $75,000 of which accounts payable are $35,000, and total liabilities of
$150,000. Calculate Novack’s working capital and current ratio.
Use the following information to answer the question below.
On January 1, 20×5, Falcon Corporation had 40,000 shares of $10 par value common
stock issued and outstanding. All 40,000 shares had been issued in a prior period at $17
per share. On February 1, 20×5, Falcon purchased 1,000 shares of treasury stock for
$19 per share and later sold the treasury shares for $26 per share on March 2, 20×5.
The entry to record the sale of the treasury shares on March 2, 20×5 is
As the staff accountant for Investment Centers Beta and Gamma, compute the residual
income for each investment center, using the following information:
Why is it important that a manager’s evaluation be based only on those revenues and
costs that he or she can control?
The effective evaluation of managers’ performance depends on both human factors and
company policies. Using variances from standard costs in a manager’s performance
report adds accuracy to the evaluation process. What actions should be taken to ensure
effectiveness and fairness when setting up a performance evaluation process?
A $150 petty cash fund has cash of $64 and valid receipts for $75. The entry to
replenish the fund would be:
Why is the book value of equipment irrelevant when considering the replacement of
equipment?