Assume that the following information was available for Guy Brown Company. How
would Maria Teresa Vazquez and the other owners evaluate this information based on
contribution margin ratio?
A. Recycled toner cartridges has the lowest contribution margin ratio.
B. Furniture has the highest contribution margin ratio.
C. Office supplies has the highest contribution margin ratio.
D. Recycled toner cartridges has the highest contribution margin ratio.
E. Based on contribution margin ratio, the owners should consider expanding the
furniture line and scaling back on office supplies and recycled toner cartridges.
Answer:
A company reports the following information for its first year of operations:
If the companys cost per unit of finished goods using absorption costing is $27, how
many units were produced?
A. 4,000 units.
B. 3,600 units.
C. 1,846 units.
D. 2,667 units.
E. 2,000 units.
Answer:
A June sales forecast projects that 6,000 units are going to be sold at a price of $10.50
per unit. The desired ending inventory of units is 15% higher than the beginning
inventory of 1,000 units. Merchandise purchases for June are projected to include how
many units?
A. 6,000 units
B. 6,150 units
C. 5,850 units
D. 7,150 units
E. 6,500 units
Answer:
The segment return on assets:
A. Can only be determined for international companies.
B. Is a measure of the profitability of a segment.
C. Is difficult to calculate because companies with traded stock are not required to
report segment information.
D. Is calculated as segment average assets divided by segment operating income.
E. Is calculated as segment sales divided by segment average assets.
Answer:
Use the following information to calculate cash paid for salaries:
A. $75,680
B. $82,080
C. $79,000
D. $85,400
E. $82,320
Answer:
A company had sales of $375,000 and gross profit of $157,500. Its cost of goods sold
was:
A. $(217,000)
B. $375,000
C. $157,500
D. $217,500
E. $532,500
Answer:
A department had 12,500 units that were 20% complete in beginning Goods in Process
Inventory. During the current period 60,000 units were transferred in. Ending Goods in
Process Inventory was 15,000 units that were 70% complete. Assume this company
uses the weighted-average method of process costing and direct material is added
uniformly throughout the process. What are the equivalent units produced with respect
to direct material?
A. 65,500
B. 57,500
C. 37,000
D. 47,500
E. 68,000
Answer:
A remittance advice is:
A. An explanation for a payment by check.
B. A bank statement.
C. A voucher.
D. An EFT.
E. A canceled check.
Answer:
A company had a beginning balance in retained earnings of $43,000. It had net income
of $6,000 and paid out cash dividends of $5,625 in the current period. The ending
balance in retained earnings account is equal to:
A. $108,625
B. $(12,625)
C. $11,375
D. $43,375
E. $(11,375)
Answer:
The following selected transactions took place during the current year for a company:
(a) Prepare the journal entries for these transactions.
(b) If Retained Earnings had a $75,000 credit balance on January 1, calculate its
year-end balance as of December 31.
Answer:
Preparing a master budget is usually the responsibility of:
A. The company CEO.
B. The marketing department.
C. A budget committee.
D. The chief financial officer.
E. Lower level management.
Answer:
A Company is preparing a cash budget for June. The company has $67,000 cash at the
beginning of June and anticipates $82,330 in cash receipts and $93,520 in cash
disbursements during June. This company has an agreement with its bank to maintain a
cash balance of at least $65,000. As of May 31, the company owes $25,000 to the bank.
To maintain the $65,000 required balance, during June the company must:
A. Borrow $9,190
B. Repay $13,190
C. Borrow $25,000
D. Repay $25,000
E. Repay $9,190
Answer:
Assume that the following information was available for Daylight Enterprises, Inc.
Which of the following statements is(are) true with regard to contribution margin ratio?
A. Tabletop lights has the lowest contribution margin ratio.
B. Ceiling lights has the highest contribution margin ratio.
C. Ceiling lights has the lowest contribution margin ratio.
D. Stand-alone lights has the highest contribution margin ratio.
E. Tabletop lights has the highest contribution margin ratio.
Answer:
The amount by which overhead incurred during a period exceeds the overhead applied
to jobs is:
A. Balanced overhead.
B. Predetermined overhead.
C. Actual overhead.
D. Underapplied overhead.
E. Overapplied overhead.
Answer:
The following information is available for the Travis Travel Agency. After the closing
entries have been journalized and posted, what will be the balance in the Retained
Earnings account?
A. $65,000
B. $80,000
C. $130,000
D. $145,000
E. $280,000
Answer:
Ridley Company estimates that overhead costs for the next year will be $6,870,000 for
indirect labor and $450,000 for factory utilities. The company uses machine hours as its
overhead allocation base. If 160,000 machine hours are planned for this next year, what
is the companys plantwide overhead rate?
A. $.02186 per machine hour.
B. $42.9375 per machine hour.
C. $45.75 per machine hour.
D. $2.8125 per machine hour.
E. $.3555 per machine hour.
Answer:
In preparing financial budgets:
A. The budgeted balance sheet is usually prepared last.
B. The cash budget is usually not prepared.
C. The budgeted income statement is usually not prepared.
D. The capital expenditures budget is usually prepared last.
E. The merchandise purchases budget is key.
Answer:
A plan that reports the units or costs of merchandise to be purchased by a
merchandising company during the budget period is called a:
A. Selling expenses budget
B. Merchandise purchases budget
C. Sales budget
D. Cash budget
E. Capital expenditures budget
Answer:
The International Accounting Standards Board (IASB)
A. Hopes to create harmony among accounting practices of different countries.
B. Is the government group that establishes reporting requirements for companies that
issue stock to the public.
C. Has the authority to impose its standards on companies
D. Is the only source of U.S. generally accepted accounting principles (GAAP).
E. Applies only to companies that are members of the European Union.
Answer:
Secured bonds:
A. Are also referred to as debentures.
B. Have specific assets of the issuing company pledged as collateral.
C. Are backed by the issuer’s bank.
D. Are subordinated to those of other unsecured liabilities.
E. Are the same as sinking fund bonds.
Answer:
A liquidating dividend is:
A. Only declared when a corporation closes down.
B. A return of a part of the original investment back to the stockholders.
C. Not allowed under federal law.
D. Only paid in assets other than cash.
E. Only paid in shares of stock.
Answer:
A company wishes to buy new equipment for $85,000. The equipment is expected to
generate an additional $35,000 in cash inflows for four years. All cash flows occur at
year-end. A bank will make an $85,000 loan to the company at a 10% interest rate so
that the company can purchase the equipment. Use the table below to determine
break-even time for this equipment.
A. Break-even time is longer than 4 years.
B. Break-even time is between 3 and 4 years.
C. Break-even time is between 2 and 3 years.
D. Break-even time is between 1 and 2 years.
E. This project will never break-even.
Answer:
On April 1, 2013, Jared Enterprises issues bonds dated January 1, 2013, that have a
$2,430,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30
and December The bonds are sold at par plus three months’ accrued interest. What is the
total amount of cash Jared Enterprises will collect on April 1, 2013?
A. $2,600,100
B. $2,430,000
C. $2,472,525
D. $2,750,000
E. $2,515,050
Answer:
A company acquires equipment for $75,000 cash. This represents a(n):
A. Operating activity
B. Investing activity
C. Financing activity
D. Revenue activity
E. Expense activity
Answer:
Renee Jackson is a partner in Sports Promoters. Her beginning partnership capital
balance for the current year is $55,000 and her ending partnership capital balance for
the current year is $62,000. Her share of this year’s partnership income was $5,250.
What is her partner return on equity?
A. 8.47%
B. 8.97%
C. 9.54%
D. 1047%
E. 1060%
Answer:
Physical inventory counts:
A. Are not necessary under the perpetual system.
B. Are necessary to measure and adjust for inventory shrinkage.
C. Must be taken at least once a month.
D. Require the use of hand-held portable computers.
E. Are not necessary under the cost-to benefit constraint.
Answer:
Total contribution margin in dollars divided by pretax income is the:
A. Degree of operating leverage.
B. Contribution margin ratio.
C. Margin of safety.
D. Sales mix.
E. Break-even point in units.
Answer:
The description of the relation between a company’s assets, liabilities, and equity,
which is expressed as Assets = Liabilities + Equity, is known as the:
A. Income statement equation.
B. Accounting equation.
C. Business equation.
D. Return on equity ratio.
E. Net income.
Answer:
A statement of cash flows should reconcile the differences between the beginning and
ending balances of:
A. Net income.
B. Equity.
C. Cash and cash equivalents.
D. Working capital.
E. Cash, cash equivalents and short-term investments.
Answer:
The following company information is available for January:
The direct material quantity variance is:
A. $5,000 favorable
B. $300 favorable
C. $5,300 unfavorable
D. $5,000 unfavorable
E. $5,300 favorable
Answer:
The following selected account balances are taken from a merchandising company’s
records:
(a) Calculate the cash payments made during 2013 for merchandise. Assume all of the
company’s accounts payable balances are a result from merchandise purchases.
(b) Calculate the cash receipts from customer sales during 2013.
(c) Calculate the cash payments for salaries during 2013.
Answer:
Beginning assets were $700,000, beginning equity was $225,000, revenue for the year
was $523,000, common stock issued during the year totaled $320,000, expenses for the
year were $392,000, ending equity is $751,000, and ending assets are $963,000.
What were the total dividends declared?
A. $75,000
B. $998,000
C. $131,000
D. $203,000
E. $308,000
Answer:
If a manager were concerned with the time value of money, from which two capital
budgeting methods should the manager choose?
A. IRR or Payback.
B. BET or IRR.
C. BET or Payback.
D. NPV or ARR.
E. NPV or Payback.
Answer:
A method of estimating bad debts expense that involves a detailed examination of
outstanding accounts and their length of time past due is the:
A. Direct write-off method.
B. Aging of accounts receivable method.
C. Percent of sales method.
D. Aging of investments method.
E. Percent of accounts receivable method.
Answer:
A 90-day note issued on April 20 has a maturity date of:
A. July 17
B. July 18
C. July 19
D. July 20
E. July 21
Answer:
The number of periods in a present value calculation can only be expressed in years.
Answer:
Briefly describe how manufacturing firms dispose of overapplied or underapplied
factory overhead.
Answer:
Pastimes Co. offers its employees a bonus equal to 2% of the company’s net income.
The estimated net income for the year is expected to be $850,000. Prepare the general
journal entry to record the employee bonus plan expense.
Answer:
Explain the effects of inventory valuation methods on the cost of ending inventory,
income, and income taxes.
Answer:
If a partner withdraws from a partnership and the recorded value of his or her equity is
overstated, then a bonus goes to _____________________; if the recorded value of the
withdrawing partner’s equity is understated, then a bonus goes to
_______________________.
Answer:
What is a sales budget? How is the sales budget prepared?
Answer:
Explain the concept of the future value of an annuity.
Answer:
Interest is the borrowers payment to the owner of an asset for its use.
Answer:
A company paid its landlord $15,000 cash for this month’s rent. Enter the appropriate
amounts for this transaction into the accounting equation format shown below:
Answer:
How does Jarrett Pumphrey of ClearCorrect, view decisions involving sales on credit?
Answer:
The _______________________ protects stockholders’ proportional interest in a
corporation by allowing them to purchase their proportional share of any common stock
later issued by the corporation.
Answer:
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 _________________.
Answer:
A company reported $990,000 in net income for the current year. Total
weighted-average number of common shares outstanding are equal to 150,000 shares
and the year-end market price is $79.20 per common share. Calculate the company’s
price-earnings ratio.
Answer:
Explain the form and content of a complete income statement.
Answer:
Explain the present value concept and how it applies to long-term liabilities.
Answer: