Cost hierarchy includes only value-adding activities.
Residual value is relevant when calculating double-declining-balance depreciation.
Supply-chain management helps companies maintain lower levels of inventory.
An overstatement of ending inventory in a period will result in an understatement of
gross margin in that period.
When preparing a statement of cash flows using the indirect method, a gain on sale of
land is deducted from net income to arrive at net cash flows from operating activities.
Loans to company employees should be included with accounts receivable on the
balance sheet.
The work sheet is published in the annual report along with the financial statements.
When the Income Statement columns of the work sheet are initially footed, they should
be in balance.
If a partnership agreement does not specify how income and losses are to be distributed,
the partners share them equally.
Due to the recording of adjusting entries, the dollar amount of Cash on the trial balance
is usually less than the dollar amount of Cash on the adjusted trial balance.
Use the following T account to answer the questions below (assume a calendar-year
accounting period).
What apparently occurred on:
a. January 10?
b. January 15?
c. May 12?
d. December 31?
Use this information to answer the following question.
The general ledger account for Accounts Receivable shows a debit balance of $50,000.
Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the
year were $494,000. In the past, 2 percent of sales have proved uncollectible, and an
aging of accounts receivable accounts results in an estimate of $13,500 of uncollectible
accounts.
Using the percentage of net sales method, the Allowance for Uncollectible Accounts
balance (after adjustment) would be
A.$8,880.
B.$9,880.
C.$10,880.
D.$1,000.
Which type of account is Cost of Goods Sold?
A.An asset account.
B.A liability account.
C.An expense account.
D.An income account.
Boulder Company had net cash flows of $150,000 from operating activities. It extended
$60,000 for purchases of plant assets, sold plant assets for $5,000, and paid dividends
of $70,000. The company’s free cash flow is
A.$25,000.
B.$50,000.
C.$60,000.
D.$75,000.
Use this inventory information for the month of July to answer the following question.
Assuming that a periodic inventory system is used, what is cost of goods sold on a
FIFO basis?
A.$7,696
B.$7,736
C.$3,664
D.$3,704
Which of the following accounts most likely would have an amount contained in the
Income Statement columns of a work sheet but not in Balance Sheet columns of work
sheet?
A.Office Supplies Expense
B.Property Taxes Payable
C.Owner’s Capital
D.Withdrawals
The Logan 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 10 percent minimum desired rate
of return.)
J. J. Johnson has decided to supplement his income by selling beehives. He expects to
sell 25,000 hives in 2014. He ended 2013 with 2,500 completed hives in inventory and
would like to complete operations in 2014 with at least 2,800 completed hives in
inventory. There is no ending work in process inventory. One beehive holds about 250
bees. The bees are purchased for $4.00 per 1,000 bees. The hives sell for $15.00 each.
What would be the total of the 2014 sales budget of Johnson?
A.$378,000
B.$375,000
C.$379,500
D.$376,500
Management accounting activities
A.are synonymous with financial accounting activities.
B.are substitute for the management process.
C.complement the management process.
D.have nothing to do with the management process.
If the market interest rate is lower than the face interest rate at the date of issuance,
bonds will
A.not sell until the face interest rate is adjusted.
B.sell at face value.
C.sell at a discount.
D.sell at a premium.
Which of the following situations severely limits the use of industry norms as standards
of comparison?
A.The fact that little information exists on industry norms
B.The existence of conglomerates
C.The presentation of segmented information
D.A downward turn in the economy
The cash payments journal would normally post a
A.debit to Cash.
B.credit to Purchases Discounts.
C.credit to Accounts Payable.
D.credit to Advertising Expense.
Which of the following statements is incorrect regarding the statement of cash flows?
A.The direct and indirect methods always produce the same amount of cash flows from
operating activities.
B.The direct method presentation of operating cash flows is more straightforward
than that of the indirect method.
C.The indirect method is more difficult to implement in practice.
D.When the direct method is presented, preparation and disclosure of the indirect
method of presenting cash flows from operating activities is also required.