1) The statement of cost of goods manufactured is an extension of the income statement
for a manufacturing company.
2) Since the adjustments are entered on the work sheet, it is not necessary to record
them in the journal or post them to the ledger.
3) Currently attainable standards do not allow for reasonable production difficulties.
4) When a partner withdraws from the partnership, the partnership dissolves.
5) The financial loss that each stockholder in a corporation can incur is usually limited
to the amount invested by the stockholder.
6) The majority of businesses end their fiscal year on December 31.
7) To a major resort, timeshare properties would be classified as property, plant and
equipment.
8) Service department charges are similar to the expenses of a profit center that
purchased services from a source outside the company.
9) X sells to A one-half of a partnership capital interest that totals $70,000 for $40,000.
A’s capital account in the partnership should be credited for $40,000.
10) Managerial accounting reports must be useful to the user of the information.
11) The anticipated purchase of a fixed asset for $400,000, with a useful life of 5 years
and no residual value, is expected to yield total net income of $200,000 for the 5 years.
The expected average rate of return on investment is 25.0%.
12) A person may be admitted to a partnership only with the consent of all the current
partners.
13) The financial statements measure precisely the financial condition and results of
operations of a business.
14) The accounts receivable turnover measures the length of time in days it takes to
collect a receivable.
15) A group of related accounts that make up a complete unit is called a trial balance.
16) Investments in stocks that are expected to be held for the long term are listed in the
stockholder’s equity section of the balance sheet.
17) Process manufacturers typically use large machines to process a continuous flow of
raw materials into a finished state.
18) If the volume of sales is $6,000,000 and sales at the break-even point amount to
$4,800,000, the margin of safety is 25%.
19) Generally, subsidiary ledgers are used for accounts that consist of a large number of
individual items.
20) When exchanging equipment, if the trade-in allowance is greater than the book
value a loss results.
21) The Owl Company produces and sells Product X at a total cost of $35 per unit, of
which $28 is product cost and $7 is selling and administrative expenses. In addition, the
total cost of $35 is made up of $24 variable cost and $11 fixed cost. The desired profit
is $6 per unit. Determine the mark up percentage on product cost.
22) A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day
period ending on that day. The last pay day of December is Friday, December 27.
Assuming the next pay period begins on Monday, December 30, journalize the
adjusting entry necessary at the end of the fiscal period (December 31).
23) Other than accounts receivable and notes receivable, name other receivables that
might be included in the general ledger.