1) A trend percent, or index number, is calculated by dividing the analysis period
amount by the base period amount and multiplying the result by 100.
2) Most companies do not take a physical count of inventory each year, but rather rely
on inventory records to determine the inventory value.
3) Newly completed units are combined with beginning finished goods inventory to
make up total ending work in process inventory.
4) The net present value decision rule is: When an asset’s expected cash flows yield a
positive net present value when discounted at the required rate of return, the asset
should be acquired.
5) A short-term note payable is a written promise to pay a specified amount on a
definite future date within one year or the operating cycle, whichever is shorter.
6) The book value of an asset when using double-declining-balance depreciation is
always greater than the book value from using straight-line depreciation, except at the
beginning and the end of the asset’s useful life, when it is the same.
7) FOB shipping point means that the buyer accepts ownership when the goods arrive at
the buyer’s place of business.
8) Trading securities are always reported as current assets.
9) When using a spreadsheet to prepare the statement of cash flows, a decrease in
accounts payable is entered in the Analysis of Changes columns with a debit in the
statement of cash flows section and a credit in the balance sheet section.
10) Common stock always carries a preference for receiving dividends over preferred
stock.
11) Trade accounts payable are amounts owed to suppliers for products or services
purchased on credit.
12) The number of equivalent units of production assigned to ending Work in Process
inventory should be equal to or less than the number of physical units in ending Work in
Process inventory.
13) Employee vacation benefits:
A.Are estimated liabilities.
B.Are contingent liabilities.
C.Are recorded as an expense when the employee takes a vacation.
D.Are recorded as an expense when the employee retires.
E.Increase net income.
14) The effective interest amortization method:
A.Allocates bond interest expense over the bond’s life using a changing interest rate.
B.Allocates bond interest expense over the bond’s life using a constant interest rate.
C.Allocates a decreasing amount of interest over the life of a discounted bond.
D.Allocates bond interest expense using the current market rate for each interest period.
E.Is not allowed by the FASB.
15) The Merker Manufacturing Company has the following job cost sheets on file. They
represent jobs that have been worked on during April of the current year. This table
summarizes information provided on each sheet:
(a) What is the cost of goods sold for the month of April?
(b) What is the cost of the Work in Process inventory on April 30?
(c) What is the cost of the finished goods inventory on April 30?
16) A manufacturing firm’s cost of goods manufactured is equivalent to a
merchandising firm’s:
A.Cost of goods sold.
B.Cost of goods purchased.
C.Cost of goods available.
D.Beginning merchandise inventory.
E.Ending merchandise inventory.
17) The type of department that generates revenues and incurs costs, and its manager is
responsible for the investments made in operating assets is called a:
A.Profit center
B.Cost center
C.Service department
D.Investment center
E.Responsibility center
18) Assuming a bottom-up process of budget development, which of the following
should be initially responsible for developing sales estimates?
A.The budget committee.
B.The accounting department.
C.The sales department.
D.Top management.
E.The marketing department.
19) A general journal is:
A.A ledger in which amounts are posted from a balance column account.
B.Not required if T-accounts are used.
C.A complete record of all transactions in chronological order from which transaction
amounts are posted to the ledger accounts.
D.Not necessary in electronic accounting systems.
E.A book of final entry because financial statements are prepared from it.
20) To determine the production budget for an accounting period, consideration is given
to all of the following except:
A.Budgeted ending inventory.
B.Budgeted beginning inventory.
C.Budgeted sales.
D.Budgeted overhead.
E.Ratio of inventory to future sales.
21) Current information for the Stellar Corporation follows:
Stellar Corporation’s Cost of Goods Manufactured for the year is:
A.$295,100.
B.$296,500.
C.$313,000.
D.$275,800.
E.$293,700.
22) Naples Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of resource consumption across activity cost pools:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products. How much indirect
factory wages and factory equipment depreciation cost would be assigned to the
Product Processing activity cost pool?
A.$260,000
B.$429,000
C.$169,000
D.$780,000
E.$351,000
23) A component of operating efficiency and profitability, calculated by expressing net
income as a percent of net sales, is the:
A.Acid-test ratio.
B.Merchandise turnover.
C.Price earnings ratio.
D.Accounts receivable turnover.
E.Profit margin ratio.
24) Andrew Industries purchased $165,000 of raw materials on account during the
month of March. The beginning Raw Materials Inventory balance was $22,000, and the
materials used to complete jobs during the month were $141,000 direct materials and
$13,000 indirect materials. What journal entry should Andrew use to account for direct
materials used in March?
A.Debit Raw Materials Inventory $141,000; credit Accounts Payable $141,000.
B.Debit Work in Process Inventory $141,000; credit Raw Materials Inventory
$141,000.
C.Debit Work in Process Inventory $141,000; credit Accounts Payable $141,000.
D.Debit Finished Goods Inventory $22,000; credit Raw Materials Inventory $22,000.
E.Debit Raw Materials Inventory $153,000; credit Work In Process $153,000.
25) A company purchases a machine for $800,000. The machine has an expected life of
9 years and no salvage value. The company anticipates a yearly after-tax net income of
$60,000 to be received uniformly throughout each year. What is the accounting rate of
return?
26) You decrease the Accounts Payable account on the ___________ side of its account.
27) A company paid $600,000 for 10% bonds with a par value of $600,000 on
September 1. The bonds pay 5% interest semiannually on September 1 and March 1.
The company intends to hold the bonds until they mature. Prepare the journal entries for
the following dates and transactions related to this bond acquisition.
(1) Bonds purchased on September 1
(2) Year-end adjusting entry, December 31
(3) Receipt of semiannual interest March 1
(4) Redemption of the bonds at maturity on August 31
28) Should both favorable and unfavorable variances be investigated, or only the
unfavorable ones? Explain.
29) Describe a petty cash account and its purpose.
30) Kominski Company completed and transferred 90,000 units during the current
period. Based on the following information, determine the cost of the goods completed
during the current reporting period and journalize the transfer.
31) To compute the amount of tax withheld from an employee’s pay, employers can use
a __________________________ table.