The cash budget presents the expected inflow and outflow of cash for a specified period
of time.
Answer:
An estimate of the amount which an asset can be sold at the end of its useful life is
called residual value.
Answer:
Ordinary gains from the sale of fixed assets should be reported in the other income
section of the income statement.
Answer:
For an automotive repair shop, the wages of mechanics would be classified as direct
labor cost.
Answer:
The adjusting entry to record inventory shrinkage would generally include a debit to
Cost of Merchandise Sold.
Answer:
Managerial accounting reports must be useful to the user of the information.
Answer:
Medicare taxes are paid by both the employee and the employer.
Answer:
Generally accepted accounting principles do not normally allow the use of the direct
write-off method of accounting for uncollectible accounts.
Answer:
The accounts receivables turnover ratio is computed by dividing total gross sales by the
average net receivables during the year.
Answer:
When a new partner is admitted to a partnership, all partnership assets should be revised
to reflect current prices.
Answer:
A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables,
$150,000 and $222,500 of inventories. Current liabilities are $225,000. The current
ratio is 2.5 to 1.
Answer:
To determine cash payments for operating expenses for the cash flow statement using
the direct method, a decrease in accrued expenses is added to operating expenses other
than depreciation.
Answer:
A controlling account is used to record the details of the individual accounts.
Answer:
A petty cash fund is used to pay relatively large amounts.
Answer:
If income from operations for a division is $30,000, sales are $263,750, and invested
assets are $187,500, the investment turnover is 1.3.
Answer:
If the property tax rates are increased, this change in fixed costs will result in a decrease
in the break-even point.
Answer:
Use of the retail inventory method requires taking a physical count of inventory.
Answer:
Under the variable cost concept, only variable costs are included in the cost amount per
unit to which the markup is added.
Answer:
Transactions are listed in the journal chronologically.
Answer:
Flexible budgeting builds the effect of changes in level of activity into the budget
system.
Answer:
In the vertical analysis of an income statement, each item is generally stated as a
percentage of total assets.
Answer:
A voucher is a form on which is recorded pertinent data about a liability and the
particulars of its payment.
Answer:
If 30,000 units of materials enter production during the first year of operations, 25,000
of the units are finished, and 5,000 are 50% completed, the number of equivalent units
of production would be 28,500.
Answer:
When a seller allows a buyer an amount for old equipment that is traded in for new
equipment of similar use, this amount is known as boot.
Answer:
The financial statements resulting from combining parent and subsidiary statements are
called consolidated statements.
Answer:
The main reason that the bank statement cash balance and the company’s cash balance
do not initially balance is due to timing differences.
Answer:
Volume variance measures fixed factory overhead.
Answer:
The normal balance of the drawing account is a debit.
Answer:
The range of activity over which changes in cost are of interest to management is called
the relevant range.
Answer:
Past performance is the best overall basis for evaluating current performance and
assessing the need for corrective action.
Answer:
The number of days’ sales in receivables is an estimate of the length of time the
accounts receivables have been outstanding.
Answer:
The denominator of the rate of return on total assets ratio is the average total assets.
Answer:
Unusual items affecting the prior period’s income statement consist of errors and change
in accounting principles.
Answer:
A cost can be a payment of cash for the purpose of generating revenues.
Answer:
If the liabilities owed by a business total $300,000 and owners equity is equal to
$300,000, then the assets also total $300,000.
Answer:
If a company has issued only one class of stock, the earnings per share are determined
by dividing net income plus interest expense by the number of shares outstanding.
Answer:
Which of the following costs is an example of a cost that remains the same in total as
the number of units produced changes?
A.Direct labor
B.Salary of a factory supervisor
C.Units of production depreciation on factory equipment
D.Direct materials
Answer:
For which of the following businesses would the process cost system be appropriate?
A.Book retailer
B.Dress designer
C.Lumber mill
D.Printing firm
Answer:
Computer equipment was acquired at the beginning of the year at a cost of $65,000 that
has an estimated residual value of $3,800 and an estimated useful life of 8 years.
Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line
depreciation.
Answer:
Profit is the difference between
A.assets and liabilities
B.the incoming cash and outgoing cash
C.the assets purchased with cash contributed by the owner and the cash spent to operate
the business
D.the amounts received from customers for goods or services and the amounts paid for
the inputs used to provide the goods or services.
Answer:
Dove Corporation began its operations on September 1 of the current year. Budgeted
sales for the first three months of business are $250,000, $320,000, and $410,000,
respectively, for September, October, and November. The company expects to sell 25%
of its merchandise for cash. Of sales on account, 70% are expected to be collected in
the month of the sale, 30% in the month following the sale.
The cash collections in October are:
A.$320,000
B.$248,000
C.$304,250
D.$382,500
Answer:
Which of the items below does not appear on the work sheet?
A.adjusting entries
B.the unadjusted trial balance
C.closing entries
D.the drawing account
Answer:
Cavy Company estimates that total factory overhead costs will be $660,000 for the year.
Direct labor hours are estimated to be 100,000. Determine (a) the predetermined factory
overhead rate, (b) the amount of factory overhead applied to Job 345 if the amount of
direct labor hours is 560 and Job 777 if the amount of direct labor hours is 800, and (c)
prepare the journal entry to apply factory overhead in April according to the
predetermined overhead rate.
Answer:
Conversion costs are
A.direct materials and direct labor
B.direct materials and factory overhead
C.factory overhead and direct labor
D.direct materials and indirect labor
Answer:
Direct labor and direct materials are classified as:
A.product costs and expensed when the goods are sold
B.product costs and expensed when incurred
C.period costs and expensed when incurred
D.period costs and expensed when the goods are sold
Answer:
Department G had 3,600 units, 25% completed at the beginning of the period, 11,000
units were completed during the period, 3,000 units were one-fifth completed at the end
of the period, and the following manufacturing costs were debited to the departmental
work in process account during the period:
Assuming that all direct materials are placed in process at the beginning of production
and that the first-in, first-out method of inventory costing is used, what is the total cost
of 3,600 units of beginning inventory which were completed during the period (round
unit cost calculations to four decimal places)?
A.$62,206
B.$16,163
C.$40,000
D.$19,275
Answer:
Which of the following transactions is recorded in the revenue journal?
A.sale of excess office equipment for cash
B.rendering services for cash
C.rendering services on account
D.sale of excess office equipment on account
Answer:
Which of the following conditions would cause the break-even point to increase?
A.Total fixed costs increase
B.Unit selling price increases
C.Unit variable cost decreases
D.Total fixed costs decrease
Answer:
Computerized accounting systems
A.are only used by medium and large sized companies
B.are generally not as accurate as manual systems
C.record and post transactions at the same time
D.must make use of special journals
Answer:
When several alternative investment proposals of the same amount are being
considered, the one with the largest net present value is the most desirable. If the
alternative proposals involve different amounts of investment, it is useful to prepare a
relative ranking of the proposals by using a(n):
A.average rate of return
B.consumer price index
C.present value index
D.price-level index
Answer:
The budgeted finished goods inventory and cost of goods sold for a manufacturing
company for the year 2012 are as follows: January 1 finished goods, $765,000;
December 31 finished goods, $640,000; cost of goods sold for the year, $2,560,000.
The budgeted costs of goods manufactured for the year is?
A.$1,405,000
B.$2,560,000
C.$2,435,000
D.$3,965,000
Answer:
Which of the following budgets allow for adjustments in activity levels?
A.Static Budget
B.Continuous Budget
C.Zero-Based Budget
D.Flexible Budget
Answer:
If one company owns more than 50% of the common stock of another company
A.a partnership exists.
B.a parentsubsidiary relationship exists.
C.the company whose stock is owned must be liquidated
D.the cost method should be used to account for the investment.
Answer:
Increases and decreases in various types of accounts are listed below. In each case,
indicate by “Dr.” or “Cr.” (a) whether the change in the account would be recorded as a
debit or a credit and (b) whether the normal balance of the account is a debit or a credit.
Answer:
The process of initially recording a business transaction is called
A.closing
B.posting
C.journalizing
D.balancing
Answer:
Assume in analyzing alternative proposals that Proposal F has a useful life of six years
and Proposal J has a useful life of nine years. What is one widely used method that
makes the proposals comparable?
A.Ignore the fact that Proposal F has a useful life of six years and treat it as if it has a
useful life of nine years.
B.Adjust the life of Proposal J to a time period that is equal to that of Proposal F by
estimating a residual value at the end of year six.
C.Ignore the useful lives of six and nine years and find an average (7 1/2 years).
D.Ignore the useful lives of six and nine years and compute the average rate of return.
Answer:
In a common size income statement, the 100% figure is:
A.net cost of goods sold.
B.net income.
C.gross profit.
D.net sales.
Answer:
Which of the following accounts ordinarily appears in the post-closing trial balance?
A.Fees Earned
B.Supplies Expense
C.Zane White, Drawing
D.Unearned Rent
Answer:
In most business organizations, the chief management accountant is called the:
A.chief accounting officer
B.controller
C.chairman of the board
D.chief executive officer
Answer:
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months were: January – 200,000 units; February –
180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company
wishes to maintain a desired ending finished goods inventory of 20% of the following
months sales.
What should the budgeted production be for January?
A.236,000
B.181,000
C.200,000
D.219,000
Answer:
Zeke Company is a manufacturing company that has worked on several production jobs
during the 1st quarter of the year. Below is a list of all the jobs for the quarter:
Job 356, 357, 358 & 359 were completed. Jobs 356 & 357 were sold at a profit of $500
on each job.
What is Gross Margin for Zeke Company as of the end of the 1st quarter?
A.$1,685
B.$2,685
C.$1,000
D.$685
Answer:
On the statement of cash flows prepared by the indirect method, a $50,000 gain on the
sale of investments would be
A.deducted from net income in converting the net income reported on the income
statement to cash flows from operating activities
B.added to net income in converting the net income reported on the income statement to
cash flows from operating activities
C.added to dividends declared in converting the dividends declared to the cash flows
from financing activities related to dividends
D.deducted from dividends declared in converting the dividends declared to the cash
flows from financing activities related to dividends
Answer:
ABC Corporation has three service departments with the following costs and activity
base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
What will the income of the Macro Division be after all service department allocations?
A.$780,000
B.$375,000
C.$575,000
D.$435,000
Answer:
The depreciation method that does not use residual value in calculating the first year’s
depreciation expense is
A.straight-line
B.units-of-production
C.double-declining-balance
D.none of the above
Answer:
The capital accounts of Hawk and Martin have balances of $160,000 and $140,000,
respectively, on January 1, 2010, the beginning of the current fiscal year. On April 10,
Hawk invested an additional $10,000. During the year, Hawk and Martin withdrew
$86,000 and $68,000, respectively, and net income for the year was $258,000. The
articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what
amount in the capital account for Martin on December 31, 2010?
A.$173,000
B.$211,000
C.$201,000
D.$232,000
Answer:
On January 12th, JumpStart Co. purchased $870 in office supplies.
(a) Journalize this transaction as if JumpStart paid cash.
(b) (1) Journalize this transaction as if JumpStart placed it on account.
(b) (2) On January 18th, JumpStart pays the amount due. Journalize this event.
Answer:
The following information pertains to Newman Company. Assume that all balance
sheet amounts represent both average and ending balance figures. Assume that all sales
were on credit.
Assets
Liabilities and Stockholders’ Equity
Income Statement
What is the price earnings ratio for this company?
A.6.0 times
B.4.2 times
C.8.0 times
D.9.6 times
Answer: