1) In calculating the net present value of an investment in equipment, the required
investment and its terminal residual value should be subtracted from the present value
of all future cash inflows.
2) For a period during which the quantity of inventory at the end was smaller than that
at the beginning, income from operations reported under variable costing will be larger
than income from operations reported under absorption costing.
3) The amount journalized showing the cost added to finished goods is taken from the
cost of production report.
4) Activity-based costing can be used to allocate period costs to various products that
the company sells.
5) Taxes deducted from an employee’s earnings to finance social security and Medicare
benefits are called FICA taxes.
6) The amount of a corporation’s retained earnings that has been restricted/appropriated
should be reported in the notes to the financial statements.
7) If in evaluating a proposal by use of the net present value method there is an excess
of the present value of future cash inflows over the amount to be invested, the rate of
return on the proposal exceeds the rate used in the analysis.
8) Under the periodic inventory system, the cost of merchandise sold is recorded when
sales are made.
9) Process manufacturers typically use large machines to process a continuous flow of
raw materials into a finished state.
10) For a period during which the quantity of product manufactured exceeded the
quantity sold, income from operations reported under absorption costing will be smaller
than income from operations reported under variable costing.
11) Conversion costs are the combination of direct labor, direct material and factory
overhead costs.
12) The financial budgets of a business include the cash budget, the budgeted income
statement, and the budgeted balance sheet.
13) A chart of accounts is a listing of accounts that make up the journal.
14) On the balance sheet for a manufacturing business, the cost of direct materials,
direct labor, and factory overhead are categorized as either materials inventory, work in
process inventory, or finished goods inventory.
15) The computations involved in the net present value method of analyzing capital
investment proposals are more involved than those for the average rate of return
method.
16) Accounts receivable from sales transactions were $51,000 at the beginning of the
year and $64,000 at the end of the year. Net income reported on the income statement
for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows
from operating activities to be reported on the statement of cash flows prepared by the
indirect method is
A.$105,000
B.$118,000
C.$92,000
D.$169,000
17) An unfunded pension liability is reported on the balance sheet as
A.current liability
B.owner’s equity
C.long-term liability
D.current liability or long-term liability, depending upon when the pension liability is to
be paid
18) The amount of increase or decrease in cost that is expected from a particular course
of action as compared with an alternative is termed:
A.period cost
B.product cost
C.differential cost
D.discretionary cost
19) A practical approach which is frequently used by managers when setting normal
long-run prices is the:
A.cost-plus approach
B.economic theory approach
C.price graph approach
D.price skimming
20) The monetary value charged to customers for the performance of services or sales is
called a(n)
A.asset
B.net income
C.capital
D.revenue
21) Philadelphia Company has the following information for March:
Determine the March (a) manufacturing margin, (b) contribution margin, and (c)
income from operations for Philadelphia Company.
22) Schedule of Activity Costs
From the above schedule, calculate the (a) value-added and (b) non-value-added costs.
23) Which of the following activity bases would be the most appropriate for food costs
of a hospital?
A.Number of cooks scheduled to work
B.Number of x-rays taken
C.Number of patients who stay in the hospital
D.Number of scheduled surgeries
24) Which of the following results in fewer transactions in just-in-time accounting?
A.all manufacturing costs are combined in one account called Raw and In Process
Inventory
B.the distinction between direct and indirect costs is eliminated
C.there is less movement of inventory between departments
D.All of the above
25) Investment in certificates of deposit and other securities that do not change in value
are reported in the balance sheet as:
A.equity investments
B.available-for-sale securities
C.cash and cash equivalents
D.held to maturity securities
26) An example of a preventive control is
A.a single person handles the responsibilities for operations, custody of assets, and
accounting
B.separation of the Purchasing Department and Accounting Department personnel
C.bonding employees who handle cash
D.accepting payment in currency only
27) Declaring and paying cash dividends
A.increase expenses
B.decrease expenses
C.increase cash
D.decrease stockholders equity
28) A responsibility center in which the department manager has responsibility for and
authority over costs and revenues is called a(n):
A.profit center
B.investment center
C.volume center
D.cost center
29) Yadkin Valleys April sales forecast projects that 6,000 units will sell at a price of
$10.50 per unit. The desired ending inventory is 30% higher than the beginning
inventory, which was 1,000 units. Budgeted purchases of units in April would be:
A.7,000 units
B.6,000 units
C.6,300 units
D.7,300 units
30) When comparing a retail business to a service business, the financial statement that
changes the most is the
A.Balance Sheet
B.Income Statement
C.Statement of Owner’s Equity
D.Statement of Cash Flow
31) Cost of goods sold for a manufacturer equals cost of goods manufactured plus:
A.beginning work in process inventory less ending work in process inventory
B.ending work in process inventory less beginning work in process inventory
C.beginning finished goods inventory less ending finished goods inventory
D.ending finished goods inventory less beginning finished goods inventory
32) Which of the following can be used to place capital investment proposals involving
different amounts of investment on a comparable basis for purposes of net present value
analysis?
A.Price-level index
B.Future value index
C.Rate of investment index
D.Present value index
33) Current liabilities are:
A.due and receivable within one year
B.due and to be paid out of current assets within one year
C.due, but not payable for more than one year
D.payable if a possible subsequent event occurs
34) The following is a measure of a managers performance working in a cost center.
A.budget performance report
B.rate of return and residual income measures
C.divisional income statements
D.balance sheet
35) Global Publishers has collected the following data for recent months:
Required:
a. Using the high-low method, find variable cost per unit, total fixed costs, and the total
cost equation.
b. What is the estimated cost for a month in which 19,000 issues are published?
36) Work in process inventory increased by $20,000 during 2011. Cost of goods
manufactured was $180,000. Total manufacturing costs incurred in 2011 are:
A.$198,000
B.$160,000
C.$189,000
D.$200,000
37) The journal entry a company records for the payment of interest, interest expense,
and amortization of bond discount is
A.debit Interest Expense, credit Cash and Discount on Bonds Payable
B.debit Interest Expense, credit Cash
C.debit Interest Expense and Discount on Bonds Payable, credit Cash
D.debit Interest Expense, credit Interest Payable and Discount on Bonds Payable
38) Flyer Company sells a product in a competitive marketplace. Market analysis
indicates that their product would probably sell at $48 per unit. Flyer management
desires a 12.5% profit margin on sales. Their current full cost per unit for the product is
$44 per unit.
What is the desired profit per unit?
A.$6
B.$8
C.$5
D.$4
39) In which of the following types of accounts are decreases recorded by credits?
A.liabilities
B.retained earnings
C.dividends
D.revenues
40) A manufacturing company applies factory overhead based on direct labor hours. At
the beginning of the year, it estimated that factory overhead costs would be $360,000
and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred
were $377,200, and actual direct labor hours were 36,000. What is the predetermined
overhead rate per direct labor hour?
A.$12.00
B.$10.00
C.$12.57
D.$10.48
41) Determine the total value of the merchandise using Net Realizable Value:
42) The Stewart Cake Factory owns a building for its operations. Stewart uses only half
of the building and is considering two options for the unused space. The Candy Store
would like to purchase the half of the building that is not being used for $550,000. A
7% commission would have to be paid at the time of purchase. Ice Cream Delight
would like to lease the half of the building for the next 5 years at $100,000 each year.
Stewart would have to continue paying $9,000 of property taxes each year and $1,000
of yearly insurance on the property, according to the proposed lease agreement.
Determine the differential income or loss from the lease alternative.
43) On February 1, Marine Company reacquired 7,500 shares of its common stock at
$30 per share. On March 15, Marine sold 4,500 of the reacquired shares at $34 per
share. On June 2, Marine sold the remaining shares at $28 per share.
Required: Journalize the transaction of February 1, March 15, and June 2.
44) Callon Industries has projected sales of 67,000 machines for 2012. The estimated
January 1, 2012, inventory is 6,000 units, and the desired December 31, 2012, inventory
is 15,000 units. What is the budgeted production (in units) for 2012?
45) Compute the standard cost for one hat, based on the following standards for each
hat:
46) John Woods weekly gross earnings for the present week were $2,500. Woods has
two exemptions. Using $80 value for each exemption, what is Woods federal income
tax withholding?
47) Selected data taken from the accounting records of Laser Inc. for the current year
ended December 31, are as follows:
During the current year, the cost of merchandise sold was $448,500, and the operating
expenses other than depreciation were $78,000. The direct method is used for
presenting the cash flows from operating activities on the statement of cash flows.
Required:
Determine the amount reported on the statement of cash flows for:
(1) Cash payments for merchandise; and
(2) Cash payments for operating expenses.