When bonds are converted to stock, no gain or loss is recognized.
One reason for preparing a process cost report for a particular department is to
determine the amount of costs to transfer to the next department or to the Finished
Goods Inventory account at the end of the period.
Cash and inventory are very vulnerable to theft.
Within the relevant range, total fixed cost and variable cost per unit remain constant.
It is possible for horizontal analysis to indicate an increase in revenues from one year to
another and a decrease in net income.
Cash flows to sales is a measure of how much operating cash flows did each dollar of
sales generate.
Direct materials and direct labor are components of manufacturing overhead.
The direct charge-off method makes no attempt to match bad-debt losses with revenues.
Activity-based management is useful for both strategic planning and operational
decision making.
Product warranties are an expense of the period in which the related product is sold.
Which of the four levels of the cost hierarchy would be used by a ice cream producer
using an activity-based management for a production run of a certain quantity of ice
cream of vanilla flavor?
A.Unit-level activity
B.Batch-level activity
C.Product-level activity
D.Facility-level activity
Use this information to answer the following question.
The total dollar amount of assets to be classified as investments is
A.$168,000.
B.$0.
C.$112,000.
D.$56,000.
The inventory turnover amount is needed to calculate the
A.days’ sales uncollected.
B.days’ inventory on hand.
C.receivables turnover.
D.interest coverage ratio.
In which of the following cases would the gross profit method most likely be used?
A.In a company with good accounting records
B.In applying the average-cost method
C.In estimating the market value of inventory for application of the
lower-of-cost-or-market rule
D.In estimating an inventory loss from fire
Assume the direct method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Decrease in Inventory’”indicate
the effect on cash payments for purchases by choosing one of the following:
A.Add to Cost of Goods Sold to compute cash payments for purchases.
B.Subtract from Cost of Goods Sold to compute cash payments for purchases.
C.Not used to adjust Cost of Goods Sold to compute cash payments for purchases.
Which of the following phrases is not descriptive of the corporate form of business?
A.Professional management
B.Continuous existence
C.Double taxation
D.Unlimited liability
Which of the following phrases is not descriptive of an ordinary annuity?
A.Payments made at the beginning of equal periods of time
B.Both present and future value can be calculated
C.Compound interest assumed
D.Series of equal payments
Lincoln Company engaged in this transaction:
Issued stock for land.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Financing activities section.
B.Operating activities section.
C.Investing activities section.
D.Schedule of noncash investing and financing transactions.
Which of the following accounts does not appear in the Balance Sheet columns of a
work sheet?
A.Withdrawals
B.Unearned Revenue
C.Wages Payable
D.Depreciation Expense’“Equipment
Use this information to answer the following question.
The total amount of working capital is
A.($30,000.)
B.$80,000.
C.$24,000.
D.$400,000.
Which of the following is an example of a deferral?
A.Wages recorded but not yet paid.
B.The purchase of a company vehicle.
C.Legal fees earned but not yet collected.
D.The accumulation of interest in a bank account.
Cardsheet Company
The following partially completed T accounts summarize the transactions of Cardsheet
Company for last year:
The applied overhead is
A.$31,000.
B.$30,000.
C.$18,000.
D.$62,300.
Direct materials costs and conversion costs for the current period on a FIFO process
cost report are divided by their respective units of equivalent production to arrive at the
A.units to be started.
B.transferred-in cost per unit.
C.beginning inventory cost per unit.
D.cost per equivalent unit.
Fill in the missing data for Company B:
Company B
Direct materials used $ 9,000
Direct labor cost 4,000
Overhead (a)
Total manufacturing costs 25,000
Work in process inventory, Jan. 1 1,000
Work in process inventory, Dec. 31 3,500
Sales revenue 40,000
Finished goods inventory, Jan. 1 (b)
Cost of goods manufactured (c)
Cost of goods available for sale (d)
Finished goods inventory, Dec. 31 4,000
Cost of goods sold 26,500
Gross margin (e)
Operating expenses (f)
Net operating income 5,500
Memphis Co. is considering purchasing a machine for $83,200 that will increase cash
flows by $40,000 in the first year, $30,000 the second year, and $25,000 the third year.
The machine will have no residual value. The minimum rate of return is 10 percent. The
present value factors, at 10 percent, for the three years are 0.909, 0.826, and 0.751,
respectively.
Using the above information for Memphis, the machine’s net present value is
A.$21,800.
B.($3,285).
C.$79,915.
D.($4,286).
Which of the following forms of organization are considered to be separate entities by
accountants?
A.Partnerships only
B.Sole proprietorships only
C.Corporations only
D.Sole proprietorships, partnerships, and corporations