1) The monetary unit assumption means that all companies doing business in the United
States must express transactions and events in U.S. dollars.
2) A system of performance measures, including nonfinancial measures, used to assess
company and division manager performance is:
A.Hurdle rate.
B.Return on investment.
C.Balanced scorecard.
D.Residual income.
E.Investment turnover.
3) A cost center is a unit of a business that incurs costs without directly generating
revenues. All of the following are considered cost centers except:
A.Accounting department at Warner Bros.
B.Purchasing department at Best Buy.
C.Research department at Microsoft.
D.Advertising department at Hertz.
E.Juice division at Coca Cola.
4) Butler Corporation is considering the purchase of new equipment costing $30,000.
The projected annual after-tax net income from the equipment is $1,200, after deducting
$10,000 for depreciation. The revenue is to be received at the end of each year. The
machine has a useful life of 3 years and no salvage value. Butler requires a 12% return
on its investments. The present value of an annuity of 1 for different periods follows:
What is the net present value of the machine?
A.$24,018.
B.$(3,100).
C.$30,000.
D.$26,900.
E.$(29,520).
5) Quantum Corporation has provided the following data from its activity-based costing
system:
The company makes 340 units of product J71B a year, requiring a total of 980
machine-hours, 36 orders, and 22 inspection-hours per year. The product’s direct
materials cost is $27.50 per unit and its direct labor cost is $18.10 per unit. According to
the activity-based costing system, the total cost for producing the 340 units of the J71B
product is:
A.$15,504.00
B.$30,972.72
C.$37,126.72
D.$21,622.72
E.$17,957.92
6) All of the following are true of the number of days’ sales uncollected ratio except:
A.Is most effective in evaluating the cash sales of a company.
B.Can be used for comparisons to other companies in the same industry.
C.Can be used for comparisons between current and prior periods.
D.Reflects the liquidity of receivables.
E.Measures how much time is likely to pass before the current amount of accounts
receivable is received in cash.
7) The following is a partially completed departmental expense allocation spreadsheet
for Brickland. It reports the total amounts of direct and indirect expenses for its four
departments. Purchasing department expenses are allocated to the operating
departments on the basis of purchase orders. Maintenance department expenses are
allocated based on square footage. Compute the amount of Maintenance department
expense to be allocated to Fabrication.
A.$6,400.
B.$9,900.
C.$8,100.
D.$9,000.
E.$25,600.
8) Given the following information, determine the cost of the inventory at June 30 using
the LIFO perpetual inventory method.
The cost of the ending inventory is:
A.$200
B.$220
C.$380
D.$275
E.$300
9) Marian Corporation has two separate divisions that operate as profit centers. The
following information is available for the most recent year:
The Black Division occupies 20,000 square feet in the plant. The Navy Division
occupies 30,000 square feet. Rent is an indirect expense and is allocated based on
square footage. Rent expense for the year was $50,000. Compute gross profit for the
Black and Navy Divisions, respectively.
A.$72,000; $193,000.
B.$172,000; $352,000.
C.$100,000; $241,000.
D.$52,000; $163,000.
E.$72,000; $163,000.
10) Metaline Corp. uses the weighted average method for inventory costs and had the
following information available for the year. Equivalent units of production for the year
are:
A.3,200 units.
B.3,320 units.
C.3,240 units.
D.3,520 units.
E.3,800 units.
11) Which of the following is not true regarding a responsibility accounting system?
A.It is designed to measure the performance of managers in terms of controllable costs.
B.It assigns responsibility for costs to the appropriate managerial level that controls
those costs.
C.It should not hold a manager responsible for costs over which the manager has no
influence.
D.It can be applied at any level of an organization.
E.It is only relevant in manufacturing companies.
12) A company paid $0.48 in cash dividends per share. Its earnings per share is $3.20
and its market price per share is $20.00. Its dividend yield equals:
A.2.4%.
B.6.25%.
C.6.4%.
D.6.67%.
E.15.00%.
13) Sanchez Company’s output for the current period was assigned a $200,000 standard
direct materials cost. The direct materials variances included a $5,000 favorable price
variance and a $3,000 unfavorable quantity variance. What is the actual total direct
materials cost for the current period?
A.$208,000.
B.$198,000.
C.$202,000.
D.$192,000.
E.$205,000.
14) The difference between actual overhead costs incurred and the budgeted overhead
costs based on a flexible budget is the:
A.Production variance.
B.Quantity variance.
C.Volume variance.
D.Price variance.
E.Controllable variance.
15) The _______________________ is a record containing all accounts used by a
company as well as the transactions and ending balances of each of the accounts.
16) ___________________________ are investments in securities that management
intends to convert to cash within the longer of one year or the operating cycle, and are
readily convertible to cash.
17) Use the following calendar-year information to prepare Adam Company’s statement
of cash flows using the direct method.
18) A company’s flexible budget for 60,000 units of production showed sales of
$96,000, variable costs of $36,000, and fixed costs of $26,000. What operating income
would be expected if the company produces and sells 70,000 units?
19) What are the four steps in accounting for production activity in a period?
20) A company’s stock is selling for $63.20 per share and its earnings per share is $3.60
for the current year. Calculate the price-earnings ratio.
21) The least amount that the buyers of stock must contribute to the corporation or be
subject to paying at a future date is called ____________________________.