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Dividing accounts receivable by net sales and multiplying the result by 365 is equal to
the:
A. Profit margin
B. Days' sales uncollected
C. Accounts receivable turnover ratio
D. Average accounts receivable ratio
E. Current ratio
Answer:
Responsibility accounting performance reports:
A. Become more detailed at higher levels of management.
B. Become less detailed at higher levels of management.
C. Are equally detailed at all levels of management.
D. Are useful in any format.
E. Are irrelevant.
Answer:
A budget is best described as:
A. A formal statement of a company's future plans usually expressed in monetary terms.
B. A master control device.
C. An informal statement of company future plans usually expressed in monetary terms.
D. The most crucial component of a company evaluation process.
E. The minimum acceptable performance level.
Answer:
The Discount on Common Stock account reflects:
A. The difference between the par value of stock and its issue price when the issue price
is below par value.
B. One share's portion of the issued corporation's net assets recorded in its accounts.
C. The difference between the par value of the stock and the amount contributed by
stockholders when the amount contributed is more than par value.
D. An amount of assets defined by state law that stockholders must invest and leave
invested in a corporation.
E. The amount a corporation must pay in addition to dividends in arrears if and when it
exercises its right to retire a share of callable preferred stock.
Answer:
The appropriate section in the statement of cash flows for reporting the issuance of
common stock for cash is:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Schedule of noncash investing or financing activity.
E. None of these as this is not reported on the statement of cash flows.
Answer:
To include the personal assets and transactions of a business's owner in the records and
reports of the business would be in conflict with the:
A. Objectivity principle
B. Realization principle
C. Business entity principle
D. Going-concern principle
E. Revenue recognition principle
Answer:
Costs that are first assigned to inventory are called:
A. Period costs
B. Product costs
C. General costs
D. Administrative costs
E. Fixed costs
Answer:
Costs that the manager does not have the power to determine or strongly influence are:
A. Variable costs
B. Uncontrollable costs
C. Indirect costs
D. Direct costs
E. Joint costs
Answer:
Reference: 18_05
Thomas Company has total fixed costs of $360,000 and variable costs of $14 per unit.
If the unit sales price is reduced from $24 to $20 and advertising is increased by
$10,000, sales will increase from 40,000 to 65,000 units.
What are the contribution margin and net income under the revised conditions?
A. $650,000 and $280,000 respectively.
B. $400,000 and $40,000 respectively.
C. $280,000 and $40,000 respectively.
D. $390,000 and $20,000 respectively.
E. $400,000 and $20,000 respectively.
Answer:
On June 18, Johnson Company (a U.S. company) sold merchandise to the Frater
Company of Denmark for 60,000 Euros, with a payment due in 60 days. If the
exchange rate was $1.14 per euro on the date of sale and $1.35 per euro on the date of
payment, Johnson Company should recognize a foreign exchange gain or loss in the
amount of:
A. $60,000 gain
B. $60,000 loss
C. $68,400 loss
D. $12,600 gain
E. $12,600 loss
Answer:
A company has net income of $250,000, net sales of $2,000,000, and average total
assets of $1,500,000. Its return on total assets is equal to:
A. 12.5%
B. 13.3%
C. 16.7%
D. 75.0%
E. 600.0%
Answer:
Assume a company sells a given product for $75 per unit. How many units must be sold
to break-even if variable selling costs are $12 per unit, variable production costs are $23
per unit, and total fixed costs are $700,000?
A. 11,112 units.
B. 13,462 units.
C. 9,334 units.
D. 17,500 units.
E. 6,363 units.
Answer:
Shown below are terms or phrases preceded by letters a through j followed by a list of
definitions. Match the terms or phrases 1 through 10 with the correct definitions by
placing the letter of the term or phrase in the answer space provided at the beginning of
each definition.
(a) Contribution margin per unit
(b) Fixed cost
(c) Mixed cost
(d) Curvilinear cost
(e) Variable cost
(f) Step-wise cost
(g) Relevant range of operations
(h) Estimated line of cost behavior
(i) Least-squares regression
(j) Cost-volume-profit analysis
__________(1) The amount that the sale of one unit contributes toward recovering
fixed costs and earning profit.
__________(2) A cost that changes in proportion to changes in volume of activity.
__________(3) A cost that includes both fixed and variable costs.
__________(4) A cost that changes with volume but not at a constant rate.
__________(5) A line drawn on a graph to fit the past relation between cost and sales.
__________(6) A statistical method for deriving an estimated line of cost behavior that
is more precise than the high-low method and a scatter diagram.
__________(7) A company's normal operating range; excludes extremely high and low
volumes that are not likely to be encountered.
__________(8) A cost that remains constant over limited ranges of volumes of activity
but changes by a lump sum when volume changes occur outside these limited ranges.
__________(9) Useful in business planning; includes predicting the volume of activity,
the costs incurred, sales earned, and profits received.
__________(10) A cost that remains unchanged in total amount even when the volume
of activity varies.
Answer:
Which of the following costs would not be classified as factory overhead?
A. Property taxes on maintenance machinery.
B. Expired insurance on factory equipment.
C. Wages of the factory janitor.
D. Metal doorknobs used on wood cabinets produced.
E. Small tools used in production.
Answer:
The appropriate section in the statement of cash flows for reporting the receipt of cash
dividends from investments in securities is:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Schedule of noncash investing or financing activity.
E. None of these as this is not reported on the statement of cash flows.
Answer:
A June sales forecast projects that 6,000 units are going to be sold at a price of $10.50
per unit. The desired ending inventory of units is 15% higher than the beginning
inventory of 1,000 units. Total June sales are anticipated to be:
A. $63,000
B. $67,500
C. $61,250
D. $74,250
E. $60,000
Answer:
A company has two products: Big and Little. It uses activity-based costing and has
prepared the following analysis showing budgeted cost and activity for each of its three
activity cost pools:
Annual production and sales level of big product is 62,525 units, and the annual
production and sales level of little product is 251,900 units.
a. Compute the approximate overhead cost per unit of big product under activity-based
costing.
b. Compute the approximate overhead cost per unit of little product under
activity-based costing.
Answer:
Resources owned or controlled by a company that are expected to yield benefits are:
A. Assets
B. Revenues
C. Liabilities
D. Stockholder's equity
E. Expenses
Answer:
Reference: 21_06
The following information describes a company's use of direct labor in a recent period:
The direct labor rate variance is:
A. $28,000 favorable
B. $28,000 unfavorable
C. $45,000 unfavorable
D. $45,000 favorable
E. $17,000 unfavorable
Answer:
Reference: 21_02
Kermit Enterprises has collected the following data on one of its products:
The direct materials quantity variance is:
A. $30,000 favorable
B. $30,000 unfavorable
C. $22,500 favorable
D. $37,500 unfavorable
E. $37,500 favorable
Answer:
Reference: 20_01
Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of
Product B are going to be sold for prices of $10 and $12, respectively. The desired
ending inventory of Product A is 20% higher than its beginning inventory of 2,000
units. The beginning inventory of Product B is 2,500 units. The desired ending
inventory of B is 3,000 units.
Total budgeted sales of both products for the year would be:
A. $42,000
B. $200,000
C. $264,000
D. $464,000
E. $500,000
Answer:
Accounts payable:
A. Are amounts owed to suppliers for products and/or services purchased on credit.
B. Are long-term liabilities.
C. Are estimated liabilities.
D. Do not include specific due dates.
E. Must be paid within 30 days.
Answer:
The private board that currently has the authority to establish U.S. generally accepted
accounting principles is the:
A. APB
B. FASB
C. AAA
D. AICPA
E. SEC
Answer:
A company wishes to earn a pretax income equal to 35% of total fixed costs. Its product
sells for $50.75 per unit. Total fixed costs equal $156,800 and variable costs per unit are
$32.50. How many units must this company sell to meet its goal? (Round answer to
complete units.)
A. 11,599
B. 8,592
C. 4,171
D. 6,513
E. 11,047
Answer:
On January 1, 2013, Jacob issued $600,000 of 11%, 15-year bonds at a price of 102½.
The straight-line method is used to amortize any bond discount or premium and interest
is paid semiannually. If all interest has been accounted for properly, what is the carrying
value of these bonds on January 1, 2019?
A. $472,000
B. $531,076
C. $584,924
D. $609,000
E. $600,000
Answer:
Match the following terms with the appropriate definition:.
A) Cash
B) Cash equivalent
C) Check
D) Outstanding checks
E) Liquid asset
F) Internal control system
G) Petty cash fund
H) Vendor
I) Purchase requisition
J) Invoice
Answer:
An employee earnings report:
A. Is the W-2.
B. Is the W-4.
C. Is the cumulative record of an employee's hours worked, gross earnings, deductions,
and net pay.
D. Shows the pay period dates, hours worked, gross pay, deductions, and net pay of
each employee for every pay period.
E. Is used to compute the federal income taxes withheld from each employee's gross
pay.
Answer:
A company's income statement showed the following: net income, $124,000;
depreciation expense, $30,000, and gain on sale of plant assets, $14,000. An
examination of the company's current assets and current liabilities showed the following
changes as a result of operating activities: accounts receivable decreased $9,400;
merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts
payable increased $3,400. Calculate the net cash provided or used by operating
activities.
A. $139,000
B. $141,000
C. $145,800
D. $155,000
E. $167,000
Answer:
Raw materials that physically become part of the product and can be traced to specific
units or batches of product are called:
A. Raw materials sold
B. Chargeable materials
C. Goods in process
D. Indirect materials
E. Direct materials
Answer:
Using the following accounts and an overhead rate of 80% of direct labor cost,
determine the amount of applied overhead.
A. $135,000
B. $75,000
C. $60,000
D. $101,000
E. $17,000
Answer:
Upside Down, Incorporated designs custom storage spaces to eliminate clutter in both
residential and business settings. The following data pertain to a recent reporting
period:
Required
a. Use ABC to compute overhead rates for each activity.
b. Assign costs to a 3,000 square foot job that requires 70 contact hours, 20 design
hours, and 14 days to complete.
Answer:
The average number of times a company's inventory is sold during an accounting
period, calculated by dividing cost of goods sold by the average inventory balance, is
equal to the:
A. Accounts receivable turnover
B. Inventory turnover
C. Days' sales uncollected
D. Current ratio
E. Price earnings ratio
Answer:
Newton Company uses the allowance method of accounting for uncollectible accounts.
On May 3, the Newton Company wrote off the $3,000 uncollectible account of its
customer, P. Best. On July 10, Newton received a check for the full amount of $3,000
from Best. On July 10, the entry or entries Newton makes to record the recovery of the
bad debt is:
A.
B.
C.
D.
E.
Answer:
The amount due on the date of maturity for a $6,000, 60-day, 8%, note receivable is:
A. $6,000
B. $6,480
C. $5,520
D. $6,080
E. $5,920
Answer:
A _____________________________ provides information for managers to use to
evaluate the profitability or cost effectiveness of each department's activities.
Answer:
Identify and explain the primary differences between fixed and flexible budgets.
Answer:
The budget that lists the dollar amounts to be both received from plant asset disposals
and spent to purchase additional plant assets to carry out the budgeted business
activities is the __________________________.
Answer:
Explain the impact, if any, on depreciation when depreciation estimates change.
Answer:
A company purchased equipment valued at $825,000 on January The equipment has an
estimated useful life of seven years or 6 million units. The equipment is estimated to
have a salvage value of $35,000. Assuming the units of production method of
depreciation, what is the annual depreciation for the second year if .5 million units were
produced?
Answer:
Rising Sun, Inc. produces granola that requires two processes, mixing and baking, to
complete. The best-selling type of granola is cherry almond delight. Information related
to the 100,000 units of cherry almond delight produced annually is shown in the
following table:
Rising Suns total expected overhead costs and related overhead data are shown below.
The company uses departmental overhead rates based on machine hours in the mixing
department and direct labor hours in the baking department.
Determine the total product cost of this product line and each unit of cherry almond
delight.
Answer:
A company purchased equipment valued at $200,000 on January The equipment has an
estimated useful life of six years or 5 million units. The equipment is estimated to have
a salvage value of $13,400. Assuming the straight-line method of depreciation, what is
the depreciation for the second year?
A $41,445.91
B. $62,137.80
C. $31,100.00
D. $55,980.00
E. $33,333.00
Answer:
Prepare a statement of retained earnings from the adjusted trial balance of Hanson
Storage.
Answer:
_______________________________________ refers to the programs that help
managers direct a company's vital operations.
Answer:
Mian, Inc., sells American gourmet foods to merchandisers in Singapore. Prepare the
journal entries for Mian to record the following transactions. Include any year-end
adjustments.
Answer:
Northwest Corporations salaries expense was $18.0 million. What is the amount of cash
that the company paid for salaries if the Salaries Payable account increased by $4.0
million?
Answer:
Wear Company is operating at 70% of its manufacturing capacity of 78,000 product
units per year. A customer has offered to buy an additional 18,000 units at $41 each and
sell them outside the country so as not to compete with Wear Company. The following
data are available:
In producing 18,000 additional units fixed overhead costs would remain at their current
level but incremental variable overhead costs of $1.28 per unit would be incurred. What
is the effect on total income if Wear Company accepts this order?
Answer:
__________________________ are investments in securities that are not readily
convertible to cash or are not intended to be converted to cash in the short-term.
Answer:
What is the purpose of a responsibility accounting system?
Answer:
Thomas Co. provides the following fixed budget data for the year:
Prepare a flexible budget performance report for the year using the contribution margin
format.
Answer:
The departmental overhead rate method allows each department to have its own
overhead rate and its own ____________________.
Answer:
Explain how available-for-sale debt and equity securities are accounted for at and after
acquisition and how they are reported in financial statements.
Answer:
The difference between total debits and total credits for an account, including any
beginning balance, is the ________________________.
Answer:
