Regarding the separation of corporate ownership and management, which of the
following is a true statement?
A) The corporate officers elect the board of directors.
B) The corporation runs better with day-to-day input from stockholders.
C) None of the stockholders have the ability to manage the business of the corporation.
D) Stockholders own the business, but a board of directors appoints corporate officers
to manage the business.
Evanston Manufacturing, Inc. reported the following information for the year:
What was the unit product cost? (Round your answer to the nearest cent.)
A) $4.32
B) $0.86
C) $0.85
D) $1.76
On January 1, 2017, Henry Manufacturing Corporation purchased a machine for
$40,600,000. Henry’s management expects to use the machine for 34,000 hours over the
next six years. The estimated residual value of the machine at the end of the sixth year
is $47,000. The machine was used for 4,000 hours in 2017 and 5,400 hours in 2018.
Calculate the book value of the machine at the end of 2018 if the company uses the
units-of-production method of depreciation. (Round any intermediate calculations to
two decimal places, and your final answer to the nearest dollar.)
A) $29,388,244
B) $40,600,000
C) $29,375,272
D) $35,829,040
The statement of cash flows helps users ________.
A) predict future net income
B) evaluate management decisions
C) evaluate the company’s earnings per share
D) predict the growth of a company’s assets
Up-to-date Merchandisers has the following transactions for the month of July.
Calculate Gross Profit.
A) $54,000
B) $97,000
C) $115,000
D) $140,000
Which of the following is always irrelevant to short-term operating decisions?
A) relevant cost
B) differential cost
C) opportunity cost
D) sunk cost
Griffin Corporation invested $128,000 to acquire 27,000 shares of Delta Technologies,
Inc. on March 1, 2017. On July 2, 2017, Delta pays a cash dividend of $1.25 per share.
The investment is classified as an available-for-sale investment. Which of the following
is the correct journal entry to record the transaction on July 2, 2017?
A)
B)
C)
D)
On December 31, 2016, the balance in Pinnacle Exploration Company’s Unearned
Revenue account was a credit of $6,000. In January, 2017, the company received an
advance payment of $12,000 from a new customer for services to be performed. By
January 31, adjustments were made to recognize $7,000 of the revenue that had been
earned during January. What was the balance in Unearned Revenue on January 31,
2017?
A) $7,000 credit
B) $12,000 debit
C) $6,000 credit
D) $11,000 credit
On July 7, Landview Bank lent $530,000 to Classical Music Shop on a 60 day, 4%
note. What is the maturity value of the note? (Use a 360-day year and round answers to
the nearest dollar.)
A) $530,000
B) $551,200
C) $533,485
D) $533,533
Olivera, Inc. provides the following data for 2017:
The gross profit as a percentage of net sales is ________. (Round your answer to two
decimal places.)
A) 31.79%
B) 33.22%
C) 66.78%
D) 34.22%
Dogwood, Inc. earned revenues of $11,000 and incurred expenses of $7,500. The
company declared and paid cash dividends of $2,000. What is the balance in the Income
Summary account prior to closing net income or loss to the Retained Earnings account?
A) debit balance of $3,500
B) debit balance of $1,500
C) credit balance of $3,500
D) credit balance of $11,000
A company that uses the perpetual inventory system sold goods to a customer on
account for $2,100. The cost of the goods sold was $1,050. Which of the following
journal entries correctly records this transaction?
A)
B)
C)
D)
The manager of which of the following centers has the authority to open new stores or
close existing ones?
A) cost center
B) profit center
C) investment center
D) revenue center
Houston Corporation reports the following cost information for March:
What is the amount of direct materials used by the company in March?
A) $10,990
B) $8,510
C) $18,100
D) $19,500
Groot Promotional Services uses a job order system for costing and billing promotional
services for dance and ballet performances. Groot has four public relations specialists
plus an office staff. At the beginning of the year, Groot estimated the total cost of
salaries and benefits for the public relations specialists at $675,000 and a total of 7,500
billable hours for the year. All remaining office and administrative costs were estimated
at $405,000. The allocation base for office and administrative costs is billable hours. In
June, Groot signed a contract for a Russian ballet performance. It estimated the new
contract would require 34 hours of specialist time. What is the total cost estimate for
this contract?
A) $1,836
B) $4,896
C) $3,060
D) $1,224
Which of the following is included in comprehensive income?
A) Owners’ investments
B) Purchase of capital assets
C) Preferred dividends
D) Deferred gains or losses from derivatives
Seven Seas Sailboats Company manufactures 100 luxury yachts per month. A compact
media center is included in each yacht. Seven Seas Sailboats manufactures the media
center in-house. The company is considering the possibility of outsourcing the
production of the media center in order to close down some of its facilities and reduce
administrative costs. At present, the variable cost per unit is $275, and fixed costs are
$39,000 per month. Assuming the company outsources the production of media center
and the fixed costs could be eliminated entirely, at what contract cost would outsourcing
pay off for Seven Seas? (Round to the nearest whole dollar.)
A) at any cost lower than $390 per unit
B) at any cost lower than $275 per unit
C) at any cost lower than $765 per unit
D) at any cost lower than $665 per unit
Which of the following statements is true if a bond is issued for an amount equal to its
face value?
A) The bond’s stated interest rate is less than the prevailing market interest rate at time
of sale.
B) The bond’s stated interest rate is the same as the prevailing market interest rate at
time of sale.
C) The bond’s stated interest rate is more than the prevailing market interest rate at time
of sale.
D) The bond is not secured by specific assets of the issuer.
The total variable overhead variance is obtained by adding variable overhead cost
variance and ________.
A) total manufacturing overhead variance
B) total direct labor variance
C) fixed overhead cost variance
D) variable overhead efficiency variance
If bonds with a face value of $209,000 are issued at 93, the amount of cash proceeds is
________.
A) $208,907
B) $209,000
C) $194,370
D) $179,740
A company seeking investment opportunities has collected the following information:
If the company makes a decision based on the net present value, which project will be
selected?
A) Project A
B) Project B
C) Project C
D) Project D
Which of the following is one of the key standards of ethical practice published by the
Institute of Management Accountants (IMA)?
A) objectivity
B) environmental sensitivity
C) technicality
D) confidentiality
Which of the following is shown on a multi-step income statement but not on a
single-step income statement?
A) gross profit
B) net sales revenue
C) cost of goods sold
D) net income
Which of the following will appear as a line item in the income statement prepared
under variable costing?
A) Contribution Margin
B) Total Cost of Goods Sold
C) Work-in-Process Inventory
D) Gross Profit
Which of the following inventory costing methods uses the cost of the oldest purchases
to calculate the cost of goods sold?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
Merchant Corporation provides plumbing services. Transactions of Merchant during the
first year of operations are given below.
a) Received $12,000 cash and issued common stock to Sharon.
b) Paid $1,600 cash for equipment to be used for plumbing repairs.
c) Borrowed $14,000 from a local bank and deposited the money in the checking
account.
d) Paid $600 rent for the year.
e) Purchased $200 of office supplies by cash.
f) Completed a plumbing repair project for a local lawyer and received $3,000 cash.
Calculate the amount of total liabilities at the end of the first year.
A) $14,000
B) $12,000
C) $24,400
D) $3,000
Merchandise inventory accounting systems can be broadly categorized into two types.
They are ________.
A) FIFO and LIFO
B) perpetual and periodic
C) wholesale and retail
D) manufacturer and producer
Which of the following is classified as a short-term investment?
A) marketable securities
B) real estate investments
C) fixed assets
D) highly illiquid equity securities that are expected to be held for more than one year
Rodriguez, Inc. had the following balances and transactions during 2017, from January
1 to December 31:
What would be reported for Ending Merchandise Inventory on the balance sheet at
December 31, 2017 if the perpetual inventory system and the weighted-average inventory
costing method are used? (Round unit costs to two decimal places and total costs to nearest
dollar.)
A) $24,480
B) $12,000
C) $24,000
D) $36,000
Partridge, Inc. provides the following information for 2017:
The company has no preferred stock outstanding. Calculate the dividend yield for common
stock. (Round your answer to two decimal places.)
A) 6.92%
B) 1.92%
C) 5.00%
D) 7.44%
In a limited-liability company, the ________.
A) members are personally liable to pay the entity’s debts
B) business pays income tax on earnings
C) members are liable for each other’s actions
D) members pay income tax on their share of earnings