The calculation of cash for interest to be paid each interest period in connection with a
bond payable is not influenced by any premium or discount upon issuance.
A company’s acceptance of credit cards, like MasterCard, is an example of factoring
with recourse.
The fixed costs that are traceable to the segments are called common costs.
Illegal acts of a small dollar amount can be ignored because they are immaterial.
The economic value added performance measure focuses on long-term financial
performance.
Although expensive to install and maintain, a standard cost accounting system can save
a company considerable amounts of money by reducing resource waste.
Under the perpetual inventory system, the Cost of Goods Sold account is updated
continually throughout the period.
The amount of cost of goods sold and cost of goods manufactured will be the same if a
company sells all of the units it produced.
When a partner withdraws from a partnership, an audit might be performed and the
assets reappraised.
Fair value is the amount for which an asset could be bought or sold in a current
transaction.
When a petty cash fund is replenished, the entry requires a credit to Cash.
Some period costs can be found in inventory accounts on the balance sheet.
Both direct and indirect labor costs can be directly traced to finished products.
A negative free cash flow means that all cash commitments have been met.
The Dropinsky Company’s management wants to determine if Segment B should be
eliminated. The following data are available (in thousands).
a. Assuming all direct fixed costs of Segment B are avoidable, what would be the
change in operating income if Segment B were eliminated?
b. Assuming one-half of the direct fixed costs of Segment B are avoidable, what would
be the change in operating income if Segment B were eliminated?
How does pull-through production help minimize inventories in a just-in-time operating
environment?
A.Products are made in anticipation of customer demand.
B.Products are made only when customer orders are received.
C.Products always goes through two or more processes.
D.Products produced are always identical.
Russell Company’s air-conditioning system has just completed the eighth year of an
estimated ten-year life. The system cost $60,000 and now has accumulated depreciation
of $48,000. At the beginning of the ninth year, the company expects to spend $16,000
on a complete renovation of the system and expects the total life of the system to be
fifteen years. Neither the capacity of the system nor the residual value was increased.
The company uses the straight-line method to determine depreciation. Determine the
following: (a) the account debited for the cost of renovation, (b) the carrying value of
the system after renovation, and (c) the depreciation expense for the ninth year.
The format of a variable costing income statement is similar to a(n)
A.contribution margin income statement.
B.traditional income statement.
C.audited income statement.
D.single-step income statement.
Data for Orlando Company for the month of June 2014 are as follows:
Assume the company uses a FIFO flow of costs.
a. Prepare a process cost report for June.
b. Identify the amount that should be transferred out of the Work in Process Inventory
account, and state where those dollars should be transferred.
Noncash assets invested into a partnership are recorded at
A.their fair market value
B.their carrying value
C.zero
D.their original cost
Breakeven analysis adjusted for a targeted profit
A.is a difficult computation that is not normally employed.
B.decreases the number of units required to breakeven.
C.is excellent for performing ‘what-if’ analysis.
D.is a poor basis for evaluating the profitability of a venture.
Underfoot Products uses standard costing. The following information about overhead
was generated during May:
Using the above information provided for Underfoot Products, compute the variable
overhead efficiency variance.
A.$10,000 (F)
B.$10,000 (U)
C.$40,000 (F)
D.$40,000 (U)
Preston Corporation purchased a truck for $40,000. The company expected the truck to
last four years or 100,000 miles, with an estimated residual value of $4,000 at the end
of that time. During the second year, the truck was driven 27,500 miles. Compute the
depreciation for the second year under each of the following methods: (a) straight-line,
(b) production, and (c) double-declining-balance. (Show your work.)
Which of the following should not be included in the computation of cost of goods
manufactured?
A.Factory power costs
B.Indirect materials costs
C.Selling costs
D.Direct materials costs
A retail store had goods available for sale during the period of $250,000 at retail and
$100,000 at cost. It has ending inventory of $28,500 at retail. What is the estimated cost
of goods sold?
A.$71,500
B.$94,300
C.$88,600
D.$82,900
Which of the following budgets is prepared soon after the preparation of sales budget in
a master budget?
A.Cost of goods sold budget
B.Production budget
C.Cash budget
D.Selling and administrative expenses budget
Short-term available-for-sale securities are valued on the balance sheet at
A)market value.
B)cost, adjusted for the effects of interest.
C)cost.
D)lower of cost or market.
For 20×5, Sahara Company had average total assets of $520,000, sales of $450,000, net
income of $50,000, net cash flows from operating activities of $75,000, dividend
payments of $25,000, purchases of plant assets of $60,000, and sales of plant assets of
$55,000. Using this information, compute (a) cash flow yield, (b) cash flows to sales,
(c) cash flows to assets, and (d) free cash flow. Round amounts to one decimal place.
A specialized piece of equipment closely associated with a mine is most likely to be
depreciated over a shorter than normal useful life because the
A.equipment will be fully utilized.
B.income tax laws require that a shorter life be used.
C.equipment contains certain defects.
D.mine is expected to be fully depleted in the shorter length of time.
A company with income before income taxes of $194,000, and $20,000 in interest
expense, has an interest coverage ratio of
A.10.7 times.
B.8.7 times.
C.9.7 times.
D.1.1 times.
On the completed work sheet, which set of columns usually should be out of balance
after the initial footing?
A.Both Income Statement and Balance Sheet columns
B.Balance Sheet columns only
C.Income Statement columns only
D.Adjusted Trial Balance columns only
Term bonds are bonds that
A.are also called serial bonds.
B.may be called in and redeemed by the issuing corporation prior to their scheduled
maturity date.
C.are secured by specific assets of the issuing corporation.
D.mature in one lump sum at a single maturity date.
Keerin Inc., produces a complete line of women’s athletic apparel. Sweat suits are very
popular in the northern states. During August, the company’s records revealed the
following information about the production of sweat suits:
Compute the standard unit cost for a sweat suit.
Information from the Income Statement columns of the work sheet of Landry Laundry
Service is provided below:
The entry to close the expense accounts is
List four advantages and four disadvantages of the partnership form of business.
Explain management’s responsibility as it pertains to internal control of a company.
Use the information below for the year ended December 31, 2014, to prepare the
statement of cost of goods manufactured.
Under a perpetual inventory system, is it necessary to take a physical inventory at the
end of the period? Why or why not?