Unrealized gains and losses on available-for-sale securities are reported on the balance
sheet.
Activity-based costing applies only to production-related activities.
The annual interest earned on an amount deposited into a bank account will be the same
each year when compound interest is used.
Return on equity equals net income divided by average stockholders’ equity.
Common examples of commitments are leases and purchase agreements.
The number of outstanding shares should exceed the number of authorized shares.
Management accounting information is determined objectively and is verifiable,
whereas financial accounting is more subjective.
Admission of a new partner never has an impact on net income.
Days’ inventory on hand equals the inventory turnover divided by 365.
Insider trading is considered unethical, but it is not illegal in the United States.
When resources like direct material, labor, or time are scarce, the goal is to maximize
the contribution margin per unit of scarce resource.
The statement of owner’s equity discloses the owner’s withdrawals made during the
period.
All of the following can be employee payroll withholdings except
A.state income taxes.
B.medical insurance premium payments.
C.charitable contributions.
D.federal unemployment tax.
Loren Inc. sold 30,000 units of its product last year with the following results:
The company expects variable costs to increase by $4.00 per unit this year.
a. Assuming the unit sale price remains constant, compute the unit contribution margin
and the contribution margin ratio for this year. (Round percentage value to one decimal
place.)
b. Given the expected change in variable costs, how many units will have to be sold this
year to earn the same operating income as last year?
c. Assuming the company is willing to raise the unit sales price but wants the
contribution margin to be the same as last year, determine the unit sales price the
company must charge to cover the expected increase in variable costs.(Round your
answers to two decimal places.)
Which of the following is a measure of liquidity?
A.Return on equity
B.Return on assets
C.Working capital
D.Profit margin
Whitman Enterprises has $2,000,000 of 20-year, 9 percent bonds dated October 1, with
interest payment dates of September 30 and March 31. The company’s fiscal year ends
July 31, and it uses the effective interest method to amortize premium or discount.
a. Prepare entries in journal form for November 1, March 31, and July 31, assuming
that the bonds were issued at face value plus accrued interest on November 1. Round
answers to the nearest dollar and omit explanations.
b. Prepare entries in journal form for October 1, March 31, and July 31, assuming that
the bonds were issued at 98 on October 1 to yield an effective interest rate of 9.2
percent. Round answers to the nearest dollar and omit explanations.
Use the following data provided by Star Inc. to answer the questions below. The
company uses a process costing system.
The FIFO costing method is used by the company.
Equivalent units for conversion costs of Star Inc. during the month totaled
A.7,920.
B.7,680.
C.6,880.
D.5,880.
Depreciation expense could be
A.a period cost.
B.a product cost.
C.a fixed cost.
D.All of these
A liquidation differs from a dissolution in that in a liquidation
A.the business will not continue
B.assets may be revalued
C.gains and losses are distributed according to the partnership agreement
D.there may be an adjustment of partners’ Capital accounts
Which of the following techniques is most useful for a special order decision?
A.Payback method
B.Present value method
C.Accounting rate-of-return method
D.Incremental analysis
Which of the following most likely is an example of an accrued liability?
A.Interest payable
B.Accounts payable
C.Current portion of long-term debt
D.Sales tax payable
The division of partnership profits on the basis of salaries, interest, and a stated ratio is
usually necessary because
A.partners seldom contribute time, effort, and resources equally.
B.this prevents arguments among the partners.
C.this reflects the amount of time devoted to the partnership by the partners.
D.most states require this method of distribution.
Calculate answers to the following using future value and/or present value tables:
a. If an accumulation of $1,000 is desired at the end of 4 years, what bank deposit must
be made now to accomplish that goal, assuming 10 percent interest compounded
annually?
b. A deposit of $600 made at the end of every 6 months for 5 years would grow to what
amount, assuming 8 percent interest compounded semiannually.
Which of the following is related to performing in the management process?
A.Comparing budgets and actual departmental costs
B.Preparing process cost reports
C.Preparing internal management reports
D.Selecting the cost systems
To find a description of a transaction, one should look at the
A.ledger.
B.trial balance.
C.journal.
D.chart of accounts.
Which of the following accounts is most likely to appear on the balance sheet as a
current liability?
A.Accumulated Depreciation
B.Bonds Payable
C.Mortgage Payable
D.Wages Payable
In a common-size financial statement, which of the following is given a designation of
100 percent?
A.Cost of goods sold
B.Total assets
C.Total liabilities
D.Net income
Shannon, Thomas, and Williman are in a partnership that is being dissolved. The stated
ratios of Shannon, Thomas, and William are 3:3:4, respectively. The partnership’s assets
are sold at a loss of $240,000. Which of the following is correct?
A.Shannon’s Capital account will be credited for $72,000.
B.William’s Capital account will be debited for $96,000.
C.The Loss from Realization will be debited for $240,000.
D.All of these choices.
Office Supplies was $1,800 at the end of January and $2,280 at the end of February.
During February, Office Supplies Expense equaled $560. How much cash was paid for
office supplies during February?
A.$440
B.$2,840
C.$3,440
D.$1,040
Which of the following would be considered a revenue expenditure?
A.Purchase of a microcomputer
B.Installation of a heating system
C.Addition of a building wing
D.Replacement of a truck’s battery
Which of the following is reduced by a just-in-time operations?
A.Inspection time and moving time
B.Only storage time
C.Moving time and processing time
D.Inspection time and processing time
Johnson Electronics Inc. manufactures a variety of microelectronic component parts
and utilizes a process costing system. The following information was provided by the
accounting department as of July 31, 2014:
a. Units started during the month of July totaled 118,200.
b. Units partially complete as of July 31 equaled 7,400.
c. Ending work in process inventory as of July 31, 2014, was 70 percent complete.
d. Direct materials are added at the beginning of the process, and conversion costs are
incurred uniformly throughout the process.
e. No units were in process on July 1, 2014.
Using the information provided, compute the equivalent units of production for direct
materials and conversion costs for July using the FIFO costing method.
Which of the following is an example of a nonvalue-adding activity?
A.Product distribution activity
B.Customer service activity
C.Data processing activity
D.Product design activity
Given below are the costs and activity observations for Ncwin Company’s maintenance
costs.
Using the high-low method, what is Ncwin’s monthly fixed costs for maintenance?
A.$11,250
B.$4,550
C.$3,750
D.$2,650
A credit balance in the account Allowance to Adjust Long-Term Investments to Market
is disclosed in the financial statements as a
A)regular account in the stockholders’ equity section of the balance sheet.
B)contra account to Long-Term Investments.
C)note to the financial statements.
D)current asset.
M. E. Taylor Enterprises had the following transactions during October. There were no
beginning inventory balances.
a. Purchased $37,300 of direct materials, on account.
b. Incurred direct labor costs, $29,250.
c. Applied $37,500 of overhead to production.
d. Completed units costing $88,450.
e. Sold units costing $76,130.
Using backflush costing, show the flow of costs using the T accounts below. Label each
entry with the appropriate letter.
When determining the value of a bond using present value, what are the two
components used in the calculation?
Eva Gomez is considering investing money in the common stock of Casa Corporation.
She has obtained the annual report of the company and calculated the ratios presented
in your text. Eva knows that her calculations are accurate, but does not know if the
ratios indicate favorable or unfavorable things about the company. What three standards
of comparison are available to Eva? What would each of the standards tell her about her
ratios?
Pearson Company uses the retail method to estimate the cost of ending inventory. Use
the following information to estimate the cost of Pearson’s ending inventory on
December 31, 2014, using the retail method. Show your answer in good form.
Use the following adjusted trial balance to answer the question below.
The entry to close Income Summary is
Last year, Amanda Jones opened an ice cream parlor in a busy shopping center. She
spent a lot on advertising and attracted many customers into the store, but a few
customers made turned up and sales were declining. Amanda paid attention to questions
and requests made by customers and determined that they often requested items that
were within the scope of her business but that she did not carry. When she offered to
order items for her customers, delivery was usually too late and, yet again, sales were
lost. What measures should Amanda take to improve her business?
The expected sales for Uptown Clothing in the month of May are shown in the table
below. Chelsea Rogers, the owner, gives credit to a select group of customers (20
percent of sales), but all others must pay cash. Of Chelsea’s credit customers, 80 percent
pay her the month after the sale and 20 percent in the second month after sales.
Chelsea pays cash for 10 percent of her purchases. The other 90 percent she pays off by
the end of the next month. Chelsea’s operating expenses are paid the month after
incurrence. Her operating expenses are about $7,000 each month, $500 of which is
depreciation. Selling expenses have a fixed and a variable component. The fixed is
$1,500 a month, and the variable is 10 percent of sales. Chelsea began May with $9,000
in cash.
Prepare a cash budget to determine Uptown Clothing’s ending cash balance for May.
Emily Holmes owns and operates a large antique shop. She uses the specific
identification method to account for transactions that affect inventory. Holmes recently
completed a physical inventory of the merchandise in her shop as part of her year-end
work. Today, her accountant called to inform her that it would be necessary to adjust the
inventory figure shown on the balance sheet, which will increase Holme’s tax liability.
Holmes argued that the inventory had to be correct, because she counted it twice and
matched every item to an invoice. Cite reasons why the accountant would find it
necessary to adjust the inventory even if Holme’s count is accurate.
At the beginning of 20×5, Spur Corporation had 68,000 shares of $10 par value
common stock issued and outstanding. During January 20×5, Spur declared and
distributed a 10 percent stock dividend. The market value of Spur’s stock was $25
throughout the month of January. The entry to be recorded for the declaration of stock
dividend is
Use this information pertaining to Tucson Company to answer the following question.
1) The corporation’s Supplies account showed a beginning debit balance of $400 and
supplies purchased of $1,600. There were $600 of supplies on hand at year end.
2)Depreciation on a building is estimated to be $10,000.
3)A one-year insurance policy was purchased for $4,800. Five months have passed
since the purchase.
4)Accrued interest on a note receivable amounted to $200.
5)The company received a $3,600 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
The adjusting entry for the insurance policy is
Information from the Income Statement columns of the work sheet of Landry Laundry
Service is provided below:
The entry to close the Cleaning Revenue account is