Discounted cash flow methods, such as net present value and internal rate of return,
________.
A) use simple interest calculations
B) use net income amounts rather than cash flows
C) focus on the payback period
D) consider discounted cash flows
Which of the following describes the allocation base for allocating manufacturing
overhead costs?
A) the primary cost driver of indirect manufacturing costs
B) the estimated base amount of manufacturing overhead costs in a year
C) the percentage used to allocate direct labor to Work-in-Process Inventory
D) the main element that causes direct costs
Which of the following would be classified as a prime cost?
A) cost of direct materials used
B) depreciation on factory equipment
C) salary of sales personnel
D) depreciation on office furniture
Ramos Corporation reported the following equity section on its current balance sheet.
The common stock is currently selling for $18.00 per share.
After the declaration and distribution of a 20% stock dividend, what is the total number of
common shares issued?
A) 13,000
B) 160,160
C) 143,000
D) 17,160
Gamma Corp. has prepared a preliminary cash budget for the third quarter as shown
below:
Subsequently, the marketing department revised its figures for cash collections. New data
are as follows: $52,000 in July, $55,000 in August, and $42,000 in September. Based on
the new data, calculate the new projected cash balance at the end of July.
A) $13,500
B) $4,400
C) $7,000
D) $7,800
Which of the following statements is true?
A) Companies are price-takers when their products are unique.
B) Companies are price-setters for a product when there is intense competition.
C) Companies are price-takers for a product when the pricing approach emphasizes
cost-plus pricing.
D) Companies are price-takers when they have little or no control over the prices of
their products or services.
Maywood Company sells hand-knit scarves. Each scarf sells for $40. The company
pays $60 to rent vending space for one day. The variable costs are $15 per scarf. How
many scarves should the company sell each day in order to break even? (Round your
answer up to the nearest whole scarf.)
A) 2 scarves
B) 3 scarves
C) 20 scarves
D) 4 scarves
Which of the following statements about internal control is true?
A) Internal auditors ensure that the employees follow company policies.
B) The treasurer and controller have the same responsibilities.
C) External auditors are employees of the company.
D) The internal control procedures are known as the “tone at the top.”
Qwerty, Inc. prepaid $7,200 on November 1, 2014 for a one-year insurance premium.
On January 1, 2015 of the next year (after December 31 adjustments), the Prepaid
Insurance account will have a debit balance of ________.
A) $6,600
B) $7,800
C) $7,200
D) $6,000
A company that uses labor, equipment, supplies, and facilities to convert raw materials
into finished products is a ________.
A) merchandising company
B) manufacturing company
C) service company
D) trading company
Significant interest investments are reported as ________ on the balance sheet.
A) current assets
B) either current assets or current liabilities
C) long-term assets
D) either current assets or long-term assets
A company is setting its direct materials and direct labor standards for its leading
product. Direct material costs from the supplier are $9 per square foot, net of purchase
discount. Freight-in amounts to $0.30 per square foot. Basic wages of the assembly line
personnel are $19 per hour. Payroll taxes are approximately 23% of wages. How much
is the direct labor cost standard per hour? (Round your answer to the nearest cent.)
A) $4.37
B) $19.00
C) $23.37
D) $32.37
Which of the following remains the same regardless of the inventory costing method
used by a company? Assume the cost of inventory is rising.
A) purchases
B) cost of goods sold
C) ending merchandise inventory
D) net income
Under which of the following terms will the buyer be required to pay transportation
costs?
A) FOB destination
B) FOB shipping point
C) freight out
D) freight in
What is the result if the amount of net income for the year is less than the amount of the
Dividends?
A) Retained Earnings increases
B) Cash balance decreases
C) Cash balance increases
D) Retained Earnings decreases
The following information is available for Jade Company for the month ending June 30,
2017.
• Balance as per the bank statement is $12,000.
• Balance as per books is $10,300.
• Check #506 for $1,200 and check #510 for $800 were not shown on the June 30, bank
statement.
• A deposit in transit of $3,000 had not been received by the bank when the bank
statement was generated.
• A bank debit memo indicated an NSF check for $100 written by Jane Smith to Jade
Company on June 13.
• A bank credit memo indicated a note collected by the bank of $2,100 and interest
revenue of $51 on June 20.
• The bank statement indicated service charges of $30.
What is the adjusted book balance?
A) $12,351
B) $12,321
C) $8,351
D) $8,300
Stewart Candle Company received cash of $40,000 and issued common stock. Which of
the following accounts will be debited?
A) Accounts Receivable
B) Cash
C) Common Stock
D) Accounts Payable
The gross profit percentage is one of the most carefully watched measures of ________.
A) profitability
B) liquidity
C) solvency
D) marketability
On January 1, 2017, Anodel, Inc. acquired a machine for $1,010,000. The estimated
useful life of the asset is five years. Residual value at the end of five years is estimated
to be $62,000. Calculate the depreciation expense per year using the straight-line
method.
A) $202,000
B) $189,600
C) $251,600
D) $252,500
Which of the following is true of the acid-test ratio?
A) It measures a company’s ability to pay its current liabilities.
B) It measures the ability of the company to earn net income.
C) It measures a company’s ability to meet its short-term obligations with cash and cash
equivalents.
D) It indicates how much cash could be realized by selling the inventory.
Which of the following is the correct formula to calculate inventory turnover?
A) Inventory turnover = Cost of goods sold / Average merchandise inventory
B) Inventory turnover = Cost of goods sold × Average merchandise inventory
C) Inventory turnover = Cost of goods sold + Average merchandise inventory
D) Inventory turnover = Cost of goods sold – Average merchandise inventory
The accountant for Jones Auto Repair, Inc. failed to make an adjusting entry to record
$5,000 of unpaid salaries for the last two weeks of the year. Which of the following is
an effect of this omission?
A) The net income will be overstated.
B) The total assets will be understated.
C) The net income will be understated.
D) The total assets will be overstated.
XO, Inc. reports the following cost information for March:
What is the amount of direct labor incurred by XO in March?
A) $62,630
B) $6,930
C) $71,000
D) $18,500
SES Manufacturing has finished production activities for the year. The company
allocates manufacturing overhead based on a percentage of direct labor costs. The
company has provided the following information:
Based on the above data, calculate the unadjusted ending balance in the Manufacturing
Overhead account.
A) $5,040 credit balance
B) $5,040 debit balance
C) $7,360 credit balance
D) $7,360 debit balance
Clark Coatings Company uses the indirect method to prepare its statement of cash
flows. Refer to the following information for the year 2017:
Net cash provided by operating activities: $44,000
Net cash used for investing activities: $(27,000)
Net cash provided by financing activities: $2,000
What is the net change in cash during the year?
A) $(19,000)
B) $42,000
C) $19,000
D) $(17,000)
The equivalent units of production for transferred in units are always 100% because
________.
A) they are the finished goods purchased and transferred to the next department
B) they are considered 100% complete with respect to the entire production process
C) they were 100% complete with respect to the previous department
D) they are not utilized for production in the subsequent department
The budgeting process ________.
A) usually begins about one month before the beginning of the budget period to allow
for more current information to be considered
B) does not need input from all levels because it is the role of management to control
costs and meet revenue goals
C) requires significant coordination among the company’s various business segments
D) is standard among all types of companies
Oscar, Inc., a manufacturer of gift articles, uses a single plantwide rate to allocate
indirect costs with machine hours as the allocation base. Estimated overhead costs for
the year are $5,000,000. Estimated machine hours are 40,000. During the year, the
actual machine hours used were 45,000. Calculate the predetermined overhead
allocation rate. (Round your answer to the nearest dollar.)
A) $111
B) $91
C) $125
D) $63
The return on assets is calculated by ________.
A) subtracting net income from average total assets
B) adding net income and average total assets
C) dividing net income by average total assets
D) multiplying net income and average total assets
Which of the following is an example of debt securities?
A) preferred stocks
B) real estate
C) common stocks
D) corporate bonds