Regardless of beginning inventory levels, beginning inventory is always ignored while
computing the equivalent units of production.
When a partner leaves a partnership, it is possible that total assets will be unaffected.
A decrease in the balance of merchandise inventory is subtracted from net income when
calculating net cash flows from operating activities using the indirect method.
A materials request form is prepared whenever the purchasing department orders
materials.
A revenue expenditure results in the recognition of an asset.
The gross profit method requires that records be kept at both cost and retail.
A debt to equity ratio of 0.5 means that one-third of a company’s total assets are
financed by creditors.
An organization’s practical capacity is its theoretical or ideal capacity reduced by
normal and anticipated work stoppages, such as machine breakdowns.
Adding a desired profit level to breakeven computations will lower the number of units
required to be sold.
A project with a net present value of zero should not be accepted.
Sunk costs are irrelevant for decision making.
Variance analysis involves computing the difference between standard and actual costs.
Annual reports of public companies will include statements from both management and
independent auditors regarding the adequacy of internal control.
The cost of land would include the cost of a building purchased with the land and torn
down because it was not needed.
The convertibility feature of a bond can be exercised by the issuing corporation.
Both product costs and period costs could appear on the balance sheet.
The most beneficial projects are the ones with the highest net present value.
When deciding whether to keep or replace a fixed asset, the asset’s carrying value could
be relevant to the decision.
Capital budgeting involves the evaluation of alternative proposals for large capital
investments, including considerations for financing the projects.
The initial step in achieving the efficiency of a just-in-time system is to
A.redesign the plant layout.
B.replace laborers with machines.
C.stop ordering materials for inventory.
D.identify products that are not profitable.
Quickwork Company uses a job order costing system. On March 1, Quickwork
Company’s Work in Process Inventory account shows a beginning balance of $170,000.
Production activity for March was as follows: Materials costing $85,000, along with
operating supplies of $20,000, were requisitioned into production. Quickwork
Company’s total payroll was $350,000, of which $75,000 was indirect labor. Overhead
is applied at a rate of 125 percent of direct labor cost. Quickwork’s Cost of Goods Sold
for the month of May was $692,000. Finished Goods Inventory was $71,500 on March
1 and $84,000 on March 31. (Quickwork does not close out overhead accounts until
year-end.)
a. Calculate Quickwork’s cost of goods completed for March.
b. Calculate Quickwork’s work in process ending inventory (March 31).
c. One of the jobs that was started in March, Job 208, was completed in April. Job 208
was 250 special-order decorative lamps. The following costs had been applied to Job
208 as of April 1: direct materials, $1,500; direct labor, $2,000; overhead, $2,500. In
April, $580 in direct materials cost and $900 of direct labor cost were added to
complete Job 208. What was the cost per unit for Job 208? (Show your computations.)
When expenses exceed revenues,
A.a liability is created.
B.a net loss occurs.
C.owner’s equity increases.
D.All of these choices.
Interest paid on debt would be entered on the multistep income statement in the
category called
A.selling expenses.
B.other revenues and expenses.
C.general and administrative expenses.
D.operating expenses.
Jordan, Kyle, and Noah have equities in a partnership of $100,000, $160,000, and
$140,000, respectively, and share income and losses in a ratio of 5:3:2, respectively.
The partners have agreed to admit Billy to the partnership. Prepare entries in journal
form without explanations to record the admission of Billy to the partnership under
each of the following assumptions:
a. Billy invests $80,000 for a 25 percent interest, and a bonus is recorded for Billy.
b. Billy invests $160,000 for a one-fifth interest, and a bonus is recorded for the old
partners.
Which of the following statements is correct regarding partnerships?
A.Accounting for a partnership is similar to accounting for a corporation.
B.If the partnership assumes a liability related to an asset invested in the partnership,
the partner’s capital account is credited and a liability account is debited.
C.It is necessary to maintain separate Capital and Withdrawals accounts for each
partner.
D.All of these choices.
The factory personnel whose wages are traceable directly to a product include
A.maintenance personnel.
B.support personnel.
C.factory supervisors.
D.employees who help to shape the product.
The process of developing a master budget differs among manufacturing, retail, and
service organizations in terms of preparation of
A.cash budget.
B.capital expenditures budget.
C.income statement.
D.operating budgets.
Recorded costs for the DC5 Division, which manufactured 6,000 units of Product DC5
during the month, are as follows:
The per-unit cost of manufacturing Product DC5 this month is
A.$163.
B.$152.
C.$170.
D.$150.
Which of the following pairs of accounts could possibly appear in the same adjusting
entry?
A.Interest Income and Interest Payable.
B.Revenue from Services and Cash.
C.Service Revenue and Unearned Revenue.
D.Rent Expense and Depreciation Expense.
.Johnson Products Company is in the process of adopting the just-in-time operating
philosophy for its idol-making operations. Indicate which of the following overhead
costs is a nonvalue-adding cost (NVA).
A.Machine electricity
B.Machine repairs
C.Depreciation of the machine used
D.Machine setup labor
The new Corina watch has an expected selling price per watch of $42, the projected
variable cost per unit is $24, and estimated fixed costs per month are $24,120.
The expected breakeven point in sales dollars is
A.$48,240.
B.$32,160.
C.$40,200.
D.$56,280.
Which of the following is an inventory processing system?
A.Perpetual
B.Last-in, first-out
C.Lower-of-cost-or-market
D.Average-cost
During the year, Dempsey Corporation’s current ratio increased while its quick ratio
decreased. Which of the following could help explain this situation?
A.A decrease in accounts receivable during the year
B.An increase in accounts payable during the year
C.The sale of short-term investments during the year
D.An increase in inventory levels during the year
The recording of data falls under which stage of accounting?
A.measurement
B.processing
C.communication
D.decision making
The new Corina watch has an expected selling price per watch of $42, the projected
variable cost per unit is $24, and estimated fixed costs per month are $24,120.
The expected breakeven point in units per month is
A.1,115 watches.
B.1,590 watches.
C.1,340 watches.
D.1,780 watches.
When a company has performed a service but has not yet received payment, what is the
required journal entry to be recorded?
A.Accounts Receivable ‘“ Debit; Service Revenue ‘“ Credit
B.Service Revenue ‘“ Debit; Accounts Payable ‘“ Credit.
C.Service Revenue ‘“ Debit; Accounts Receivable ‘“ Credit
D.No entry is required until the cash is received.
A practical decision to expense a $120 printer rather than record it as property, plant,
and equipment and depreciate it probably is made on the basis of the convention of
A.conservatism.
B.consistency.
C.materiality.
D.full disclosure.
Copper Company engaged in the following transactions during April
What is the amount of cash still to be paid?
A.$18,000
B.$47,000
C.$94,000
D.$52,000
Assume the indirect method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Dividend Income (assume that
cash received is equal to amount reported)’”indicate the effect on net income in arriving
at net cash flows from operating activities by choosing one of the following:
A.Add to net income to arrive at net cash flows from operating activities.
B.Subtract from net income to arrive at net cash flows from operating activities.
C.Not used to adjust net income to calculate net cash flows from operating activities.
Net income results in a(n)
A.increase in owner’s equity.
B.increase in revenues.
C.decrease in expenses.
D.increase in assets.
Danielle Corporation is authorized to issue 100,000 shares of $5 stated value common
stock and 2,000 shares of $100 par value, 8 percent preferred stock. Prepare entries in
journal form without explanations to record the following transactions:
What would a company using an activity-based management approach attempt to do in
regard to activities that add value to the product and those that do not?
McCloud Company purchased a machine for $15,500. The machine is expected to last
four years and has a residual value of $1,500. The entry to record depreciation expense
at the end of the first year using the straight-line method is:
The entry to close the Dividends account at the end of an accounting period which has a
balance of $10,000 is:
Dale, Smith, and Associates, a CPA firm, is trying to determine the hourly cost of its
junior accountants in the auditing department. The following data have been gathered.
Assuming 40 percent of the monthly overhead costs for the auditing department are
attributable to the junior accountants, compute the hourly cost of their services.(Round
your answer to two decimal places.)