1) The return on common stockholder’s equity measures a company’s success in
reaching the goal of earning net income for its owners.
2) Joint costs are a group of several costs incurred in producing or purchasing a single
product.
3) The proportion of sales volumes for various products is known as the composite mix.
4) The cash basis of accounting commonly results in financial statements that are less
comparable from period to period than the accrual basis of accounting.
5) The withdrawals account of each partner is closed to retained earnings at the end of
the accounting period.
6) Under the net method an invoice for $2,000 with terms of 2/10, n/30 should be
recorded with a debit to Inventory and a credit to Accounts Payable of $2,000.
7) If a company resells treasury stock below the acquisition cost, a loss from the sale of
treasury stock is recorded.
8) A bond is a written promise to pay an amount identified as the par value of the bond
along with interest.
9) Trading securities are securities that are purchased by trading other securities rather
than by paying cash.
10) Incidental costs often added to the costs of inventory include import duties, freight,
storage, and insurance.
11) Installment accounts receivable are classified as current assets, even though the
installment period is more than one year, if the seller regularly offers customers such
terms.
12) A credit memorandum from a seller informs a buyer of the seller’s credit to its
Accounts Payable account arising from a sales return or allowance.
13) When no-par stock is not assigned a stated value, the total amount received is
recorded as Common Stock.
14) The concepts of direct costs and controllable costs are essentially the same; also,
indirect costs and uncontrollable costs are essentially the same.
15) If the Cash Over and Short account has a debit balance at the end of the period, the
amount is reported as miscellaneous revenue.
16) Managerial accounting provides financial and nonfinancial information to an
organization’s managers and other internal decision makers.
17) The first step in accounting for an asset disposal is to calculate the gain or loss on
disposal.
18) Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a
loss of $10,000. This implies that $40,000 cash was received from the sale.
19) A company received a $1,000, 90-day, 10% note receivable. The journal entry to
record receipt of the note includes a debit to Notes Receivable.
20) An error in the period-end inventory balance will cause an error in the calculation of
cost of goods sold.
21) _______________________ are links among computers giving different users and
different computers access to common databases and programs.
22) _________________________ are capital expenditures that make a plant asset
more productive; they often involve adding a component to an asset or replacing one of
its old components with a better one, and do not always increase an asset’s life.
23) Abington Corporation provides the following data from a recent period for its
manufacture of shoes: variable manufacturing costs, $24,000; variable selling costs,
$12,000; and total fixed costs, $40,000. Sales were $60,000 based on 12,000 units sold
during the period. Calculate the contribution margin and the contribution margin ratio.
24) Describe how to account for and report on contingent liabilities.
25) The least amount that the buyers of stock must contribute to the corporation or be
subject to paying at a future date is called __________________________.
26) Define the partner return on equity ratio and explain how a specific partner would
use this ratio.