When there is no direct connection between revenues and costs, the costs are
systematically allocated among the periods benefited.
Ending merchandise inventory is not included in the calculation of cost of goods
available for sale.
Once in a while, a transaction leaves an account with a balance that isn’t ‘normal.’ When
this occurs, the ‘abnormal’ balance should be corrected to the ‘normal’ balance before
copying the balance into the trial balance.
Financial accounting information is confidential and private.
An important use of the work sheet is as a replacement for the annual financial
statements.
Form 10-QK refers to the annual report filed with the SEC.
In a process costing system, total period costs incurred by a company are traced to
individual processes.
Under the periodic inventory system, the amount for inventory on hand is accurate only
on the balance sheet date.
When a bond sells at a premium, what is probably
The objective of financial reporting established by the FASB is to provide information
that is useful to potential customers.
Legal capital of a corporation is the maximum amount that can be reported as
contributed capital.
Vacation pay is charged properly as an expense in the month in which the employee
takes a vacation.
Financial accounting reports are prepared on a periodic basis.
Because bad debt losses are incurred to generate sales, they should be charged against
the sales that they helped generate.
Regardless of the cost accounting system used, when the products are completed, they
are transferred from work in process inventory to finished goods inventory.
The materiality concept dictates that no internal controls be established over petty cash.
When the Balance Sheet columns of the work sheet are initially footed, they should be
in balance.
Management accounting data must be expressed in historical dollars.
Use this information to answer the following question.
In addition, beginning merchandise inventory was $22,000 and ending merchandise
inventory was $14,000.
Net income for the period was
A.$173,000.
B.$93,000.
C.$63,000.
D.$203,000.
Emerald Corporation’s overhead budget for 2013 was as follows:
750,000 units were produced in 2013.
Direct labor cost is $42,000,000.
For both 2013 and 2014, each unit required 4 direct labor hours at $14 per hour.
In 2014, property taxes, insurance, and depreciation are expected to stay at 2013 levels.
Utilities costs vary proportionally with units produced.
Factory supervision increases by increments of $45,000 for every 300,000 increase in
direct labor hours.
The 2014 expected production is 1,200,000 units.
What will be the value for utilities of Emerald in the 2014 overhead budget?
A.$450,000
B.$250,000
C.$400,000
D.$650,000
Which of the following user groups will use managerial accounting information for
decision-making purposes?
A.Customers
B.Lenders
C.Employees
D.Stockholders
The credibility standard of management accountants state that management accountants
must communicate information fairly and objectively. This means essentially that
accountants must perform each task
A.as professionals, possessing the degree of skill of those management accountants who
held the position before them.
B.to provide relevant information, both positive and negative, to the recipients of their
reports.
C.in conformity with generally accepted accounting principles.
D.to the satisfaction of government regulators.
Which of the following is an application of accrual accounting?
A.Depreciating a building as quickly as allowed by income tax regulations.
B.Recording utilities expense in the accounting period covered by the monthly bill.
C.Expensing a machine in its entirety when purchased.
D.Recording revenue at the time payment is received.
Which of the following would not be found in a good system of internal control?
A.Requiring all employees to take earned vacations
B.Establishing a system of checks and balances
C.Having one person handle all the responsibilities of a department
D.Establishing an internal audit staff
Kyle Inc. manufactures automobiles. In recent past, the company started buying brake
shoes from an external vendor. Which of the following decisions is made by the
company in this example?
A.Special order decision
B.Segment profitability decision
C.Outsourcing decision
D.Capital investment decision
How is the contribution margin calculated when utilizing variable costing?
A.Sales less variable cost of goods sold
B.Sales less variable cost of goods sold, less variable selling and administrative
expenses
C.Sales less cost of goods sold
D.Sales less variable cost of goods sold, less variable selling and administrative
expenses, less fixed cost of goods sold, less fixed selling and administrative expenses
In the space below, state whether each situation is a deferral or an accrual.
______a. Unrecorded interest on savings bonds is $765.
______b. Property taxes that have been incurred but that have not yet been paid or
recorded amount to $1,034.
______c. Legal fees of $2,890 were collected in advance. By year end, 70 percent were
still unearned.
______d. Prepaid Insurance had a $900 balance prior to adjustment. By year end, 25
percent was still unexpired.
______e. Salaries earned by employees by year end but not yet paid or recorded
amounted to $1,655.
______f. Services totaling $690 have been performed but not yet recorded or billed.
Use this information to answer the following question.
If the income statement were prepared in a multistep form, income from operations
would be
A.$48,750.
B.$41,250.
C.$51,250.
D.$42,500.
The periodic inventory system has traditionally been used most commonly by
companies that sell
A.low-priced, high-volume merchandise.
B.low-priced, low-volume merchandise.
C.high-priced, low-volume merchandise.
D.high-priced, high-volume merchandise.
Which of the following in a process costing system helps in verifying the cost of ending
work in process inventory for a period?
A.Materials requisitions and labor time tickets
B.Cost recap included in the statement of production
C.Cost recap included in the process cost report
D.None of the these
When an intangible asset becomes worthless,
A.it should remain on the books at its existing carrying value.
B.its remaining carrying value should be written off immediately as a loss.
C.prior years’ accounting records should be adjusted retroactively.
D.its remaining carrying value should be amortized over 20 years.
Current liabilities are debts that are expected to be satisfied within
A.one year or the normal operating cycle, whichever is shorter.
B.one year or the normal operating cycle, whichever is longer.
C.one year.
D.the normal operating cycle.
The trial balance for Parker Company is as follows:
If the trial balance showed a balance of $8,000 in the Wages Expense account and a
balance of $85,000 in the Advertising Fees Earned account, what would be the amount
of the Mike Parker, Withdrawals account?
A.$75,000
B.$53,000
C.$35,000
D.$63,000
Which of the following accounts is not closed during the closing process?
A.Owner’s Capital
B.Commissions Earned
C.Income Summary.
D.Withdrawals
The purpose of an audit is to
A.determine whether or not a company is a good investment.
B.comply with income tax regulations.
C.determine whether or not a company is a good credit risk.
D.ascertain that the financial statements follow GAAP.
All of the following are possible reasons for using accelerated depreciation except
A.greater efficiency of assets when new.
B.increasing repair costs in later years.
C.rapid changes in technology.
D.increasing use of an asset over the years.
Assume the indirect method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Interest 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.
What is the chief objective of supply-chain management? How is it accomplished?
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 to record the accrued interest on the note is
Julie Robertson, an accountant, has entered into a $12,000 contract to do a consulting
engagement that will begin in 20×5 and end in 20×6. Assuming a calendar-year
accounting period, prepare Julie’s entries in the following journal, using the dates and
explanations provided.
During May, Phone Mart sold 150 iphones for $200 each. Each camera had cost Phone
Mart $108 to purchase and carried a one-year warranty. If 4 percent typically need to be
replaced over the warranty period and two actually are replaced during May, the entry
to record the Product Warranty Expense is
On January 2, 20×5 Platte Golf Corp. issued ten-year, 8 percent bonds with a face value
of $500,000. The semiannual interest dates are June 30 and December 31. The bonds
were issued for $437,740 to yield a market interest rate of 10 percent. The accounting
year ends on December 31. Prepare entries in journal form without explanations to
record the bond issue on January 2, 20×5, and the payments of interest and amortization
of discount on June 30 and December 31, 20×5. Use the straight-line method of
amortization. Round answers to the nearest dollar.
Assume that during the physical count of the inventory of a large corporation for this
year, $450,000 of merchandise was counted twice. The error was not detected, and the
financial statements were prepared. Identify the individual statements that would be
affected and explain the effect the count error would have on each. (Omit income tax
considerations.)
Distinguish between the cost of goods available for sale and the cost of goods sold.