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If bonds are retired by an issuer by purchase on the open market at a price below the
bonds' carrying value, a loss will result.
When a job has been completed, all of the costs assigned to that job are moved to the
Cost of Goods Sold account.
When the terms of sale include a sales discount, it usually is advisable for the buyer to
pay within the discount period.
Outsourcing can reduce operating costs of a company.
All factors in a present value of a single sum table are less than 1.000.
The amount for the Withdrawals account will appear in the Income Statement columns
of a work sheet.
Revenue is equal to the cash received by a company during an accounting period.
Costs that change, in total, in direct proportion to changes in productive output, or
activity, are called variable costs.
A value-adding activity is one that increases the cost of a product but does not add to
the product's market value.
A purchase should usually not be recognized (recorded) before the title is transferred
because, until that point, the vendor has not fulfilled its contractual obligation and the
buyer has no liability.
Companies file their quarterly reports with the SEC on Form 8-Q.
Due care means carrying out one's professional responsibilities with competence and
diligence.
Bondholders are creditors of the issuing corporation.
Depreciation Expense'“Buildings is a nominal account.
A company would be more likely to know the amount of inventory on hand if it used
the periodic inventory system rather than the perpetual inventory system.
Non-value-adding costs increase the cost of a product.
Conversion costs are defined as the combined total of direct materials costs and direct
labor costs incurred by a production department.
Product costs for a manufacturing company consist of cost of direct materials, direct
labor, and overhead.
The ability of an investing company to affect the operating and financial policies of
another company, even though the investor holds less than 50 percent of the voting
stock, is known as
A)significant influence.
B)control.
C)minority interest.
D)noninfluential control.
Performance reports should include
A.all costs and revenues for a specific responsibility center.
B.all costs, revenues, and resources for a specific responsibility center.
C.noncontrollable costs for a specific responsibility center.
D.controllable costs, revenues, and resources for a specific responsibility center.
Powell Repair pays wages of $5,000 every other Friday ($500 per weekday).
a. In the journal provided, prepare the following entries (omit explanations) for the
fiscal year ended March 31, 20x5:
b. What would the April 8 entry be if no reversing entry was made? Use the journal
provided.
For each of the following oversights, state whether owner's equity will be understated,
overstated, or not affected.
______ a.Failure to record depreciation
______ b.Failure to record accrued wages
______ c.Failure to convert unearned revenue to earned revenue
______ d.Failure to record accrued interest in the bank
______ e.Failure to record expired insurance
______ f.Failure to record revenue earned but not yet received
Use this information to answer the following question.
The trial balance for Nowwick Company appears as follows:
If services totaling $250 had been performed but not billed,
A.the adjusting entry would include a credit to Unearned Service Revenue for $250.
B.the adjusted balance in Accounts Receivable would be $1,250.
C.the adjusted balance of Service Revenue would be $750.
D.All of these choices.
The primary purpose of the statement of cash flows is to provide information
A.about a company's cash receipts and cash payments during an accounting period.
B.about a company's investing and financing activities during an accounting period.
C.regarding a company's financial position at the end of an accounting period.
D.regarding the results of operations for a period of time.
Which of the following is not an assumption underlying cost-volume-profit analysis?
A.Product sales mix will not change during the period.
B.The breakeven point will be reached and surpassed during the period.
C.Cost behavior can be determined accurately.
D.Productivity is constant within the relevant range.
Cellular Solutions Inc. had a very successful year in 2013. Based on a $125 average
unit selling price, monthly sales during 2013 were as follows:
Mr. James, vice president of sales, is preparing the sales budget for 2014. Increased
manufacturing costs will make it necessary to increase the selling price by 12 percent.
Even with this price increase, the unit volume of sales is expected to increase by 25
percent. The seasonal sales pattern shown for 2013 is expected to continue in 2014.
a. Prepare the monthly sales unit and dollar budgets for the first quarter of 2014.
b. Mr. Serene is considering the possibility of raising the average selling price by 20
percent in 2014. If this action is taken, he projects that the sales volume for the year will
increase by only 10 percent. What would forecasted sales in units and dollars be in 2014
if his projection is correct?
If the indirect method is used to prepare a statement of cash flows, which of the
following would be added to net income to arrive at net cash flows from operating
activities?
A.Decrease in accrued liabilities.
B.Decrease in income taxes payable.
C.Decrease in accounts receivable.
D.Increase in prepaid expenses.
The net income figure appears in all the following financial statements except the
A.statement of cash flows.
B.income statement.
C.statement of owner's equity.
D.balance sheet.
A company records a transaction in which six months' rent is paid in advance. Which of
the following journal entries records the transaction?
A.Prepaid Rent '“ Debit; Cash '“ Credit
B.Rent Receivable '“ Debit; Cash '“ Credit
C.Rent Revenue '“ Debit; Cash '“ Credit
D.Rent Expense'“ Debit; Cash '“ Credit.
A low receivable turnover indicates that
A.few customers are defaulting on their debts.
B.a large proportion of the company's sales are on credit.
C.the company's inventory is moving very quickly.
D.customers are making payments slowly.
In a manufacturing environment, costs of materials initially flow
A.into the Work in Process Inventory account.
B.into the Materials Inventory account.
C.into the Cost of Goods Sold account.
D.into the Finished Goods Inventory account.
When a company uses an accounts receivable subsidiary ledger,
A.it need not maintain an Accounts Receivable account in the general ledger.
B.credit sales transactions must be posted to the individual customers' accounts
monthly.
C.when the amounts in the subsidiary ledger and the controlling account do not match,
the accountant must find the error and correct it.
D.All of these choices.
A purchase on account with an invoice price of $1,500 has been made. The entry to
record the payment after the 2 percent discount period would include a(n)
A.decrease to Accounts Payable for $1,500.
B.decrease to Purchases Discounts for $30.
C.increase to Accounts Payable for $1,470.
D.decrease to Cash for $1,470.
Compute the May 2014 EVA for an investment center with the following information:
A.$12,292,405
B.$12,710,500
C.$11,931,500
D.$12,235,500
The trial balance for Parker Company is as follows:
If the trial balance showed a balance of $14,000 in the Mike Parker, Withdrawals
account and a balance of $30,000 in the Wages Expense account, what would be the
amount of Advertising Fees Earned for the period?
A.$106,000
B.$86,000
C.$116,000
D.$56,000
The Nick Lumber Company is in the process of deciding whether to sell or process
further rough-sawn lumber. The joint cost of producing the rough-sawn lumber is
$10,500. The following data are available:
a. What is the incremental effect, increase or (decrease), on operating income of
processing each type of lumber further?
b. Which type of lumber should be processed further?
As the controller of a large company, you notice that the Cash Short or Over account is
consistently debited for fairly large sums of cash when the petty cash fund is
replenished. You probably will want to
A.increase the amount of the fund.
B.decrease the amount of the fund.
C.find a new custodian for the fund.
D.offer the custodian your congratulations.
Given the following information about purchases and sales during the year, compute the
cost to be assigned to ending inventory under each of three methods: (a) average-cost,
(b) FIFO, and (c) LIFO. (Show your work.)
Assume that a periodic inventory system is used.
Red Company created advertising copy for a client. Which of the following does not
indicate that the transaction meets the SEC's four criteria for revenue recognition?
A.The company and the customer agree that the customer owes for the service.
B.Both parties understand the price.
C.The goods or services have been used to produce revenue.
D.There is a reasonable expectation that the customer will pay the bill.
Omaha Inc. is expected to have the following cash revenues and expenses (other than
depreciation) in 2014:
Omaha's estimated 2014 net cash flows are
A.$31,000.
B.$29,000.
C.$34,000.
D.$24,000.
When a partner invests assets other than cash into a partnership, those assets should be
listed on the balance sheet at
A.their original cost
B.their carrying (book) value
C.their fair market value
D.the value the investing partner assigns to them
What elements are used to calculate free cash flow? Indicate whether the element is
added or subtracted.
Compute the dollar amount of the items indicated by letters a through f in the table
below.
Distinguish between a deferral and an accrual.
Justin and Nicole are forming a partnership. What are some of the factors they should
consider in deciding how income might be divided?
Erwin Press pays wages of $6,000 every Friday for a five-day workweek. June 30, the
last day of the fiscal year, falls on a Tuesday. In the journal provided, prepare the June
30 adjusting entry as well as the July 3 follow-up entry when the wages are paid. Omit
explanations.
On December 31, Jameson Products has a $300 credit balance in Allowance for
Uncollectible Accounts. It estimates that 4 percent of the $60,000 in sales are
uncollectible. After the appropriate adjusting entry for uncollectible accounts has been
made, what will be the balance in Allowance for Uncollectible Accounts using the
percentage of net sales method? Indicate if the balance is a debit or credit. (Show your
work.)
How is the account Allowance for Uncollectible Accounts presented in the financial
statements, and what purpose does this presentation serve?
