Misleading financial reports are not considered fraudulent if they are the result of the
misapplication of accounting principles.
The flexible budget formula is an equation that determines budgeted costs for any level
of output.
Like job order costing systems, process costing systems are also only suited for
companies that produce customized products.
Accountants focus on the needs for financial information by both internal and external
decision makers.
The production process determines the product costing system needed.
The process of assigning a collection of indirect costs is termed as cost pooling.
Research and development costs normally are capitalized and amortized over the
estimated sales life of the product developed.
When calculating ROI, assets invested represent the average of the beginning and
ending asset balances for a given period.
Bond issue costs have the effect of increasing a premium, or reducing a discount, on
bonds issued.
When a U.S. company does business with a British company and payment is in British
pounds, an exchange gain or loss occurs if the exchange rate between dollars and
pounds changes between the date of sale and the date of payment.
Activity-based management focuses on identifying product costs as either variable or
fixed.
When disposing of equipment, Accumulated Depreciation is debited for the existing
carrying value.
The financing period is also referred to as the cash gap.
A decrease in plant assets shown in the investing activities section of the statement of
cash flows would be presented based on the amount of the resulting gain or loss
incurred.
Other postretirement benefits should be expensed
A.on the employee’s retirement date.
B.as they are received by the employee.
C.when the employee is hired.
D.as the employee earns them.
Why might stock options not be the best way to promote coordination of goals?
A.Stock prices can fluctuate quickly.
B.Many of the variables that affect stock prices are beyond a manager’s control.
C.Employees generally do not value stock options very highly.
D.None of these choices
Under the allowance method, when a year-end adjustment is made for estimated
uncollectible accounts,
A.total assets decrease.
B.liabilities increase.
C.total assets are unchanged.
D.net income is unchanged.
Justin, Inc. purchased equipment for $100,000. The equipment had an estimated useful
life of eight years and an estimated residual value of $12,000. After five years of use,
the estimated residual value is changed to $18,000. Assuming straight-line depreciation,
depreciation expense in year 6 would be
A.$9,000.
B.$10,250
C.$11,000.
D.$15,000.
Which of the following accounts would be credited in the cash payments journal?
A.Purchases Discounts.
B.Accounts Payable.
C.Salary Expense.
D.Rent Expense.
An NSF check should appear in which section of the bank reconciliation?
A.Deductions from the balance per books
B.Deductions from the balance per bank
C.Additions to the balance per books
D.Additions to the balance per bank
Return on equity is measured in terms of
A.days.
B.times.
C.a percentage.
D.dollars.
Use the following information regarding Larson Company to answer the question
below.
1. Established a petty cash fund in the amount of $250.
2. Reimbursed the petty cash fund given the following petty cash fund disbursements:
a. Payment for postage, $20.
b. Payment for supplies, $70.
3. Increased the petty cash fund to $300.
4. Cash over at the end of the first period was $5.
The entry to establish the petty cash fund would include a
A.debit to the Cash account for $250.
B.debit to the Petty Cash account for $250.
C.memorandum entry only in the ledger.
D.credit to the Petty Cash account for $250.
For 2010, Black & White Corporation had average total assets of $300,000, net sales of
$250,000, net income of $20,000, net cash flows from operating activities of $30,000,
dividend payments of $15,000, purchases of plant assets of $70,000, and sales of plant
assets of $30,000. Using this information, compute (a) cash flow yield, (b) cash flows
to sales, (c) cash flows to assets, and (d) free cash flow. Round amounts to one decimal
place.
When compared with which of the following, the EVA of an investment center will be
more meaningful?
A.Target EVAs
B.EVAs from other investment centers
C.EVAs from previous periods
D.All of these choices
Failure to record depreciation at year end will result in all of the following except
A.understatement of total liabilities.
B.overstatement of total assets.
C.overstatement of net income.
D.overstatement of owner’s equity.
The cost of goods manufactured of a company is $850,000. The beginning and ending
finished goods inventory are $360,000 and 250,000, respectively. Determine the cost of
goods sold.
A.$960,000
B.$740,000
C.$610,000
D.$600,000
Firehawk Corporation had net income of $560,000 in 20×5 and paid dividends of
$440,000 on 200,000 shares of outstanding common stock. Total stockholders’ equity at
the end of 20×5 was $2,060,000 and the market price for each share of Firehawk’s stock
was $58 throughout 20×5. Based on this information, what is the price/earnings ratio for
Firehawk’s stock?
A.96.67 times.
B.20.71 times.
C.4.83 times.
D.26.36 times.
Which of the following is the first step while carrying out capital budgeting process?
A.Perform preliminary screening of proposals
B.Identify capital investment needs
C.Evaluate investment proposals
D.Make investment decisions based on available funds
Mesquite, Inc. engaged in the following transactions during October:
What is the amount of cash still to be paid?
A.$2,300
B.$2,100
C.$1,300
D.$400
Omitting key letters in the work sheet would make which of the following difficult?
A.The preparation of the closing entries
B.The preparation of the financial statements
C.Crossfooting to the next set of columns
D.The preparation of the adjusting entries
Which of the following is one of the integrity standards of management accountants?
A.Refraining from accepting hospitality gifts from coworkers
B.Refraining from activities that the company does not actively endorse
C.Avoiding actual or apparent conflicts of interest
D.Avoiding only those conflicts of interest that occur between coworkers
The intentional preparation of misleading financial statements, known as fraudulent
financial reporting, can result from all of the following except
A.the misapplication of accounting principles.
B.the manipulation of inventory records.
C.fictitious sales or orders.
D.recording a revenue that has been earned but not yet received.
When bonds are sold at face value between interest dates, the result is a debit to the
Cash account that
A.equals face value.
B.depends on the circumstances.
C.is less than face value.
D.exceeds face value.
The traditional approach to applying overhead costs to a product or service is to use
a(n)
A.actual overhead rate.
B.activity-based overhead rate.
C.departmental overhead rate.
D.single-plantwide overhead rate.
Which of the following statements is correct regarding partnerships?
A.Accounting for a partnership is similar to accounting for a sole proprietorship.
B.If the partnership assumes a liability related to an asset invested in the partnership,
the asset is debited, the partner’s capital account is credited and a liability account is
credited.
C.It is necessary to maintain separate Capital and Withdrawals accounts for each
partner.
D.All of these choices.
All of the following are estimated liabilities except
A.liability for vacation pay.
B.payroll liabilities.
C.product warranty liability.
D.property tax liability.
Process costing is applicable to production operations that
A.utilize several processes, departments, or work cells in a series.
B.do not assign overhead costs to operations.
C.produce products that are made to order.
D.produce unique products.
Distinguish between a supply chain and a value chain. How do they relate to each
other?
Using the direct method, calculate the amount of cash payments for purchases. Show
your work
Baird Corporation had 60,000 shares of $5 par value common stock issued and
outstanding on December 31, 20×4. Each share was issued during 20×2 at $14 per
share. Prepare the entries in journal form without explanations for the following
transactions occurring in 20×5:
If Rex Corporation issued ten $1,000 bonds issued at 99.75 on the interest date, the
entry to record this transaction is :
On June 3, Addison Company purchased merchandise worth $1,600 on credit, terms
2/10, n/30. The account was paid on June 10. What is the required journal entry to
record the payment under the periodic inventory system?
Meggie’s Fitness Center received $800 from a customer in advance for a one-year
membership in the fitness center. The entry that would be made to record the fee receipt
is
The following data pertain to McBride Corporation:
Calculate the amount of net sales reported for 20×5. Use 365 days per year.
What are some of the limitations of using ROI, residual income, and EVA to measure
the performance of investment centers?
Discuss the difference between the successful efforts and full-costing methods of
accounting for oil and gas resources. What type of company is most likely to use each
method?
Use this information to answer the following question.
Pinnacle Corporation has 90,000 shares of $10 par value common stock outstanding.
The following transactions occurred during the year:
The entry to record the transaction of March 17 is: