On the income statement, freight-out is included as part of cost of goods sold.
After selling all the assets and paying the liabilities in a liquidation of a partnership, the
partners share any remaining cash according to the stated ratios.
Participative budgeting results in setting unattainable standards.
The purchasing agent is responsible for developing the direct materials quantity
standard.
Revising the budgets to include all planning decisions will improve the quality of the
budgets.
All of the following statements are TRUE about the Sarbanes-Oxley Act except
A.it applies to publicly traded companies.
B.it shields chief executives from criminal penalties.
C.it orders the SEC to draw up certain rules.
D.its primary goal is to regulate financial reporting and the accounting profession.
Adding together the ending merchandise inventory and cost of goods sold gives the cost
of goods available for sale.
It is best that the receiving department not be given a copy of the purchase order or the
invoice.
Withdrawls and revenues are deductions from owner’s equity.
There is an impact on the income statement (gain or loss) of a partnership when a
partner withdraws from the business.
Accounting for capital leases can be thought of as similar to accounting for mortgage
payments.
Conduct a preliminary screening of a new capital investment is the last step in the six
step process of capital investment analysis.
All ethical conflicts are resolved by the accountant of a company.
Breakeven analysis helps in finding the level of activity at which sales revenue equals
the sum of all variable and fixed costs.
In choosing among alternatives, managers are guided by historical cost information.
A company’s management can improve overall profitability by decreasing the profit
margin,
the asset turnover, or both.
Available-for-sale securities may only be classified as short-term investments.
When preparing financial statements, the accountant assumes that the business will
continue to operate for at least 5 years, unless there is evidence to the contrary.
The budget committee oversees each stage in the preparation of a master budget.
Regardless of the product costing system used, when the products are completed, they
are transferred from work in process inventory to finished goods inventory.
The general ledger account for Accounts Receivable shows a debit balance of $40,000.
The Allowance for Uncollectible Accounts has a credit balance of $2,000. Net sales for
the year were $250,000. In the past, 3 percent of net sales have proved uncollectible. An
aging of accounts receivable accounts results in an estimate of $9,000 of uncollectible
accounts receivable. Calculate (1) Uncollectible Accounts Expense and (2) the ending
balance of the Allowance for Uncollectible Accounts using (a) the percentage of net
sales method and (b) the accounts receivable aging method for both (1) and (2).
Determining cash flows from investing activities is the ________ step in preparing the
statement of cash flows.
A.First
B.Second
C.Third
D.Fourth
Use this inventory information for the month of July to answer the following question.
Assuming that a periodic inventory system is used, what is cost of goods sold under the
average-cost method?
A.$3,648
B.$7,752
C.$3,712
D.$7,888
Disposing under- or overapplied overhead into the Cost of Goods Sold account is
related to _____ in the management process.
A.performing
B.planning
C.evaluating
D.communicating
On the work sheet, under what circumstances will the last two columns be in balance
after the initial footing?
A.Under all circumstances, assuming no arithmetical errors have been made
B.When net income is zero
C.When no adjustments have been entered on the work sheet
D.Under no circumstances
Customer relations are usually part of
A.the supply chain.
B.the value chain.
C.both the value chain and the supply chain.
D.neither the value chain nor the supply chain.
On November 1, 2013, Rob’s Auto Repair purchased diagnostic equipment for $18,000.
The equipment had an estimated residual value of $3,000 and a five-year life and was
sold on May 1, 2015. Assuming that the company depreciates the asset on a
straight-line basis and reports on a calendar-year basis, journalize the following
independent transactions in the journal provided. (Omit explanations.)
a. The entry to update depreciation to May 1, 2015
b. The entry to record the sale for $15,000
c. The entry to record the sale instead for $11,000
d. The entry to record the sale instead for $13,500
Direct materials for 8,000 units were added at the beginning of the second process
during October. During the month, 8,300 units were completed and transferred to the
third process. On October 1, there were 600 units in beginning inventory, and on
October 31, there were 300 units still remaining in the process. Compute the equivalent
units for direct materials for the second process for October using the FIFO costing
method.
A.8,600
B.8,000
C.8,300
D.8,900
Which of the following business events is not a transaction
A.Signing a contract.
B.Paying wages.
C.Receiving goods.
D.Purchasing a service.
When a service has been performed, but no cash has been received, which of the
following statements is true?
A.The entry would include a debit to Accounts Receivable.
B.The entry would include a debit to Accounts Payable.
C.The entry would include a credit to Unearned Revenue.
D.No entry is required until the cash is received.
An expenditure to lengthen the useful life of a company vehicle would require a
A.credit to Company Vehicles.
B.debit to Repair and Maintenance Expense
C.debit to Depreciation Expense.
D.debit to Accumulated Depreciation.
During the current month, Thompson Company started 40,000 units of product and
transferred 25,000 fully completed units to finished goods. The final work in process
inventory was 50 percent complete as to labor operations. There was no initial work in
process, and actual labor hours were 150,000 for the period. Each unit should have
required 3 direct labor hours to be produced at standard. The total standard hours
allowed for the period are
A.75,000 hours.
B.97,500 hours.
C.120,000 hours.
D.150,000 hours.
Copper Company began operations in April and then engaged in the following
transactions during April
If the balance in cash after these transactions is $165,000, how much cash was paid on
account?
A.$43,000
B.$57,000
C.$1,000
D.$21,000
When bonds are issued at a discount, the total interest cost of the bonds over the life of
the bonds is equal to the amount of
A.interest payments made over the life of the bonds minus the amount of issuance
discount.
B.issuance discount.
C.interest payments made over the life of the bonds plus the amount of issuance
discount.
D.interest payments made over the life of the bonds.
A ratio of net income of $100,000 to sales of $1,000,000 can be stated as
A.Net income is 1/10, or 10 percent, of sales.
B.For every dollar of sales, the company has an average net income of 10 cents.
C.The ratio of sales to net income is 10 to 1 (10:1), or sales are 10 times net income.
D.All of these choices.
When actual capacity exceeds expected capacity, the result is a(n)
A.favorable fixed overhead volume variance.
B.favorable materials quantity variance.
C.unfavorable overhead variance.
D.unfavorable materials quantity variance.
Which of the following statements is TRUE of fixed and variable costs?
A.Both costs are constant when considered on a total basis.
B.Variable costs are constant in total, and fixed costs are constant per unit.
C.Both costs are constant when considered on a per unit basis.
D.Fixed costs are constant in total, and variable costs are constant per unit.
When a statement of cash flows is prepared using the direct method,
A.net income is the starting point in determining cash flows from operations.
B.cash paid for dividends is not included.
C.the increase in cash is different than when the indirect method is used.
D.the amount of cash collected from customers is calculated.
On July 1, 20×5, Claudio Corp. issued bonds with a face value of $800,000. The bonds
carry a face interest rate of 8 percent that is payable each July 1 and January 1.
a. Prepare the entry in journal form without explanation for the issuance of the bonds
assuming the bonds are issued at 98.
b. Prepare the entry in journal form without explanation for the issuance of the bonds
assuming the bonds are issued at 101.
A corporation issues bonds that pay interest each February 1 and August 1. The
corporation’s December 31 adjusting entry might include a
A.debit to Unamortized Bond Premium.
B.debit to Cash.
C.debit to Bond Interest Payable.
D.credit to Bond Interest Income.
An adjusting entry was made on the last day of the previous fiscal year debiting Wages
Expense and crediting Wages Payable. If a reversing entry has been made, then at the
time of payment
A.the accountant needs to find out how much of the payment applies to the current
period and how much applies to the previous period.
B.the accountant will debit Wages Payable and Wages Expense, and credit Cash.
C.the accountant will debit Wages Expense and credit Cash.
D.the accountant will debit Cash and credit Wages Expense.
Which of the following is an example of egregious financial reporting fraud as
discussed in the text?
A.Closing the books at the end of the reporting period.
B.Transferring assets to an affiliate at more than their actual value.
C.Recording as expenses expenditures that should have been classfied as expenses.
D.Recording a liability when title to merchandise passes to the purchaser.
Which of the following assets is not subject to depreciation, depletion, or amortization?
A.Land improvements, such as parking lots and fences
B.Gas fields
C.Land
D.Patents
General-purpose external financial statements are not primarily intended for
A.management.
B.investors.
C.suppliers of goods and services.
D.lending institutions.
Pacific Enterprises entered into a long-term lease for a piece of equipment. The lease
term calls for an annual payment of $8,000 for six years, which approximates the useful
life of the equipment. Assume a discount factor of 8 percent. (Note: Present value of a
single sum factor at six years and 8% is 0.63017; present value of an annuity factor at
six years and 8% is 4.623.) Round answers to the nearest dollar.
a. Prepare the entry without explanation to record the leased equipment.
b. Prepare the entry without explanation to record annual depreciation, assuming the
straight-line method and no residual value.
c. Prepare the entry without explanation to record the first annual payment of $8,000,
after the company has had the equipment for one year.
You win the grand prize and can choose between receiving $100,000 today or $20,000
per year for seven years. Ignoring income taxes, how would you go about making your
decision?
Match each of the following terms with its appropriate description.
Which two broad account categories are used to determine net income? Define each
category and list two examples of each type.
The following information relates to Ferguson Company for 20×6 and 20×5:
Additional information:
Prepare a statement of cash flows using the indirect method. Include a schedule of
noncash investing and financing transactions, if applicable.
Indicate on the blanks below the letter of the type of activity (O = operating activity, F
= financing activity, I = investing activity, N = noncash transaction) each of the
following transactions represents.
_____ 1> Firm sold 8,000 shares of its own common stock for cash.
_____ 2> Sold $200,000 worth of products for cash.
_____ 3> Paid $120,000 dividend.
_____ 4> Received $1,500 in interest income.
_____ 5> Exchanged 6,000 shares of stock for 15-year bonds.
_____ 6> Paid $121,000 to the U.S. Treasury for income taxes.
Sarusse Inc. produces two products in a single plant utilizing two departments: Shaping
and Assembly. Direct labor hour and dollar requirements for 2014 are being projected
using 2013 unit standard labor information. Departmental data and routing sequence
information are shown below.
Management has forecasted that 20,000 units of product R2D2 and 70,000 units of
product T3E3 must be produced during 2014.
Prepare a direct labor budget for 2014 that shows the budgeted direct labor cost for each
department and the company as a whole.
Grace Corporation issued 60,000 shares of $5 par value common stock for $600,000.
The journal entry to record the transaction is: