The reporting format of financial accounting information is based on generally accepted
accounting principles.
Lean uses ABC to assign overhead costs to the product by using appropriate cost
drivers.
If management wants specific information on individual items, a subsidiary ledger can
be used for Notes Receivable and Equipment.
Backflush costing aims at decreasing waste in the production process.
Variable costs per unit change in an inversely proportional rate to changes in volume.
The costs of an automated perpetual inventory system are considerable because they
include the costs of automating the system, maintaining the system, and taking a
physical inventory.
A bill of activities will complicate the estimation of profits of a company.
The cost-benefit convention holds that the benefits to be gained from providing
accounting information should be greater than the costs of providing it.
Purchases and sales of long-term investments for the period should be netted for
disclosure in the investing activities section of the statement of cash flows.
Federal tax law does not allow the rapid write-off of plant assets.
Building depreciation is an example of a direct product cost in a manufacturing
company.
Which of the following accounts will have an amount in the Adjustments columns of
the work sheet but probably not in the Trial Balance columns?
A.Owner’s Capital
B.Revenue from Services
C.Depreciation Expense’“Machinery
D.Utilities Expense
Under an operating lease, the lessee records which of the following?
A.Rent expense
B.Capital lease obligations
C.Depreciation on the leased asset
D.Capital lease assets
Compound interest is computed quarterly on $700 for seven years at 12 percent annual
interest. The future value table is used by multiplying the $700 by which factor?
A.28 periods at 3 percent
B.7 periods at 3 percent
C.7 periods at 12 percent
D.28 periods at 7 percent
Lincoln Company engaged in this transaction:
Retired long-term debt with cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Operating activities section.
B.Does not represent a cash flow.
C.Investing activities section.
D.Financing activities section.
Suppose a company rents a building for $225,000 a year for the purpose of
manufacturing between 100,000 and 180,000 units (the relevant range of activity). The
rental cost per unit of production will __________ with increase in production level.
A.behave in a nonlinear fashion
B.increase
C.decrease
D.remain fixed
Analysis of the financing activities section of the statement of cash flows will disclose
A.the extent of investments in plant and equipment.
B.net income for the period.
C.purchases and sales of treasury stock.
D.the amount of money loaned to others.
The balance in the Work in Process Inventory account on October 1 was $14,000, and
the balance on October 31 was $85,400. Costs incurred during the month were as
follows: direct materials, $55,820; direct labor, $58,420; and overhead, $40,000. What
amount was transferred to the Finished Goods Inventory account during October?
A.$82,840
B.$154,240
C.$239,640
D.$140,240
Under which circumstance would one less closing entry than usual be made?
A.When a net loss has been suffered
B.When withdrawals by the owner are equal to net income for the period
C.When net income is zero
D.When the owner’s Capital account is zero prior to posting of closing entries
Calculate answers to the following scenarios:
a. To what amount will an $800 deposit grow, assuming an APR of 9 percent paid
annually, 5 years, and simple interest?
b. To what amount will a $500 deposit grow, assuming an APR of 10 percent paid
semiannually, three years, and simple interest?
Expensing a building in the year of purchase represents an abuse of which of the
following accounting conventions?
A.Full disclosure
B.Cost-benefit
C.Conservatism
D.Consistency
If a company’s free cash flow is $66,000, net cash flows from operating activities total
$133,000, purchases of plant assets total $61,000, and the payment of dividends was
$20,000, what amount was obtained from the sale of plant assets?
A.$7,000
B.$14,000
C.$28,000
D.Impossible to determine from the facts given.
The purchases journal
A.must have several columns, it cannot be a single-column journal.
B.will include all purchases of merchandise for resale.
C.has Accounts Receivable as its controlling account.
D.requires that individual transactions in the Accounts Payable column be posted daily.
Which of the following accounting principles best justifies accelerated depreciation
accounting?
A.Materiality
B.Matching
C.Full disclosure
D.Consistency
The following graphical breakeven analysis is for Nicronea’s new line of desktop
computers. Questions related to the graph should be answered in the spaces provided.
a. Production at point J would be at a __________.
b. The area depicting profitable operations is __________.
c. The fixed costs line is depicted by letters __________.
d. The breakeven point for sales units is at letter __________.
e. Letter A represents __________.
f. The line H-B represents what CVP element? ___________.
g. Total cost of operations is reflected in line __________.
Compute the current liabilities for the Atlas Technologies using the information given
below:
A.$53,000
B.$166,667
C.$125,000
D.$100,000
An adjusting entry can include a debit to a(n)
A.expense and a credit to an asset.
B.cash and a credit to a revenue.
C.liability and a credit to cash.
D.liability and a credit to an asset.
Fantastic Futons manufactures futons. The estimated number of futon sales for the first
three months of 2014 are as follows:
Finished goods inventory at the end of 2013 was 10,000 units. On average, 25 percent
of the futons to be sold in the next month are produced and kept as ending balance in
finished goods inventory. The planned selling price is $150 per unit.
How many futons are budgeted to be produced in January by Fantastic Futons?
A.44,500
B.28,000
C.42,500
D.52,500
The existence of diversified companies makes which of the following very difficult?
A.Comparison with industry norms
B.The preparation of interim financial statements
C.Use of more than one depreciation or inventory method
D.The compilation of segment information
Why is the quick ratio probably better than the current ratio as a measure of short-term
liquidity?
At the beginning of the year, Shannon Company’s assets were $150,000 and its owner’s
equity was $100,000. During the year, assets decreased $30,000 and liabilities increased
$15,000. What was the owner’s equity at the end of the year?
Feltner’s Shoe Store had net retail sales of $196,000 during the current year. The
following additional information was obtained from the accounting records.
Estimate the company’s ending inventory at cost using the retail method. (Show your
work.)
Match the following with their meanings given below:
Gonzalez Printing purchased a new printing press for $80,000. It depreciates the press
over a five-year period, using the double-declining-balance method of depreciation. If
the press has an $8,000 estimated residual value, calculate depreciation expense for
each of the five years. (Show your work.)
Listed below are a number of common manufacturing costs. For each cost, state
whether the cost would be considered a direct (D) or indirect (I) cost in a traditional
manufacturing environment and in a JIT manufacturing environment.
Explain the two methods used to estimate uncollectible accounts.
Freewalt Co. purchased investments for $160,000 cash. The journal entry to record this
transaction that correctly shows the outflow of cash is:
A company has the following listed asset accounts. Determine the amount that should
appear on the balance sheet as the total current assets.
When preparing a statement of cash flows using the indirect method, why is
depreciation added back to net income within the operating activities section?