A company that factors its receivables will have a less favorable receivable turnover
than a company that does not factor.
Companies that produce custom-made products usually use a process costing system.
Indirect product costs incurred are charged directly to the Cost of Goods Sold account.
A partner’s inability to meet his or her obligations at the time of liquidation does not
relieve that individual of his or her liabilities to the other partners.
Return on assets is a better measure of profitability than profit margin because it takes
into account the assets invested in the business.
Activity-based costing is the tool used in an ABM environment to assign activity costs
to cost objects.
The intentional preparation of misleading financial statements is referred to as
fraudulent financial reporting.
The exclusive right to use an identifying symbol is called a patent.
The costs of marketing and delivering a product are recorded in the Work in Process
Inventory account.
Lawsuits against a company in connection with an industrial accident would not be
listed in the contingent liabilities section on the balance sheet.
Job order cost cards for incomplete jobs make up the ending balance of the Finished
Goods Inventory account.
Typically, there are four levels in the cost hierarchy.
All the interest income on U.S. Treasury bills is recorded at maturity.
Underwriters typically charge 1 percent of the selling price to guarantee the sale of
initial public offerings of stock.
When the average-cost method is applied to a perpetual inventory system, a moving
average cost per unit is computed with each purchase.
Social Security and Medicare taxes are borne entirely by the employee.
When the terms are FOB shipping point, the title passes at the point of origin and the
buyer pays the transportation costs.
Shares of treasury stock are
A.issued shares that have been bought back by the corporation and are being held by
the corporation.
B.shares held by the U.S. Treasury Department.
C.part of the total outstanding shares but not part of the total issued shares of a
corporation.
D.unissued shares that are held by the treasurer of the corporation.
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.Amortization expense.
B.Depreciatione expense.
C.Loss on sale of land.
D.All of these choices.
Budgets identify, gather, summarize, and communicate
A.financial data only.
B.financial and nonfinancial data.
C.nonfinancial data only.
D.None of these answer choice are correct.
An important purpose of the work sheet is to
A.accompany the financial statements in the company’s annual report.
B.aid the accountant in the daily preparation of journal entries.
C.replace the journal when making adjusting and closing entries.
D.check the accuracy of adjusting entries before they are entered formally into the
accounting records.
Qualitative factors used by decision makers include all of the following except
A.social issues.
B.tax implications.
C.timeliness.
D.competition.
A controlling investment is defined as owning what percent of the stock of another
company?
A)More than 50 percent
B)100 percent
C)More than 75 percent
D)75 percent
The unit of measurement used in management accounting reports is
A.primarily the historical dollar.
B.usually current replacement cost.
C.any measurement unit that is useful in a particular situation.
D.the measurement unit used by competing companies.
If the amount of uncollectible accounts expense is understated at year end,
A.net Accounts Receivable will be understated.
B.total liabilities will be overstated.
C.net income will be understated.
D.Allowance for Uncollectible Accounts will be understated.
A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been
recorded was disposed of on January 1. If the truck was discarded as having no value,
the entry to record this event includes
A.a gain of $3,000.
B.a loss of $3,000.
C.a loss of $6,000.
D.no recognition of a gain or loss.
Luther Inc. has two products: Normal (unit sales price, $30; unit variable cost, $15) and
Hybrid (unit sales price, $35; unit variable cost, $20). The company’s sales mix of the
Normal to the Hybrid is 3:2 and fixed costs are $42,000.
a. Determine the weighted-average contribution margin.
b. Calculate the weighted-average breakeven point.
c. Compute the breakeven point for each product.
Which of the following is related to performing in the management process?
A.Comparison of job estimates with actual job costs
B.Preparation of financial statement
C.Computation of a job’s cost per unit
D.Selection of a predetermined overhead rate
If net cash flows from operating activities total $115,000, net cash flows from financing
activities total $50,000, net cash flows from investing activities total $60,000, purchases
of plant assets total $30,000, dividends total $12,000, and sales of plant assets total
$17,000, the free cash flow equals
A.$90,000.
B.$174,000.
C.$116,000.
D.$56,000.
Use this information to answer the following question.
Northbrook Corporation is preparing a statement of cash flows. The following
transactions occurred during the year:
1> Sold machinery for $9,000 cash.
2> Purchased a building for $80,000 cash.
3> Issued $70,000 worth of stock to acquire an airplane.
4> Converted long-term bonds by issuing $100,000 worth of stock.
5> Declared and paid a $10,000 cash dividend.
Transaction 5 would be found on the statement of cash flows in the
A.noncash investing and financing transactions section.
B.cash flows from financing activities section.
C.cash flows from operating activities section.
D.cash flows from investing activities section.
Use this information to answer the following question.
A single deposit of $7,000 made at the beginning of period 1 and earning 12 percent
interest compounded annually would grow to how much at the end of three years?
A.$7,840
B.$9,835
C.$8,778
D.$23,618
Use this information to answer the following question.
The total dollar amount of assets to be classified as property, plant, and equipment is
A.$135,000.
B.$125,000.
C.$95,000.
D.$85,000.
Cost of goods manufactured is equal to
A.Direct Materials + Direct Labor + Overhead.
B.Beginning Work in Process Inventory + Total Manufacturing Costs ‘“ Ending Work in
Process Inventory.
C.Beginning Work in Process Inventory + Period Costs ‘“ Ending Work in Process
Inventory.
D.Beginning Work in Process Inventory + Product Costs.
The cash receipts journal
A.must have several columns, it cannot be a single-column journal.
B.requires that the ‘Other Accounts’ column total be posted daily and at the end of the
month.
C.can result in both debits and credits to cash, depending on the transaction.
D.All of these choices.
Which of the following is an actual account on the books?
A.Cost of goods sold.
B.Gross margin.
C.Net income.
D.Income from operations.
Win Shield International manufactures trophies. Each trophy goes through two
departments in the production process and requires two direct labor hours in
Department A and one hour in Department B. Labor cost is $8 per hour in Department
A and $10 per hour in Department B.
Assuming the amount budgeted to be produced in March is 30,000 units, what is the
budgeted direct labor cost of Win Shield for March?
A.$810,000
B.$840,000
C.$780,000
D.$540,000
Assume that the balance of accounts payable does not change during a period. When
preparing a statement of cash flows, an increase in ending inventory over beginning
inventory will result in an adjustment to cost of goods sold under the direct approach
because
A.the amount of cost of goods sold is equal to the amount of cash paid for purchases.
B.consumed inventory is an expense but not a use of funds.
C.the amount of cost of goods sold on an accrual basis is less than the amount of cash
paid for purchases of inventory.
D.the amount of cash paid for purchases of inventory is less than the amount of cost of
goods sold on an accrual basis.
The cost of a long-term asset is expensed
A.in the period in which it is sold.
B.in the period in which it is acquired.
C.as the asset benefits the company.
D.when it is paid for.
All of the following are indications of significant influence over another company
except
A)exchange of managerial personnel.
B)representation on the board of directors.
C)technological dependency between the two companies.
D)ownership of all of the other company’s debt securities.
Wages Payable was $350 at the end of October and $280 at the end of November.
Wages Expense for November was $2,000. How much cash was paid for wages during
November?
A.$1,930
B.$2,630
C.$2,070
D.$1,370
Match each description with the letter of the term to which it corresponds.
Saybrook Company purchased a machine on January 2, 2014. Under the terms of the
purchase agreement, the company is required to make 14 quarterly installment
payments of $23,000 each, beginning April 1, 2014. Assuming 16 percent interest
compounded quarterly, determine the purchase price of the machine. Use future value
and/or present value tables in calculating your answer.
Paula Giltz earns an hourly wage of $18 with time-and-a-half pay for hours worked
over 40 per week. During the most recent week, she worked 46 hours, her federal tax
withholding totaled $93, her state tax withholding totaled $27, and $5 was withheld for
union dues. Assuming a 6.2 percent social security tax rate and a 1.45 percent Medicare
tax rate, prepare the journal entry to record Giltz’s wages and related liabilities. Round
to the nearest penny.
Lewis Company purchased a machine for $60,000. The machine has an estimated life
of 20,000 hours and no salvage value. The entry to record the depreciation charge under
the production method assuming that the machine was used for 4,000 hours is:
Brashear Corporation engaged in the following transactions involving promissory notes
in 2014 and 2015. Journalize these transactions in the journal provided. (Omit
explanations.) Round to nearest whole dollar.
Managers are constantly comparing the costs of what was expected to happen with the
costs of what did happen. By examining the differences, or variances, managers can
learn much valuable information. Identify and discuss the steps involved in variance
analysis.