A flexible budget is derived by dividing actual unit costs by the standard unit costs.
A project breaks even when total revenues less variable costs equals fixed costs.
The basis used in computing equivalent unit cost under process costing system is made
up of certain specific jobs worked on during the fiscal year.
The entry that includes a debit to Payroll Taxes and Benefits Expense would also
include credits to Social Security Tax Payable and Medicare Tax Payable.
A trial balance is normally prepared at the end of each business day.
When the market value of available-for-sale securities exceeds cost, an unrealized loss
appears in stockholders’ equity as an addition.
The costs associated with the development of software, for sale or internal use, should
be expensed in the period incurred.
Invoices are documents prepared by a vendor and sent to the accounting department of
its customers.
Liquidation of a partnership is the process of ending the business.
A stock dividend is a pro rata distribution of cash to a corporation’s stockholders.
Securitization delays the receipt of cash from sales made on credit.
Projected cash flows remain constant in each year of an asset’s life.
When a corporate stockholder sells his or her shares of stock, the corporation is
technically dissolved.
The discount rate used in net present value calculations is the company’s minimum rate
of return.
Under a capital lease, the lessee, not the lessor, should record depreciation.
The costs included in work in process and finished goods inventories would properly
contain manufacturing overhead costs.
The objective of a sales mix decision is to select the alternative that maximizes the
contribution margin per constrained resource.
Which of the following items is associated with the purpose of the closing entries?
A.Recording adjusting entries.
B.Preparing financial statements.
C.Preparing budgets.
D.Recording closing entries.
Carrying value
A.equals cost minus accumulated depreciation.
B.equals cost minus residual value.
C.is the expired cost of an asset.
D.is the same as residual value.
For a small coffee cafe, which of the following is a nonvalue-adding activity?
A.Importing coffee beans
B.Purchasing ingredients
C.Accounting for materials and conversion costs
D.Operating the drive-through window
In a just-in-time environment,
A.production runs are interrupted each day at setup time to perform routine
maintenance.
B.scheduled and preventive maintenance is extremely important.
C.cost savings are realized by performing maintenance whenever it is needed.
D.routine minor maintenance is always performed by the repair department.
The issue of deciding when to record a transaction is solved by
A.properly classifying the transaction.
B.deciding on a point of recognition.
C.assigning historical cost to the transaction.
D.analyzing the intent of management.
Compute the return on investment (rounded to nearest percent) for the Tim Tom
investment center from the information given below.
A.21%
B.18%
C.15%
D.12%
Significant influence is defined as owning what percent of the stock of another
company?
A)15 to 60 percent
B)More than 50 percent
C)20 to 50 percent
D)75 percent
Using the following information, calculate for 20×5 (a) net sales, (b) beginning
merchandise inventory, (c) gross margin, and (d) net income.
If the indirect method is used, which of the following would be added to net income to
arrive at net cash flows from operating activities?
A.Increase in Inventory.
B.Decrease in Prepaid Expenses.
C.Decrease in Accounts Payable.
D.Increase in Accounts Receivable.
Use this information to answer the following question.
The general ledger account for Accounts Receivable shows a debit balance of $50,000.
Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the
year were $500,000. In the past, 2 percent of sales have proved uncollectible, and an
aging of accounts receivable accounts results in an estimate of $13,500 of uncollectible
accounts.
Using the percentage of net sales method, Uncollectible Accounts Expense would be
debited for
A.$9,000.
B.$11,000.
C.$1,000.
D.$10,000.
Which of the following partnership characteristics is an advantage?
A.Mutual agency
B.Ease of dissolution
C.Unlimited liability
D.Limited life
Estimated future costs that differ between alternative courses of action are termed as
__________ costs in management decision analysis.
A.sunk
B.relevant
C.absorption
D.replacement
The effectiveness of a performance management and evaluation system depends on
how well it coordinates the goals of
A.the entire company.
B.responsibility centers.
C.managers.
D.All of these choices
Which of the following methods generally is used to determine the loss when inventory
is destroyed or stolen?
A.Retail method
B.FIFO
C.LIFO
D.Gross profit method
An adjusting entry made to record salaries earned but not yet paid or recorded is made
with which of the following entries?
A.Salaries Expense ‘“ Debit; Cash ‘“ Credit
B.Salaries Payable ‘“ Debit; Salaries Expense ‘“ Credit
C.Salaries Expense ‘“ Debit; Salaries Payable ‘“ Credit
D.Cash ‘“ Debit; Salaries Expense ‘“ Credit
Which of the following is TRUE of cost-benefit analysis?
A.It supports only short-run decision making.
B.It considers quantitative costs and benefits, not qualitative.
C.It conveys that the benefits from a project should exceed its costs.
D.It supports only long-run decision making.
Following are the total assets and liabilities at the beginning and end of the year for
Hagedorn Company:
Determine the net income or loss for the year in each of the following situations:
a. The owner made no investments in the business and no withdrawals were made
during the year.
b. The owner made an investment of $20,000 and withdrew $12,000 during the year.
On January 2, 20×5, Clair Inc. signed a 9% mortgage payable for $200,000 with equal
monthly payments of $2,400. When Clair makes the first payment, how much interest
expense will be recorded?
A.$0
B.$1,500.
C.$18,000.
D.$750.
Powerhorse Inc. manufactures steel hitches for horse trailers. The company’s direct
labor rates have been set by the terms of the current labor contract. Direct labor rate
standards have been assigned for each job classification. In July 2014, a young
apprentice was being trained during regular working hours to become a machine
operator on one of the turret lathes. A timekeeper determined that the apprentice had
spent a total of 48 hours as a novice machine operator in July. Standard time for the
same work output is 34 hours. The apprentice earned $6.80 per hour in July. The
standard direct labor rate for machine operators working on turret lathes is $9.50 per
hour.
a. From the data provided, determine the direct labor efficiency variance and the direct
labor rate variance that resulted from the temporary substitution of the apprentice for
the regular machine operator. (Note that, according to the labor contract, the apprentice
is not entitled to the same rate as a regular machine operator during the training period.)
b. Did the company benefit financially from the situation? Why or why not? (Show
calculations.)
The owner’s Capital, Withdrawals, and Income Summary accounts for Rick’s Repair
Shop for the accounting period are presented below in T account form after the
recording and posting of closing entries.
From the T accounts, determine the following:
a. Total revenue for the period
b. Net income (or net loss)
c. Total withdrawals for the period
d. Ending balance of Rick Barton, Capital
Which of the following accounts would not need to be adjusted at year end?
A.Prepaid Rent.
B.Owner’s Capital.
C.Equipment.
D.Unearned Rent Revenue.
The direct method of preparing a statement of cash flows
A.eliminates the need for a schedule of noncash investing and financing transactions.
B.provides a different result than the indirect method.
C.adjusts net income for changes in current accounts.
D.shows cash receipts from sales.
Which of the following is the first step in the accounting cycle?
A.Prepare financial statements.
B.Analyze business transactions from source documents.
C.Prepare and adjusted trial balance.
D.Post the journal entries to the ledger.
The Bakersfield Company has the following information available:
At the beginning of the period, there were 800 units in process that were 60 percent
complete as to conversion costs and 100 percent complete as to direct materials costs.
During the current period, 5,800 units were started and completed. Ending inventory
contained 400 units that were 60 percent complete as to conversion costs and 100
percent complete as to direct materials costs. (Assume that the company uses the FIFO
process costing method.)
The total costs that will be transferred into the Finished Goods Inventory account of
Bakersfield during the current period are
A.$144,768.
B.$180,050.
C.$164,736.
D.$160,080.
Kirk Corporation owns 25 percent of the voting stock of Allen Corporation and
accounts for the investment using the equity methoD) Allen reports a net loss of
$40,000. Kirk Corporation’s entry to record its share of loss is:
The following lettered items represent a classification scheme for a balance sheet, and
the numbered items represent accounts. In the blank next to each account, write the
letter indicating to which category it belongs.
From the following data, calculate the amount of gross margin and gross purchases.
On a balance sheet, what items normally are included in Cash?
Why is the Owner’s Withdrawals account increased by a debit? Explain in terms of its
relationship to owner’s equity.
McCoy, Inc. has a 7 percent, $1,200,000 bond issue that originally was issued five years
ago. There are now ten years remaining on the bond issue, and the market interest rate
is 12 percent. Interest is paid semiannually. Calculate the current market value of the
bond issue, using present value tables.
List five possible users of a set of financial statements and state what each would be
interested in learning from its review.
Is breakeven analysis a tool that can be used for a service-oriented business? Explain
your answer.
As the management accountant for Bynami Enterprises Inc., you have been asked to
prepare a statement of cost of goods manufactured at the end of the second quarter.
Account balances at that time were as follows:
June 30 inventories were as follows: materials, $540,200; work in process, $795,400;
and finished goods, $604,100. Prepare the statement of cost of goods manufactured for
the second quarter.
