Regardless of whether the straight-line method or the effective interest method is used,
the carrying value of a term bond issued at a discount will increase continually over the
life of the bond.
The purchase of treasury stock qualifies as a financing activity, but it is not a cash flow.
Unearned revenue is an example of a definitely determinable liability.
Which of the following is not TRUE about a 35 percent stock dividend?
A.The market value of the stock is needed to record the stock dividend.
B.Retained earnings decreases.
C.Contributed capital increases.
D.Par value per share remains the same.
Exchange gains and losses are reported on the income statement.
The cash flow yield equals net cash flows from operating activities divided by net sales.
The final step in variance analysis is taking appropriate corrective action.
When using the high-low method, the accountant assumes the fixed portion of mixed
costs to be the lowest fixed amount incurred during the period under review.
Unamortized Bond Discount is a contra-liability account.
Cash payments made on accounts payable or accrued liabilities are considered
repayments of loans and are classified as financing activities on the statement of cash
flows.
Primary users of managerial accounting include governmental agencies.
A stock dividend increases the total amount of stockholders’ equity.
Lean’s primary goal is to eliminate waste in business processes.
Cost of capital is the minimum desired rate of return on a particular investment.
In a process costing system, all production costs are assigned to departments or
processes.
Which of the following budgets would be prepared immediately after the preparation of
the overhead budget?
A.Cash budget
B.Production budget
C.Cost of goods sold budget
D.Cost of goods manufactured budget
Which of the following costs generally do not include standard unit costs?
A.Direct materials costs
B.Indirect materials costs
C.Board of directors’ salary
D.Depreciation on factory machine
Which of the following typically would not be done to satisfy a current liability?
A.Use long-term assets to satisfy the liability
B.Render a service to satisfy the liability
C.Use current assets to satisfy the liability
D.Take on another current liability to satisfy the liability
The collection of a $800 account within the 2 percent discount period would result in
a(n)
A.increase to Accounts Receivable for $784.
B.decrease to Cash for $784.
C.increase to Sales Discounts for $16.
D.decrease to Accounts Receivable for $784.
The sales journal
A.is designed to handle all cash and credit sales.
B.requires that account names be written out for each debit and credit.
C.requires a brief explanation for each transaction.
D.requires that only one amount, total credit sales for the month, be posted.
Pelican Company issued $200,000 of 20-year, 6 percent bonds at 98 on one of its
semiannual interest dates. The straight-line method of amortization is to be used. What
is the total interest cost of the bonds?
A.$240,000
B.$244,000
C.$236,000
D.$235,000
Which of the following questions do not dictate a managerial report’s format?
A.Who should write the report?
B.To whom should the report be distributed?
C.What is the purpose of the report?
D.What information is needed?
The excess of the issuance price over the stated value of a no-par common stock should
be credited to the
A.Common Stock account.
B.Retained Earnings account.
C.Additional Paid-in Capital.
D.Treasury Stock.
Use this inventory information for the month of March to answer the following
question.
Assuming that a periodic inventory system is used, what is cost of goods sold on a
FIFO basis?
A.$2,160
B.$3,780
C.$3,861
D.$5,940
Which of the following describes the interest coverage ratio?
A.Income before income taxes plus interest expense divided by interest expense
B.Income after income taxes plus interest expense divided by interest expense
C.Income after income taxes divided by interest expense
D.Income before income taxes minus interest expense divided by interest expense
Which of the following errors will cause the trial balance to be out of balance?
A.Posting a debit to Land as a debit to Machinery.
B.Placing a debit balance amount into the credit balance column of the ledger.
C.Omitting an entire transaction.
D.Incorrectly recording the purchase of land for cash as a debit to Cash and a credit to
Land.
Consider the following information: direct materials used totaled $124,700; direct labor
amounted to $412,000; overhead was computed to be $789,600; Work in Process
Inventory on March 1, 2014, was $482,500; and Work in Process Inventory on March
31, 2014, was $597,100. What was the cost of goods manufactured?
A.$1,211,700
B.$729,200
C.$1,440,900
D.$422,100
An understatement of ending inventory in one period results in
A.an overstatement of the ending inventory of the next period.
B.an understatement of gross margin of the next period.
C.an overstatement of gross margin of the next period.
D.no effect on gross margin of the next period.
Coffeeberry Company manufactures a variety of coffee and utilizes a process costing
system. The following information was provided by the accounting department as of
May 31, 2014:
a. Units started during the month of May totaled 40,000.
b. Units partially complete as of May 31 equaled 8,600.
c. Ending work in process inventory as of May 31, 2014, was 75 percent complete.
d. Direct materials are added at the beginning of the process, and conversion costs are
incurred uniformly throughout the process.
e. No units were in process on May 1, 2014.
Using the information provided, compute the equivalent units of production for direct
materials and conversion costs for the month ended May 31, 2014, assuming a FIFO
costing flow.
A copyright is obtained for what becomes a very successful book. The publisher expects
the book to generate sales for ten years. The copyright should be
A.amortized over the author’s life plus 70 years.
B.expensed immediately.
C.amortized over 10 years.
D.amortized over a reasonable life.
Jeffrey Gray is paid $6 per hour, plus double-time for hours worked on weekends.
During the two-week period ending February 5, Jeffrey worked 70 hours on weekdays
and 8 hours on weekends. Social Security taxes are 6.2 percent, Medicare taxes are 1.45
percent, $65 is withheld for federal taxes, $18 is withheld for state income taxes, and
$24 is withheld for charities. In addition, Jeffrey’s employer must pay Social Security
taxes of 6.2 percent, Medicare taxes of 1.45 percent, federal unemployment taxes of 0.8
percent, and state unemployment taxes of 5.4 percent. Calculate (a) Jeffrey’s gross
earnings, (b) Jeffrey’s net pay, (c) the employer’s payroll taxes expense, and (d) the total
cost of employing Jeffrey for the two-week period. Round all amounts to the nearest
penny.
Which of the following is exclusive to a production-oriented company?
A.Balance sheet
B.Statement of cash flows
C.Income statement
D.Statement of cost of goods manufactured
A business accepts a 12 percent, $94,000 note due in three years. Assuming simple
interest, how much will the business receive when the note falls due?
A.$105,280
B.$127,840
C.$116,560
D.$94,000
A partner has a capital balance of $40,000 for five months, $50,000 for six months, and
$60,000 for one month. The average capital balance is
A.$49,168
B.$50,000
C.$48,500
D.$46,667
The way in which the performance of a cost center is evaluated is similar to
A.job order costing.
B.standard costing.
C.process costing.
D.marginal costing.
If there is a credit balance in the Payroll Payable at the end of the accounting period, it
represents
A.the amount by which applied payroll was greater than actual payroll.
B.the amount by which actual payroll was greater than applied payroll.
C.labor costs which have not been paid.
D.an amount that should be charged to Cost of Goods Sold.
Which of the following is a condition required by the SEC for the recognition of
revenue?
A.Completion of goods manufactured.
B.Execution of a promissory note.
C.Price in excess of $100.
D.Reasonable assurance of collection.
Which of the following attributes of internal control would be violated if the purchasing
department wrote checks to pay accounts payable?
A.Adequate design of documents
B.Sound personnel procedures
C.Periodic independent verification
D.Separation of duties
Transfer of ownership will affect the continuity of a
A.corporation.
B.sole proprietorship.
C.partnership.
D.sole proprietorship or partnership.