Selected information about The Staccato Company for the current year and prior year is
given below.
The current year’s selling and general expenses percentage (as would be found on a
vertical analysis of the income statement for the current year) is
A) 22.00%.
B) 23.96%.
C) 152.47%.
D) 14.43%.
The following data relate to Sorrentino Corporation for last year:
What is the net cash provided by operating activities for last year on the statement of
cash flows for Sorrentino Corporation?
A) $130,000
B) $142,000
C) $173,000
D) $177,000
The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the debt ratio for the current year?
A) 0.21
B) 0.06
C) 1.27
D) 0.35
A company uses the direct method to prepare the statement of cash flows. It presents
the following data on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about accounts payable transaction in the operating
activities category in the statement of cash flows?
A) The increase of $10,000 will be subtracted from net income.
B) The increase of $10,000 will be added to net income.
C) The increase of $10,000 will be added to purchases to determine payments to
suppliers.
D) The increase of $10,000 will be subtracted from purchases to determine payments to
suppliers.
The following information relates to The Roberta Corporation.
Required:
a.What is the acid-test ratio for the current year?
b.What is the inventory turnover for the current year?
c.What is days’ sales in receivables for the current year?
d.What is the current ratio for the current year?
To follow is selected information about The Boston Company for the current year and
prior year.
What is the current year’s cost of goods sold percentage (as would be found on a
vertical analysis of the income statement for the current year)?
A) 69.70%
B) 64.00%
C) -2.42%
D) 97.58%
The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to long-term liabilities?
A) Long-term liabilities increased by $6,000.
B) Long-term liabilities decreased by 5.92%.
C) Long-term liabilities increased by 6.21%.
D) Long-term liabilities decreased by $1,500.
In a (an) ________ company, salaries and benefits make up over 70% of the total costs.
A) merchandising
B) service
C) manufacturing
D) All companies have a high percentage of labor costs.
Sea Escape Company sells condominiums in Florida. During the recession, the
company moved its sales operations to an older building near the beach. The new sales
office does not attract new clients and the company cannot retain its employees
because the employees resign and they pursue employment at other organizations that
offer professional, newer, office facilities. The sales manager conducted a meeting to
discuss the business reasons for adopting sustainable business practices. The sales
manager asked the operations manager for approval to update the old facilities. The
sales manager estimates that the cost to update the building is $150,000. The sales
manager estimates that if the proposal to update the old building is approved, the
company can generate at least $80,000 in additional sales.
Compute the payback period, in years, to recover from the cost of renovations. List and
discuss at least three business reasons for adopting sustainable business practices.
Fiesta Supply Company compiled the following data in order to assess the weighted
average contribution margin per unit of two of the company’s best-selling party items;
the dome tent and the portable gazebo.
1.What is the contribution margin of the dome tent?
2.What is the weighted-average contribution margin per unit?
A) $880; $221.67
B) $530; $1,330
C) $775; $220
D) $389; $6
Review the following individual accounting system components that contain the skills
and capabilities of individuals in Chart A and review the accounting system components
that contain the skills and capabilities of individuals in Chart B.
Which of the following describes the individual required to perform the accounting
system skills and capabilities in Chart A and which individual is the responsible
individual required to perform the skills and capabilities in Chart B?
A) Chart A: Independent Auditor; Chart B: Internal Audit Function
B) Chart A: Managerial Accountant; Chart B: Financial Accountant
C) Chart A: Audit Committee; Chart B: Cross Functional Teams
D) Chart A: Cross Functional Teams; Chart B: Treasurer
E) Chart A: Controller; Chart B: Treasurer
The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to current assets?
A) Inventory turnover of 9.17 times
B) Current ratio of 1.06
C) A 26.00% increase in current assets
D) Current assets as 40.60% of total assets
The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s acid-test ratio for the current year?
A) 0.35
B) 1.27
C) 5.38
D) 0.77
Elk Manufacturing has budgeted the following amounts for its next fiscal year:
To maintain the original breakeven sales in units if fixed expenses were to increase by
20%, the selling price per unit would have to be
A) increased by 65.00%.
B) increased by 15.00%.
C) decreased by 15.00%.
D) decreased by 65.00%.
The Bedford Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the times-interest-earned ratio for the current year?
A) 1.46 times
B) 1.00 times
C) 5.12 times
D) 4.12 times
Sales territories, such as geographic areas within the country may be classified as a(n)
A) cost center.
B) investment center.
C) revenue center.
D) profit center.
A company uses the direct method to prepare the statement of cash flows. It presents
the following data on its financial statements:
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to inventory?
A) The decrease of $18,000 will be subtracted from net income.
B) The decrease of $18,000 will be added to net income.
C) The decrease of $18,000 will be subtracted from cost of goods sold to determine
payments to suppliers.
D) The decrease of $18,000 will be added to cost of goods sold to determine payments
to suppliers.
Boat Hull Manufacturing produces boat parts at the manufacturing facility in Virginia.
The managerial accountant reported that Boat Hull Manufacturing manufactures parts
to repair the container ships that import products from China. The main part that Boat
Hull Manufacturing produces is the T24 part. The Port Department produces the T24
part at the Boat Hull Manufacturing facility in Virginia. The managerial accountant
reported that the Deport Department could also produce the T24 part because there is
excess capacity at the facility. The managerial accountant reported the current market
price of the T24 part is $825 and reported the following manufacturing cost and
expenses data:
What is the highest transfer price the selling division would receive, and the buying
division would pay, for the T24 part?
A) $935
B) $825
C) $136
D) $145
Jackie works at the Outer Banks Beach Shoppe. Jackie also works with employees that
represent various functions of the company such as R&D, Design, Production, and
Marketing. This role is effective because each member can address the business
decisions from a different viewpoint. Jackie reports to the vice president of operations.
What is Jackie’s role at the Outer Banks Beach Shoppe?
Use the indirect method of preparing a statement of cash flows to answer the question.
Ending balances for Sunday Hut are listed below:
Net income for this year was $97,000 and dividends of $24,000 were declared and paid
during this year.
What was the net cash provided by financing activities?
The managerial accountant at the Holiday Wreath Shoppe is required to determine the
relationship between net income and common stockholder’s equity. The goal of the
managerial accountant is to determine how much income is earned at the Holiday
Wreath Shoppe for each $1 invested by the common shareholders. The managerial
accountant reported that the rate of return on assets is 9.5%. The managerial accountant
reported the following information:
Calculate the rate of return on common stockholder’s equity in 2014. Discuss the
difference in the rate of return on assets at the Wreath Factory compared to the rate of
return on its rate of return on common stockholder’s equity.
Standard Products Company recognizes variances from standards at the earliest
opportunity, and the quantity of direct materials purchased is equal to the quantity used.
The following information is available for the most recent month. Assume the
allocation base for fixed overhead costs is the number of units.
Journalize the direct labor costs incurred and the assignment of direct labor to Work in
Process Inventory, including the related variances.
Use the following information about The Conley Company to do a vertical analysis of
the income statement for the current year. Fill in the missing components in the table.
McCartney Services has a customer Web site to take orders, answer customer questions,
and address customer complaints. The costs associated with this customer Web site over
the past six months are listed below:
Management at McCartney Services believes that the customer Web site costs are a
mixed cost and would like to use the high-low method to estimate their future costs
using the number of Web site hits in any given month as the cost driver.
Required:
1.Using the high-low method, estimate the variable cost per Web site hit and the
monthly fixed costs associated with the customer Web site.
2.Use the results you computed in Requirement 1 to write the cost equation to estimate
the customer Web site expenses for McCartney Services.
3.If McCartney Services expects 9,500 Web site hits for July, what are their anticipated
customer Web site costs for July?
