Total variable costs remain constant within a defined time period or range of activity.
Both public accountants and management accountants are required to adhere to a code
of professional conduct.
Managers prepare financial statements to communicate the company’s performance to
its external users.
Accrual accounting recognizes revenues and expenses at the point that cash changes
hands.
The post-closing trial balance will typically have more accounts than the adjusted trial
balance.
Under the periodic inventory system, the Purchases account is used to accumulate all
purchases of merchandise for resale.
Net income is another term for revenues.
Goods in transit shipped FOB destination should not be included in the buyer’s ending
inventory.
If a company wants to know how many units of a certain product it must sell to make a
desired level of profit, it should add the amount of profit to the numerator in the
breakeven analysis.
The declaration of cash dividends will increase the book value per share of common
stock.
Under a capital lease, each monthly payment is debited by the lessee to Rent Expense.
The post-closing trial balance will contain only nominal accounts.
Investing activities involve
A.Long-term investments.
B.Short-term investments.
C.Long-term assets.
D.All of these choices.
Willow Corporation has retained earnings of $320,000. It has 5,000 shares of 6 percent,
$100 par value preferred stock outstanding that is callable at 102. The preferred stock is
cumulative, and one year of dividends is in arrears. It also has 10,000 shares of $50 par
value common stock outstanding. Assume all stock is issued at par. The book value of
each share of preferred stock is
A.$168.00.
B.$108.00
C.$20.
D.$176.00.
The purchase and sale of debt and equity securities would appear in which section of
the statement of cash flows?
A)Operating activities
B)Investing activities
C)Financing activities
D)Noncash investing and financing activities
In a purchase system, the most appropriate department to control goods upon arrival at
the company is the
A.accounting department.
B.receiving department.
C.treasury department.
D.requesting department.
Lincoln Company engaged in this transaction:
Sold land it was holding for speculation.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Financing activities section.
B.Schedule of noncash investing and financing transactions.
C.Operating activities section.
D.Investing activities section.
Which of the following accounts might appear in the adjusted trial balance but not in
the post-closing trial balance?
A.Depreciation Expense’“Equipment
B.Owner’s Capital
C.Unearned Revenue
D.Income Summary
Which of the following physically prepare and audit financial reports?
A.accountants
B.managers
C.chief executives
D.board of directors
Which of the following costs would not be included in the inventory cost?
A.Invoice price
B.Cost of goods held on consignment
C.Freight-in
D.Sales tax
A company is referred to as a diversified company or a conglomerate if it operates in
A.many related industries.
B.many unrelated industries.
C.many and varied locations throughout the world.
D.one single major industry.
The perpetual inventory system
A.reduces the amount of clerical work.
B.eliminates the need for a physical count of the inventory.
C.keeps a continuous record of the quantity of inventory items.
D.All of these choices.
The Income Summary account
A.appears on the balance sheet.
B.appears on the income statement.
C.is closed to the cash account to properly state cash at the end of the period.
D.does not appear in the financial statements.
Failure to record depletion for a given accounting period will result in
A.understated total assets.
B.understated total liabilities.
C.overstated net income.
D.overstated total liabilities.
Generally accepted accounting principles
A.are changing continually.
B.are sound in theory but rarely used in practice.
C.have eliminated all weaknesses in accounting practice.
D.are accounting rules formulated by the Internal Revenue Service.
If bonds payable were issued initially at a premium, the carrying value of the bonds at a
balance sheet date will be calculated by
A.deducting the amount of premium amortized between the issuance date and the
balance sheet date from the face value.
B.deducting the balance of unamortized bond premium from the face value.
C.adding the balance of unamortized bond premium to the face value.
D.adding the amount of premium amortized between the issuance date and the balance
sheet date to the face value.
The Taylor Company uses a process costing system. Assume that direct materials are
added at the beginning of the period and that direct labor and overhead are added
continuously throughout the process. The company uses the FIFO costing method. The
following data are available for one of its accounting periods
Assume that you have calculated a direct materials cost per unit of $4 and a conversion
cost per unit of $7. Under this assumption, the ending balance for Work in Process
Inventory of Taylor Company would be
A.$82,000.
B.$165,000.
C.$99,000.
D.$123,000.
On December 12, Roger Kent, a painter, received $2,400 in advance for performing a
service that would extend into the following calendar year. By December 31, he still
had one-fourth of the service remaining to perform. In the journal provided, prepare the
December 12 entry, the December 31 end-of-period adjustment, as well as the entry on
January 29 when the job was completed. Omit explanations.
McAfee Corporation borrowed $20 million to finance the construction of a new
building. In addition to the annual interest that is not included in the face, one-tenth of
the principal amount borrowed is to be repaid each year. If the borrowing occurred one
month prior to year end, how should the loan be presented on the upcoming balance
sheet?
The general ledger account for Accounts Receivable shows a debit balance of $50,000.
Allowance for Uncollectible Accounts has a credit balance of $3,000. Net sales for the
year were $500,000. In the past, 3 percent of sales have proved uncollectible, and an
aging of accounts receivable resulted in an estimate of $20,000 of uncollectible
accounts receivable.
Using the accounts receivable aging method, the entry to record Uncollectible Accounts
Expense would be:
How and why is the matching rule applied to the cost of a building?
Prepare closing entries for December (omit explanations) from the following Income
Statement columns of the work sheet of Kemp Corporation, assuming that a $1,000
withdrawal was made during the period.
In the journal provided, prepare the entries for the following transactions. (Omit
explanations.)
Indicate on the blanks below the net effect (I = increase, D = decrease, NE = no effect)
of each of the following entries on total stockholders’ equity.
_____ 1> To record the declaration of a cash dividend
_____ 2> To record the payment of a previously declared and recorded cash dividend
_____ 3> To close the Dividends account at the end of the accounting period