The higher the receivables turnover, the lower the days’ sales uncollected.
A company with a current ratio of 1.0 is considered more liquid than a company with a
current ratio of 2.0.
Which of the following is
When the terms are FOB destination, the title passes at the point of origin and the buyer
pays the transportation costs.
The account ‘˜Supplies’ will appear as an expense on the income statement.
The fixed overhead volume variance measures the use of existing facilities and
capacity.
Processes in a process costing system must incur the same amount of costs.
The date on a statement of stockholders’ equity is for a specific point in time.
An advantage of the corporate form is the separation of ownership and control.
A variable costing income statement is also called a traditional income statement.
Fixed costs remain constant within a defined range of activity or time period.
In order for a manager to reduce throughput time, it is necessary for the accounting
system to focus on calculating units produced per direct labor hour.
For accounting information to be useful, it must be both relevant and conservative.
Generally, before Accounts Receivable is debited, it is credited.
To decide the cost of a product, managers use information about past and projected
product costing and customer preferences.
All factors in a future value table must be less than or equal to 1.000.
A contra account is an account whose balance is subtracted from an associated account
in the financial statements.
Corporations represent the largest number of businesses in the United States.
Advertising expense appears as a general and administrative expense on the income
statement.
Which of the following would not be considered a capital expenditure?
A.The addition of a building wing
B.A tune-up of a company vehicle
C.A complete overhaul of an air-conditioning system
D.The cost of installing a piece of equipment
Yount, Inc. issues $400,000 of 20-year, 9 percent bonds at 95. Interest is paid
semiannually, and the effective interest method is used for amortization. Assume that
the market interest rate for similar investments is 10 percent and that the bonds are
issued on an interest date.
a. What amount was received for the bonds?
b. How much interest is paid each interest period?
c. How much bond interest expense is recorded on the first interest date (after the issue
date)?
d. What is the carrying value of the bonds after the first interest date (after the issue
date)?
Which of the following is a correct statement relating to the concept of mutual agency
and the corporate form of business?
A.There is no mutual agency with the corporate form of business.
B.Mutual agency may or may not exist in a corporation, depending on the individual
state law.
C.Mutual agency always exists in the corporate form of business.
D.Mutual agency may or may not exist in a corporation, depending on a vote by the
shareholders.
The last step in a master budget is to prepare a
A.cost of goods manufactured budget.
B.budgeted balance sheet.
C.cash budget.
D.sales budget.
Smith and Hodges produce notions for the clothing industry. It uses four work cells for
its four product lines. Just-in-time operations and costing methods have recently been
adopted. A overhead rate of $9.50 per machine hour is applied to work cell #2. There
were no beginning inventories on February 1. Operating costs for February for work
cell #2 are as follows:
a. Using T accounts and traditional costing, show the flow of costs.
b. Using T accounts and a backflush costing system, show the flow of costs.
c. What is the total cost of goods sold for the month of February?
A tabulation of invoices at the end of the day showed $1,600 in MasterCard invoices,
which were deposited into a bank account at full value, less a 5 percent discount. The
entry to record the above events would include an increase in
A.Accounts Receivable for $1,520.
B.Cash for $1,600.
C.Sales for $1,520.
D.Credit Card Expense for $80.
Which of the following is an example of an investing activity?
A.Purchasing a building
B.Paying off a loan
C.Employing workers
D.Producing goods and services
The profit margin equals
A.net sales divided by net income.
B.gross margin divided by net income.
C.net income divided by gross margin.
D.net income divided by revenues.
In a partnership liquidation, the Gain or Loss from Realization
A.is closed to Retained Earnings.
B.is distributed according to the partners’ stated ratios.
C.the last entry made to the partners’ Capital accounts.
D.All of these choices.
Use this balance sheet and income statement for the first year of operations for Cane
Construction to answer the following question. Use ending balances whenever average
balances are required for computing ratios.
The profit margin for Cane Construction is
A.30 percent.
B.75 percent.
C.60 percent.
D.27 percent.
Which of the following categories of investments can be debt but not equity securities?
A)Trading securities
B)Held-to-maturity securities
C)Available-for-sale securities
D)Both trading and available-for-sale securities
In the journal provided, prepare adjusting entries for the following items. Omit
explanations.
a. Depreciation on machinery is $940 for the accounting period.
b. Interest incurred on a loan but not paid or recorded is $635.
c. Office supplies of $600 were on hand at the beginning of the period. Purchases of
office supplies during the period totaled $200. At the end of the period, $80 in office
supplies remained.
d. Commissions amounting to $540 were earned but not recorded or collected by year
end.
e. Prepaid Rent had an $8,000 normal balance prior to adjustment. By year end, 40
percent had expired.
Which of the following would be added to the balance per books on a bank
reconciliation?
A.Notes collected by the bank
B.Deposits in transit
C.Service charges
D.Outstanding checks
‘The difference between actual hours worked and standard hours allowed for the good
units produced, multiplied by the standard labor rate’ is a description of the
A.direct labor rate variance.
B.direct labor efficiency variance.
C.total direct labor cost variance.
D.direct labor quantity variance.
Use this information to answer the following question.
The debt to equity ratio is
A.0.46.
B.0.67.
C.2.18.
D.0.33.
Stetson Corporation has 80,000 shares of $5 par value common stock outstanding.
Prepare entries in journal form without explanations for the following transactions.
(Market value of the stock was $10.00 on December 16 and $12.00 on December 23.)
Chaney Company has established a petty cash fund for small expenditures. Prepare
journal entries for the following transactions (omit explanations).
Write a brief note on the performance-based pay.
Prepare the entries in journal form necessary to record the following stock transactions
of Horsetail Corporation. These transactions represent all treasury stock transactions
entered into by the company. (Omit explanations.)
Sam’s Menswear has $11,600 in Accounts Receivable at December 31. Sam’s
accountant estimates that $600 of the $11,600 will never be collected. Complete the
current asset section of the balance sheet below.
The Yeva Company produces children’s automobile car seats. The company recently
changed from a traditional production environment to just-in-time work cells. The
company’s car seats are widely distributed in popular retail stores. Would you
recommend the use of backflush costing or ABM/ABC for tracking product costs?
Explain your choice of system.
Flint Company produces widgets that cost $30 each and have a 5 percent failure rate. If
500 widgets are sold, the entry to record the estimated product warranty expense would
be
Ralston Company’s cash balance at December 31, 20×5, was $23,000. During the year,
Ralston sold assets with a book value of $245,000 that resulted in a loss of $110,000.
Calculate the company’s cash balance at December 31, 20×6 , given the following
information for the year ended December 31, 20×6. Show your work.
