A partnership is dissolved when any partner leaves the business or dies.
If the carrying value of goodwill is more than its fair value, an impairment loss must be
recorded.
The recognition of an expense does not depend on the payment of cash.
The entire cost of developing computer software should be capitalized and amortized
over the software’s useful life.
The determination of the balance sheet cost of merchandise inventory is not important
to the determination of net income.
An understatement of ending inventory in a period will result in an overstatement of
gross margin in the next period.
Start-up and organization costs should be expensed as incurred.
When a new partner is admitted, it will dissolve the old partnership.
Owner’s Capital is closed by transferring the balance to Income Summary.
When a company discounts a note receivable at the bank, it has a contingent liability.
Working capital is the amount by which current liabilities exceed current assets and
measures how efficiently liabilities are used to produce sales.
The carrying value of a bond issued at a premium is calculated at any given point in
time by adding the balance of the unamortized premium to the bond’s face value.
If a corporation issues par value common stock and the proceeds are less than par value,
the
Common Stock account is credited for the par value.
Identical products are produced in a continuous flow production process.
Companies in the same industry are not required to use the same methods to value
inventory and to depreciate similar assets.
The periodic inventory system provides no means of identifying losses from spoilage,
shoplifting, and theft.
A liability for dividends exists only when the board of stockholders requests them.
According to generally accepted accounting principles, the proper accounting treatment
of the cost of developing intangible assets is to
A.carry the cost as an asset indefinitely.
B.amortize the cost over five years.
C.amortize the cost over a reasonable life.
D.write off the cost immediately.
A responsibility center in which the relationship between resources and products or
services produced is not well defined is known as a(n)
A.investment center.
B.profit center.
C.cost center.
D.discretionary cost center.
Which of the following items is used in preparing the statement of owner’s equity?
A.Withdrawals.
B.Net income.
C.Additional investments.
D.All of these choices.
Which of the following is the entry to record indirect labor costs incurred?
A.Work in Process Inventory
Overhead
B.Overhead
Work in Process Inventory
C.Overhead
Payroll Payable
D.Payroll Payable
Overhead
The Work in Process Inventory account for Clinton Company for the month ended
September 30 appears below.
Overhead is applied based on direct labor dollars. Direct material costs for the one job
remaining in work in process on September 30 was $12,300.
a. What was the overhead rate used to apply overhead to jobs?
b. Determine the amount of direct labor charged to the one remaining job. Round you
answers to nearest dollars.
An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for
$5,200. The entry to record the sale includes
A.no gain or loss.
B.a debit to Loss on Sale of Asset for 800.
C.a credit to Loss on Sale of Asset for 18,800.
D.a credit to Gain on Sale of Asset for 800.
Valprado Industries is considering purchasing a machine that will produce plastic
kitchenware. The machine would be used for five years, would cost $35,000, and would
have a $5,000 residual value. It is expected to increase annual net cash inflows by
$8,800. Valprado uses the straight-line method of depreciation. Using the above facts
and the present value factors below, determine the following.
(a) Payback period (Round your answer to one decimal place)
(b) Accounting rate of return (Round your answer to one decimal place)
(c) Net present value of the investment based on a 12 percent minimum desired rate of
return (Use parentheses to indicate a negative net present value. Round your answer to
the nearest dollar).
During the most recent month, Ostriker Company began operations with a cash balance
of $0 and made made cash sales of $81,000. During this same time period, the company
paid $32,000 in cash expenses. Additionally, the company purchased supplies on
account, $34,000, made sales on account, $90,000, and received cash on the credit sales
$52,000.
a. If cash at the end of the month totals $74,000, how much cash was paid on account?
b. What is the total amount still to be paid?
c. What is the total amount still to be received?
Excerpts from a cost-volume-profit analysis indicate fixed costs of $30,000, a variable
cost per unit of $36, a selling price of $60, and a sales level of $125,000. The targeted
level of profit must be
A.$20,000.
B.$50,000.
C.$95,000.
D.$75,000.
Use this information to answer the following question.
The total dollar amount of assets to be classified as investments is
A.$125,000.
B.$95,000.
C.$60,000.
D.$40,000.
Underfoot Products uses standard costing. The following information about overhead
was generated during May:
Using the above information provided for Underfoot Products, compute the variable
overhead spending variance.
A.$10,000 (F)
B.$10,000 (U)
C.$40,000 (F)
D.$40,000 (U)
The amount of cost of goods available for sale during the year depends on the amounts
of
A.beginning merchandise inventory, net cost of purchases, and ending merchandise
inventory.
B.beginning merchandise inventory and cost of goods sold.
C.beginning merchandise inventory, cost of goods sold, and ending merchandise
inventory.
D.beginning merchandise inventory and net cost of purchases.
Which of the following typically would be considered an incremental cost?
A.Fixed cost
B.Direct product cost
C.Sunk cost
D.Administrative overhead cost
Which of the following is a reason for not using the specific identification method?
A.It is impractical to keep track of the purchase and sale of individual items.
B.Deciding which of many identical items sold would be arbitrary.
C.Deciding whether lower or higher-priced identical items sold could be a means of
manipulating income.
D.All of these are reasons for not using the specific identification method.
Which of the following is not a permanent account?
A.Supplies
B.Accounts Receivable
C.Withdrawals
D.Unearned Revenue
In a manufacturing environment, direct labor costs initially flow
A.into the Materials Inventory account.
B.into the Cost of Goods Sold account.
C.into the Work in Process Inventory account.
D.into the Finished Goods Inventory account.
Explain what cost-volume-profit analysis is and how managers use it.
Why are managers more likely to achieve their objectives in both the short term and the
long term when they utilize a tool such as the balanced scorecard?
Briefly answer each of the following questions about bond issue costs:
1) What type of cost is included in bond issue costs?
2) As a percentage of a bond issue, how significant are bond issue costs?
3) What is the impact of bond issue costs on a bond issue and the amount of interest
expense a company records over the life of the bond?
Sport Runner Inc., produces a complete line of men’s running apparel. The nylon short
set is a very popular item in the southern states. During June, the company’s records
revealed the following information about the production of the nylon shorts set:
Compute the standard unit cost for a nylon shorts set.
Agnes purchased a computer for $2,240. It has an estimated useful life of four years and
an estimated residual value of $240. The entry to record the depreciation charge for the
first year using the double-declining-balance method is:
Ironwood Company has just started operations. The owner, Robert Ironwood, invested
$10,000 to get the business started. The company has made several sales on account,
but has not yet collected any cash from these sales. At this point, Ironwood’s cash flows
for expenses are exceeding its cash flows from revenues. How might Ironwood make
up the difference so it can maintain its liquidity?
List the contents of a master budget for a manufacturing organization by identifying the
two major components and the budgets within each of them.
The profit margin and asset turnover ratios are important measures, but they have a
limitation. Describe these limitations and discuss the ratio that can be used to overcome
these deficiencies.
The profit margin ratio does not consider the assets necessary to produce income, and
the asset turnover ratio does not take into account the amount of income produced. The
return on assetsratio overcomes these deficiencies by relating net income to average
total assets.