Archives: Quiz

1) Indicate how the event affects the elements of the financial statements. Use the following letters to record your answer in the box shown below each element: You do not need to enter amounts. Wade Corporation paid its monthly utility […]

1) Selected financial information for Rockufeler Company for 2012 follows: Required: How many times did Rockufeler’s merchandise inventory turn over during 2012? 2) Indicate how the event affects the elements of the financial statements. Use the following letters to record […]

1) Stockham Valve Company produces a mechanical valve used in water systems. Three years ago the company introduced an electronic version of the valve. Sales of the mechanical model have steadily declined, and the company will report a loss on […]

1) In 2012, the balance sheet of Worth Company incorrectly reported as long term some liabilities that should have been treated as current liabilities. How would this error affect financial statement users’ analysis and assessment of the company? 2) San […]

1) Define the term, “cost driver,” and give an example of a cost driver. 2) For each of the following transactions, indicate the type by entering “AS” for asset source transaction, “AU” for asset use transaction, “AE” for asset exchange […]

1) Describe how a flexible budget is useful in planning for an organization. 2) Discuss the types of audit opinions that an independent auditor can express on a company’s financial statements. Answer: An unqualified opinion is the most favorable opinion […]

1) Gamma Corporation has working capital of $840,000, and Sigma Corporation has working capital of $620,000. Based on this information, is it safe to conclude that Gamma is more liquid than Sigma? 2) Many companies have to monitor some of […]

1) Cooper Tools produces scissors in a two-stage production process. The following production times are provided: Required: 1) Identify the non-value-added activities. 2) What percentage of the total time to complete is actually value-added time? 3) How could this production […]

1) What does the acronym “GAAP” stand for? Name the group that has the primary responsibility for establishing US GAAP. 2) Who are the primary users of financial accounting information? Who are the primary users of managerial accounting information? Answer: […]

1) Indicate how the event affects the elements of the financial statements. If the transaction affects a given element of the financial statements, enter the dollar amount below that financial statement element with a plus to indicate an increase or […]

1) Classify the following cost as a selling or general and administrative period cost or as a direct or indirect product cost by entering the dollar amount in the appropriate column: Hale Company paid sales commissions of $48,000. 2) List […]

1) Halley Company has just received a special order for 1,000 deck chairs. Halley has sufficient idle capacity to accept the order. Indicate whether the given cost is a sunk cost, opportunity cost, relevant or not relevant to the decision […]

1) Why do managers of a company need information about its product costs? 2) How are direct costs different from indirect costs? Answer: Direct costs can easily be traced to a cost object, such as a department or product. Indirect […]

1) On December 31, 2012, Detroit Co. paid $6,000 cash for insurance coverage for the year 2013 . What is the effect of this transaction on the financial statements for the 2012 reporting period? 2) Temporary accounts are closed prior […]

1) What is an aging of accounts receivable, and how might an aging be useful in estimating uncollectible accounts? 2) Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. In 2012, the company expects […]

1) In 2012, the Human Resources Department at Heather Corporation expects to incur costs of $145,000. The company has two operating departments. Department A has 30 employees and will incur salary costs of $1,350,000 in 2012 . Department B has […]

1) Indicate how the event affects the elements of the financial statements. If the transaction affects a given element of the financial statements, enter the dollar amount below that financial statement element with a plus to indicate an increase or […]

1) Driscoll Company purchased equipment on January 1, 2010 for $26,000. Driscoll uses straight-line depreciation for the asset, which has a five year estimated useful life and a salvage value estimated at $4,000. The asset was sold on January 1, […]

1) Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. On January 1, 2012, Pedroia Co. issued […]

1) What term is used for liabilities that are uncertain as to amount? 2) What are margin and turnover? If a division can increase turnover with margin constant, how will return on investment be affected? Answer: Margin is operating income/sales. […]

1) Which financial statement presents a summary of revenues and expenses of a business for a specific period of time, such as a month or year? 2) How should the manager of a cost center be evaluated? Answer: The manager […]

1) Discuss some of the information items normally included in a corporation’s articles of incorporation. 2) As of December 31, 2012, Walton Corporation had a current ratio of 1.84, quick ratio of 1.45, and working capital of $18,000. The company […]

1) Indicate whether each of the following statements is true or false. 1>An aging of accounts receivable classifies accounts receivable by the length of time that a company has had a business relationships with a particular customer 2>An aging of […]

1) What is a deferral? 2) Indicate whether each of the following statements is true or false. 1>When a company can identify more than one cost driver for a particular cost, it should use the cost driver with the strongest […]

1) Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. Assume use of a perpetual inventory system. […]

1) Stephanie must decide between two alternatives for the weekend: babysitting or yard work. If she baby sits, she will receive $40 and will incur $15 in food and snack costs. If she does yard work, she will receive $40 […]

1) Senior executives focus on financial data when comparing the performance of their companies to that of competitors. 2) The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship. Answer: […]

1) If the master budget prepared at a volume level of 20,000 units includes direct materials of $80,000, a flexible budget based on a volume of 18,000 units would include direct materials of $72,000. 2) The accounting equation may be […]

1) A company’s outside, independent auditors are responsible for preparing its financial statements. 2) Wiley Corporation issued 5,000 shares of no-par common stock for $32 per share. For this transaction, Common Stock should be credited (increased) for $160,000. Answer: TRUE […]

1) A company can use cost-volume-profit analysis to determine the level of sales required to earn a target profit. 2) A potential danger from outsourcing is that a company may become too dependent on the supplier. Answer: TRUE 3) Product […]

1) A company in its first year of operations incurred $1,000 in cost of goods manufactured. Its income statement showed cost of goods sold of $800 and selling costs of $100. Its ending finished goods inventory was $200. 2) Flexible […]

1) Sometimes, volume-based cost drivers are used to allocate fixed indirect costs. 2) Revenue is the economic benefit derived from operating a business. Answer: TRUE 3) A corporation must record a liability for cash dividends on the date of record. […]

1) Addison Company is using a hole-punching machine that originally cost $80,000 and has a current market value of $45,000. The $80,000 is a measure of the opportunity cost for continuing to use the machine. 2) A business’s equity is […]

1) The inventory cost flow method a company chooses affects both the income statement and the balance sheet. 2) If Paterno Company’s turnover measure is 2.5 and its margin is 7.5%, its ROI is 10%. Answer: FALSE 3) The choice […]

1) Investors and creditors use accounting information to identify the businesses they wish to provide resources to. 2) Suboptimization refers to actions taken by a manager that are in his/her best interest but not in the best interest of the […]

1) Managers should be praised or punished based on variances. 2) Articles of incorporation, prepared by a business that wishes to incorporate, normally include the corporation’s name and purpose, its location, and provisions for capital stock. Answer: TRUE 3) Costs […]

1) The accounting term “reliability” means that information is consistent from one accounting period to the next. 2) A substantial amount spent to improve the quality or extend the life of a long-term asset is a revenue expenditure. Answer: FALSE […]

1) A single step income statement separates routine operating results from peripheral or non-operating items. 2) When a corporation records a stock dividend, it decreases Retained Earnings for the par value of the stock. Answer: FALSE 3) Preparing a bank […]

1) If a company determines that the likelihood of a future obligation arising from a contingent liability is possible, the company must record a liability on its balance sheet. 2) The face value of Accounts Receivable less the balance in […]

1) Costs that support multiple cost objects are referred to as direct costs. 2) A corporation should recognize losses but not gains related to treasury stock transactions. Answer: FALSE 3) The balance sheet reports a business’s assets and the claims […]

1) An internal service fund is required whenever an activity is funded by fees or charges from other government departments. 2) Unless use of an agency fund is mandated by law, by GASB standards, or by decision of the governing […]

1) Employers with defined contribution plans will report a pension liability if the required contribution has not been fully paid by year end. 2) Fiduciary funds are reported only in the fund-basis financial statements. Answer: True 3) An annuity serial […]

1) In the General Fund, revenues are recognized when measurable and earned. 2) The most numerous and important enterprise services rendered by local governments are public utilities. Answer: True 3) A fund represents part of the activities of an organization […]

1) Proprietary funds do not record capital assets, depreciation on those capital assets, and long-term debt. 2) The Budgetary Comparison Schedule requires a column for the original budget, a column for the final revised budget, and a column for actual […]

1) Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Restricted Fund Balance 2) Financial statements prepared for private colleges and universities present net assets as: unrestricted, restricted, or […]

1) Unrelated Business Income Tax is an excise tax, applied to the gross receipts of a business activity. Therefore allocations of expenses incurred in generating the income are irrelevant. 2) The Statement of Custodial Activity is not required of every […]

1) The current and long-term portions of General Long-term Debt are normally reported in a debt service fund. 2) Investment Trust Funds account for only the external portion of investment pools. Answer: True 3) Private colleges and universities use the […]

1) Proprietary funds record the net pension liability as a fund liability. 2) Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year […]

1) Tax-exempt organizations are required to file Form 990 by the 15th day of the 9th month following the organizations taxable year. 2) Service Efforts and Accomplishments Reporting includes measures of service inputs, outputs and outcomes. Answer: True[/cpmembership] 3) Special-purpose […]

1) Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the 2) General long-term debt, to be paid out of resources of the government’s taxing power, is reported in both the governmental fund […]