Archives: Quiz

Losses on discarding fixed assets are _____. a. opportunity costs b. nonoperating items c. capital expenditures d. accumulated depreciation Which of the following statements is true? a. The revenue activities of a service business involve providing services to customers. b. […]

Denominator in the ratio of cash to monthly cash expense is calculated as _____. a. total revenues divided by 12 b. net cash flows from investing activities divided by 12 c. earnings before taxes divided by 12 d. net cash […]

The amount of time spent by each employee and the labor costs incurred for each individual job or for factory overhead are recorded on the: a. employees’ earnings records. b. inandout board. c. time tickets. d. receiving order The form […]

Production and sales estimates for June are as follows: Estimated inventory (units), June 18,000 Desired inventory (units), June 309,000 Expected sales volume (units): Area X3,000 Area Y4,000 Area Z5,500 Unit sales price$25 The budgeted total sales for June is: a. […]

The declaration of a cash dividend decreases a corporation’s stockholders’ equity and decreases its assets. a. True b. False The accounting term depreciation measures: a. the decline in an asset’s market value. b. the amount of cash a company sets […]

In computing the return on total assets, interest expense is added to net income before dividing by average total assets. a. True b. False The accounts receivable turnover is computed by dividing: a. total assets by average accounts receivable. b. […]

The SarbanesOxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements. a. True b. False The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead […]

The document issued by the seller that informs the buyer of the details of customer refund is called a debit memorandum. a. True b. False Net income or loss may appear on the income statement of both a service business […]

Sales commissions expense for a department store is an example of a direct expense. a. True b. False The budgeted direct materials purchases are based on the sum of (1) the materials needed for production and (2) the desired ending […]

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13, the direct materials quantity variance was $4,800 favorable. a. True b. False A company’s […]

Electrodo Co. purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable. What effect does this transaction have on the accounts under the accrual basis of accounting? a. Net increase in assets and liabilities of $55,000 […]

One of the weaknesses of the direct writeoff method is that it: a. understates accounts receivable on the balance sheet. b. violates the matching principle. c. adjusts allowance account the end of the year. d. is based on estimates. Determine […]

Every company must use the cash basis of accounting. a. True b. False On the income statement in the singlestep form, the total of all expenses is deducted from the total of all revenues. a. True b. False True NATIONAL […]

Internal control is enhanced by combining the control of a transaction with the recordkeeping function. a. True b. False Costs incurred to earn revenue are referred to as _____. a. common stock b. expenses c. liabilities d. retained earnings b […]

Total fixed costs remain constant as the level of activity changes within the relevant range. a. True b. False If the cost of materials is not a significant portion of the total product cost, the materials may be classified as […]

Assume in analyzing alternative proposals that Proposal F has a useful life of six years and Proposal J has a useful life of nine years. What is one widely used method that makes the proposals comparable? a. Adjust the life […]

Many service businesses use process yield for assessing performance and the efficient use of assets. a. True b. False XYZ Co.’s petty cash receipts indicate the following expenditures for the end of October: Office supplies $490 Miscellaneous selling expense$300 Miscellaneous […]

Flyer Co. billed a client for flying lessons given in January. The payment was received in February. Under the accrual basis of accounting, when should Flyer Co. record the revenue? a. January b. February c. Some in January and some […]

A customer’s check received in settlement of an account receivable is considered cash. a. True b. False The excess of cash flowing in from revenues over the cash flowing out for expenses is termed net discounted cash flow. a. True […]

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n): a. deduction from the cash balance per books. b. addition to the cash […]

The profit center income statement should include only those revenues and expenses that can be controlled by the manager. a. True b. False _____ occurs due to obsolescence that causes an asset to no longer provide services for which it […]

A qualitative characteristic that influences capital investment analysis is manufacturing productivity. a. True b. False Rush Corporation borrowed $25,000 from the bank. Which of the following accurately shows the effects of the transaction? a. Increase cash $25,000 and decrease notes […]

Allowance for Doubtful Accounts has an unadjusted balance of $400 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $300,000, compute the amount of the adjustment to record […]

A bond is simply a form of an interestbearing note. a. True b. False Costvolumeprofit analysis can be presented in both graphically and equation form. a. True b. False True NATIONAL STANDARDS: United States BUSPROG: Analytic Variable costs are costs […]

Cook Co. incurred the following costs related to the office building used in operating its sports supply company: (a)Replaced a broken window. (b)Replaced the roof that had been on the building for 23 years. (c)Serviced all the air conditioners before […]

The following information is given for a company: Process AProcess B Units passing inspection 8,800 units3,000 units Units entering process10,000 units5,000 units Calculate the (a) process yield for Process A, (b) process yield for Process B, and (c) overall process […]

Leasing assets may be a favorable alternative to purchasing assets if the asset has a high risk of becoming obsolete. a. True b. False When a corporation issues bonds, it executes a contract with the bondholders known as a bond […]

Which of the following is an example of a capital expenditure? a. Cleaning the carpet in the frontoffice room b. Regular tuneup for a company truck c. Replacing an engine in a company car d. Replacing all burnedout light bulbs […]

Cash receipts from interest and dividends are classified as: a. investing activities. b. operating activities. c. either financing or investing activities. d. financing activities. Subtracting operating expenses from gross profit gives us ____. a. net sales b. total purchases c. […]

The anticipated purchase of a fixed asset for $400,000, with a useful life of 5 years and no residual value, is expected to yield total net income of $200,000 for 5 years. The expected average rate of return on investment […]

If variable costs per unit increased because of an increase in hourly wage rates, the breakeven point would: a. decrease. b. increase. c. remain the same. d. increase or decrease, depending upon the percentage increase in wage rates. Depreciation on […]

The profit margin is calculated as the ratio of operating income to: a. invested assets. b. investment turnover. c. sales. d. residual income. Separation of businesses into more manageable operating units is termed centralization. a. True b. False False NATIONAL […]

If $4,000,000 of 12% bonds are issued at 103 1/4, the amount of cash received from the sale is: a. $4,040,000. b. $4,000,000. c. $4,130,000. d. $3,520,000. The purchase of factory equipment would be an example of which type of […]

If a company has an accounts receivable turnover ratio of 15, the company: a. is converting its accounts receivable to cash 15 times per year. b. is selling its inventory on 15 days credit terms. c. is converting its inventory […]

Which of the following warning signs could mean receipts are being pocketed before being deposited? a. Missing documents or gaps in transaction numbers b. An unusual increase in customer refunds c. A sudden increase in cash payments d. A difference […]

Which of the following accounts will not be found in the Cost of Goods Sold section on the income statement? a. Purchases b. Transportation In c. Customer Refunds and Allowances d. Merchandise Inventory For an automobile company, the total overhead […]

In capital rationing, alternative proposals that survive initial screening and further analysis using present value methods are normally evaluated in terms of: a. net income. b. qualitative factors. c. maximum cost. d. net cash flow. If the contribution margin ratio […]

A company sold 200 shares of common stock with a par value of $5 at a price of $12 per share. Which section of the statement of cash flows will contain this transaction? a. Operating activities b. Investing activities c. […]

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account. a. True b. False Robbson Manufacturers has estimated total factory overhead costs of $184,000 and 25,000 direct labor hours for the current fiscal […]

The investment turnover is calculated as the ratio of sales to: a. operating income. b. invested assets. c. marketable investments. d. profit margin. Following is the information about Standard Inc. The standard costs and actual costs for direct materials, direct […]

Based on the following information, calculate the overall process yield. Process M: Units passing inspection 7,755 units Units entering process 11,750 units Process N: Units passing inspection 5,762 units Units entering process 6,700 units a. 80.93% b. 60.82% c. 66.00% […]

The amount of details presented in a budget performance report for a cost center depends upon the level of management to which the report is directed. a. True b. False For EFG Co., the transaction “cash sales to customers at […]

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) Other accounts. (1)Cost of paving parking area for employees and customers. (2)Insurance during construction of building. (3)Interest incurred […]

Which of the following is true of rate of return on assets? a. It is a measure of a company’s profitability. b. It is used to evaluate a company’s ability to pay off its shortterm debts. c. It is used […]

The net income reported on the income statement for the current year was $310,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at […]

Georgia Inc. reported operating income of $156,000 and sales of $1,300,000 for the current year end. Determine the company’s return on sales. a. 10% b. 8% c. 15% d. 12% Credit purchase is taken into account while calculating accounts receivable […]

Stockholders’ equity will be reduced by: a. payment of dividends. b. increase in revenues. c. owners’ investments. d. issuance of bonds. On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments […]

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the Materials account to: a. WorkinProcess and Cost of Goods Sold. b. WorkinProcess and Factory Overhead. c. Finished […]

If $500,000 of 8% bonds are issued at 102, the amount of cash received from the sale is: a. $540,000 b. $510,000 c. $500,000 d. $530,000 Which financial statement reconciles net income with net cash flows from operating activities? a. […]

Which of the following is necessary for a corporation to pay cash dividends? a. Market value in excess of par value per share b. Order by the court of law c. Sufficient retained earnings d. Prior declaration of stock dividends […]