Archives: Quiz

List the steps of the operating cycle for a merchandiser with credit sales. A company reported net sales for Year 1 of $285,000 and $575,000 for Year 2. The year-end balances of accounts receivable were $49,000 for Year 1 and […]

Jorgensen Department Store has three departments: Clothing, Toys, and Jewelry. The most recent income statement, showing the total operating profit and departmental results is shown below: Based on this income statement, management is planning on eliminating the hardware department, as […]

Having external auditors test the company’s financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ________________________. The four building blocks of financial analysis are (1) ____________________, (2) __________________________, (3) ____________________ […]

_______________ is the deliberate misuse of the employer’s assets for the employee’s personal gain. An investing company that owns _________ of another (investee) company’s voting stock (but not more than 50%) is presumed to have a significant influence over the […]

Prichard Company has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity. During the current period, the company […]

Noncash financing and investing activities are disclosed in the ____________ or in a separate ______________________________. Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 Answer: Notes; schedule […]

Briefly describe how manufacturing firms dispose of overapplied or underapplied factory overhead. ________________________ refers to a company’s ability to pay for its near-term obligations. Answer: Liquidity In the analysis of variances, management commonly focuses on four categories of production costs: […]

Harriet’s Toy Shop had net sales of $852,000. The gross profit was $230,000. Calculate Harriet’s cost of goods sold. When factory payroll for indirect labor is assigned, __________________ is debited. Answer: Factory Overhead When preparing the operating section of the […]

On September 1, a corporation had 50,000 shares of $5 par value common stock, and $1,000,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. […]

In the process of completing a work sheet, you determine that the Income Statement debit column totals $83,000, while the Income Statement credit column totals $65,000. To enter net income (or net loss) for the period into the work sheet […]

Outstanding checks refer to checks that have been: A.Written, recorded, sent to payees, and received and paid by the bank. B.Written and not yet recorded in the company books. C.Held as blank checks. D.Written, recorded on the company books, sent […]

A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 […]

Use the following information about the current year’s operations of a company to calculate the cash paid for merchandise. A.$218,000. B.$223,200. C.$220,000. D.$228,800. E.$234,000. Which of the following is not a benefit of following a well-designed budgeting process? A.Improved decision-making […]

A company purchased a new truck at a cost of $42,000 on July 1, 2009. The truck is estimated to have a useful life of 6 years and a salvage value of $3,000. The company uses the straight-line method of […]

Sales less sales discounts less sales returns and allowances equals: A.Net purchases. B.Cost of goods sold. C.Net sales. D.Gross profit. E.Net income. An analytical technique used by management to focus on the most significant variances and give less attention to […]

Classify the following activities according to the appropriate section of the statement of cash flows. a. Operating activity b. Investing activity c. Financing activity 1) Cash paid for withdrawals by owners. 2) Cash paid for utilities. 3) Cash received from […]

Cost concepts such as variable, fixed, mixed, direct and indirect apply only to manufacturers and not to service companies. Joint costs can be allocated either using a physical basis or a value basis. Answer: TRUE The lower of cost or […]

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation. An activity-based costing system usually involves a fewer number of allocations compared with a traditional cost allocation system. Answer: FALSE A company […]

Sales variances allow managers to focus on sales mix as well as sales quantities. The current ratio is used to help assess a company’s ability to pay its debts in the near future. Answer: TRUE An out-of-pocket cost requires a […]

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods. Product costs can be classified as one of three types: direct materials, direct labor, or overhead. Answer: TRUE The book value […]

A capital expenditures budget is prepared before the operating budgets. Goodwill is the amount by which a company’s value exceeds the value of its individual assets and liabilities. Answer: TRUE Analysis of a single financial item is important but is […]

Sellers generally prefer to receive notes receivable rather than accounts receivable when the credit period is long and the receivable is for a large amount. The effective interest method yields increasing amounts of bond interest expense and decreasing amounts of […]

When a process cost accounting system assigns the cost of materials to a production department, the journal entry debits the Raw Materials Inventory account and credits the Goods in Process Inventory account for that department. Cost-volume-profit analysis is a precise […]

When a credit customer returns merchandise to the seller, under a perpetual inventory system, the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold. Both interest on […]

Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue and a debit to an expense. Under the perpetual inventory system, the cost of merchandise purchased is recorded in the Merchandise Inventory account. Answer: […]

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio. According to the cost principle, it is preferable for managers to report an estimate of an asset’s value. Answer: FALSE The equity […]

The building blocks of financial statement analysis include (1) liquidity, (2) salability, (3) solvency, and (4) profitability. A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets […]

The margin of safety is the amount that sales can drop before the company incurs a loss. All disbursements from petty cash should be documented by a petty cash receipt. Answer: TRUE Land and buildings are generally recorded in the […]

The time value of money is considered when calculating the payback period of an investment. A properly designed internal control system is a key part of systems design, analysis, and performance. Answer: TRUE The account form of the balance sheet […]

The return on total assets can be calculated as profit margin times total asset turnover. A contingent liability is a potential obligation that depends on a future event arising from a future transaction or event. Answer: FALSE Job order costing […]

Process costing is applied to operations with repetitive production and heterogeneous products. Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems. Answer: FALSE If a department that […]

Bonding does not discourage loss from theft because employees know that bonding is an insurance policy against loss from theft. If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and pays the partnership $5,000 out […]

Capital structure refers to a company’s long-run financial viability and its ability to cover long-term obligations. Planning is defining an organization’s ideas, goals, and actions. Answer: TRUE On the date of the record the journal entry to record $10,000 in […]

To avoid the time-consuming process of taking an inventory each year, most companies use the gross profit method to estimate ending inventory. Future value can be found if the interest rate (i), the number of periods (n), and the present […]

The withdrawals account of each partner is closed to retained earnings at the end of the accounting period. Partners can invest both assets and liabilities into a partnership. Answer: TRUE Times interest earned can be calculated by multiplying income by […]

Toys “R” Us had cost of goods sold of $8,321 million and its ending inventory was $2,027 million. Therefore its days’ sales in inventory equals 89 days. Comparative financial statements are reports that show financial amounts placed side by side […]

A stock option is also called a stock dividend. A work sheet is a substitute for the set of financial statements. Answer: FALSE A buyer records the costs of shipping goods in a Delivery Expense, or transportation-out account when the […]

Mortgage bonds are backed only by the good faith and credit of the issuing company. The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period. Answer: […]

If the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination. The current ratio is computed by dividing current liabilities by current assets. Answer: FALSE Bond sinking funds are examples of […]

A plant asset’s useful life might not be the same as its productive life. Input devices are the means to make accounting information available to users. Answer: FALSE The process cost summary is an important managerial accounting report produced by […]

Automatic speech recognition systems complete three steps. Which step matches your spoken phonemes to a phoneme sequence stored in an acoustic model database? A.Feature analysis B.Signal capture and arrangement C.Language processing D.Pattern classification How is RAM different from a CPU? […]

When business intelligence is focused on the external competitive environment, it is known as _____. A.External information B.Trends C.Competitive intelligence D.Competitor knowledge Which of the following can not be used for biometrics? A.Fingerprint B.Retina C.Password D.Voice Answer: C. Which of […]

An ATM card is an example of which form of biometric security? A.What you know B.What you have C.Who you are D.What you can do There are methods to designing and developing business applications. Which of the following is not […]

Which network device sends information privately over the network? A.Hub B.Switch C.Router D.Virtual connector What is the number of dots printed per inch and is the same principle as the resolution in monitors? A.Resolution of a printer B.Dot pitch C.Pixel […]

What is internal information? A.Operational information B.Private, business information C.Secured information D.Business intelligence Which computer is designed to meet the computing needs of several people simultaneously in a small to medium-size business environment? A.Mainframe computer B.Minicomputer C.Supercomputer D.Desktop computer Answer: […]

Should a business’ decisions about its technology drive its business strategy? A.Yes, if the decision is about management information systems (MIS) B.Yes, if the decision is about strategic information systems (SIS) C.There are times that technology should drive strategy and […]

Optimizing what ensures that the right quantity of parts arrive at the right time for production or sale? A.Logistics B.Production C.Cost and Price D.Fulfillment What computer device, such as a USB port, allows you to connect to and from a […]

In what decision making phase do you consider possible ways of solving problems, filling needs, or capitalizing on opportunities? A.Design B.Intelligence C.Choice D.Prediction and decision Which type of e-commerce refers to the electronic commerce activities performed within a nation’s government […]

Which of the following types of products purchased on the Internet are typically priced low because it is used more frequently? A.Music B.Streaming video C.Online services D.Convenience What is the title for the person responsible for ensuring that information is […]

What is the difference between a decision support system (DSS) and an expert system (ES)? A.A DSS supports the novice users; an ES supports the analyst or expert B.The DSS requires considerable knowledge from the user; the ES provides considerable […]