1) Costs that the manager does not have the power to determine or at least significantly
affect are:
A.Variable costs.
B.Uncontrollable costs.
C.Indirect costs.
D.Direct costs.
E.Joint costs.
2) Tate Company’s 2015 income statement and changes in selected balance sheet
accounts are given below. Calculate the company’s net cash provided or used by
operating activities using the direct method.
The company also experienced the following during 2015:
3) Alani’s Hawaiian segment had revenues of $2,075 million, operating income of
$1,500 million, and average assets of $1,450 million. The Hawaiian segment return on
assets is:
A.72.3%
B.69.9%
C.103.4%
D.96.7%
E.138.3%
4) The gross margin ratio:
A.Is also called the net profit ratio.
B.Indicates the percent of sales revenue remaining after covering the cost of the goods
sold.
C.Is also called the profit margin.
D.Is a measure of liquidity and should exceed 2.0 to be acceptable.
E.Should be greater than 1 for merchandising companies.
5) A plan showing the planned sales units and the revenue to be derived from these
sales, and is the usual starting point in the budgeting process, is called the:
A.Operating budget.
B.Business plan.
C.Income statement budget.
D.Merchandise purchases budget.
E.Sales budget.
6) Record the following transactions of Naches Corporation in general journal form:
(a) Reacquired 8,000 of its own $3 par value common stock at $20 cash per share. The
stock was originally issued at $15 per share.
(b) Sold 2,000 shares of the stock reacquired under part (a) at $23 cash per share.
(c) Sold 3,000 shares of the stock reacquired under part (a) at $19 cash per share.
7) A company had net income of $43,000, net sales of $380,500, and average total
assets of $220,000. Its profit margin and total asset turnover were, respectively:
A.11.3%; 1.73.
B.11.3%; 19.5.
C.1.7%; 19.5.
D.1.7%; 11.3.
E.19.5%; 11.3.
8) Standard costs are used in the calculation of:
A.Price and quantity variances.
B.Price variances only.
C.Quantity variances only.
D.Price, quantity, and sales variances.
E.Quantity and sales variances.
9) Which of the following items is not likely an extraordinary item?
A.Write down of inventories.
B.Condemnation of property by the city government.
C.Loss of use of property due to a new and unexpected environmental regulation.
D.Loss due to an unusual and infrequent calamity.
E.Expropriation of property by a foreign government.
10) The total amount of cash and other assets received by a corporation from its
stockholders in exchange for its stock is:
A.Always equal to its par value.
B.Always equal to its stated value.
C.Referred to as paid-in capital.
D.Referred to as retained earnings.
E.Always below its stated value.
11) The expected amount of time to recover the initial amount of an investment is called
the:
A.Amortization period.
B.Payback period.
C.Interest period.
D.Budgeting period.
E.Discounted cash flow period.
12) Selected current year company information follows:
The return on total assets is:
A.2.24%
B.2.81%
C.3.64%
D.4.67%
E.6.28%
13) Hatter, Inc. allocates fixed overhead at a rate of $17 per direct labor hour. This
amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units. During
July, Hatter produced 5,500 units. Budgeted fixed overhead is $66,000, and overhead
incurred was $67,000.
Required:
Determine the volume variance for July.
14) Expenditures incurred in the process of converting raw materials to finished goods,
that include direct labor and factory overhead are known as
_________________________.
15) A company reported net sales of $850,000, net income of $200,000 and average
total assets of $575,000. Calculate its return on total assets.
16) Firenze Company’s fixed budget for the first quarter of the calendar year appears
below. Prepare flexible budgets that show variable costs per unit, fixed costs and two
different flexible budgets for sales volumes of 22,000 and 24,000.
17) Wasp Corporation has a loan agreement that provides it with cash today, and the
company must pay $25,000 one year from today, $15,000 two years from today, and
$5,000 three years from today. Wasp agrees to pay 10% interest. The following are
factors from a present value table:
What is the amount of cash that Wasp receives today?
18) A company purchased and installed machinery on January 1 at a total cost of
$93,000. Straight-line depreciation was calculated based on the assumption of a
five-year life and no salvage value. The machinery was disposed of on July 1 of year
four. The company uses the calendar year.
1) Prepare the general journal entry to update depreciation to July 1 in year four.
2) Prepare the general journal entry to record the sale of the machine for $27,000 cash.
