The customer’s perspective governs whether an activity adds value to a product or
service.
An adjustment must be made at the end of an accounting period to accrue the interest
expense on bonds payable and to amortize any related premium or discount from the
last interest payment date to the end of the fiscal year.
When using the accounting rate-of-return method, the net income has to be averaged
over the life of the investment.
The FUTA tax rate most often actually paid by employers is 0.8 percent.
The word preferred in the phrase preferred stock means that an owner of preferred stock
has some advantages over a bondholder.
The choice of accounting methods does not affect cash flows except for possible
differences in income taxes.
Financial accounting information is used primarily by management.
Market interest rate is another term for effective interest rate.
Cost of sugar is an indirect cost in the manufacture of candy bars.
The theoretical value of an asset is the future value of its expected benefits.
Special orders should be considered only when entire capacity of an organization is
used.
Management accounting is a profession that involves partnering in management
decision making.
For accounting purposes, a business and its owner are considered the same entity.
If prices were to never change, there would be no need for alternative inventory
methods.
Successful budget implementation depends on two factors’”clear communication and
the support of top management.
Unit fixed costs vary inversely with activity or volume.
It is possible for a partner’s Capital account to increase even if a net loss occurs.
Assume the direct method is used to compute net cash flows from operating activities.
For this item extracted from the financial statements’”Increase in Income Taxes
Payable’”indicate the effect on cash payments for income taxes by choosing one of the
following:
A.Add to Income Taxes to arrive at cash payments for income taxes.
B.Subtract from Income Taxes to arrive at cash payments for income taxes.
C.Not used to adjust Income Taxes to arrive at cash payments for income taxes.
Which of the following activities would be part of the value chain of a manufacturer?
A.Inventory control
B.Product design
C.Cost accounting
D.Materials storage
Use this balance sheet and income statement to answer the following question. Use
ending balances whenever average balances are required for computing ratios.
The profit margin for National Textile is
A.60 percent.
B.25 percent.
C.20 percent.
D.12 percent.
Prepaid Rent was $800 at the end of May and $1,300 at the end of June. Rent Expense
for June was $720. How much cash was paid for rent during June?
A.$820
B.$1,020
C.$1,220
D.$1,420
The learning and growth perspective of Sweetcake Restaurant shows increasing
customer satisfaction as an objective. Which of the following will be an appropriate
performance measure of this objective?
A.Number of new chefs trained in each department
B.Order delivery time
C.Percentage growth in sales
D.Percentage growth in profit
Mesquite, Inc. is ordering a new machine to be used in its manufacturing facility.
Which of the following events would trigger the recognition of the machine and related
liability on Mesquite’s books?
A.The company generates a purchase order.
B.A technician installs the machine on the floor of the manufacturing facility.
C.The company receives the machine.
D.The company pays the bill from the supplier.
Theoretical capacity reduced by normal and expected work stoppages is called
A.practical capacity.
B.normal capacity.
C.ideal capacity.
D.excess capacity.
You are given the following present value factors at 8 percent, the Tehachapi Glass
Company’s minimum desired rate of return:
The Tehachapi Glass Company is considering the replacement of a piece of equipment.
The old machine has a carrying value of $800 and a remaining estimated life of five
years, with no residual value at that time. Present residual value is $200. The new
equipment will cost $1,200, including transportation and installation. It has an
estimated life of five years, with no residual value then. Annual cash operating costs are
$405 for the old machine and $165 for the new machine. Round answers to two decimal
places.
a. Compute the present value of the operating cash outflows for the old machine.
b. Compute the present value of the operating cash outflows for the new machine.
c. Compute the present value of the cash operating savings if the new machine is
purchased.
d. What is the net present value of the replacement alternative?
The Lennon Company uses a standard costing system and a flexible budget. At a
normal level of activity of 15,000 units and 45,000 standard direct labor hours, the
standard direct labor cost would be $270,000. During June, 44,950 hours were worked
to produce 14,000 units at an actual direct labor cost of $352,000. The direct labor
efficiency variance in June was
A.$25,700 (U).
B.$17,700 (U).
C.$17,700 (F).
D.$25,700 (U).
The asset turnover ratio measures
A.how quickly the company uses assets to pay debt.
B.how efficiently assets are used to produce sales.
C.the income produced by selling inventory.
D.how efficiently equity is used to produce revenue.
Prime costs is the sum of
A.the direct labor costs and indirect labor costs.
B.the direct material costs, direct labor costs, and overhead costs.
C.the direct labor costs and overhead costs.
D.the direct materials costs and direct labor costs.
Which of the following accounts is not shown on the Statement of Owner’s Equity?
A.Owner’s Capital
B.Revenues
C.Expenses
D.Withdrawals
The number of shares of issued stock equals
A.unissued shares minus authorized shares.
B.outstanding shares plus treasury shares.
C.subscribed shares plus outstanding shares.
D.authorized shares minus treasury shares.
Calculate answers to the following scenarios.
a. Jackson Company purchased machinery by executing a $50,000 non-interest-bearing
note due in four years. Assuming the going rate for similar notes is 6 percent and using
the appropriate present value table, for how much should the machinery be recorded?
b. Wendy Kwon is making bank deposits of $3,000 at the beginning of each year for
three years for purposes of buying a car. Assuming an interest rate of 7 percent
compounded annually, how much will she have saved for the purchase at the end of
year 3? (Calculate manually and round to the nearest dollar.)
c. Ashton Jones would like to make a lump-sum deposit today so that he can withdraw
$15,000 at the end of each year for the next three years. Assuming a 9 percent interest
rate and using the appropriate present value table, what should she invest today?
You have just received notice that Agnes Fisher, a customer of yours with an Accounts
Receivable balance of $200, has gone bankrupt and will not be making any future
payments. Assuming you use the allowance method, the journal entry you make is to
A.debit Uncollectible Accounts Expense and credit Accounts Receivable.
B.debit Allowance for Uncollectible Accounts and credit Uncollectible Accounts
Expense.
C.debit Uncollectible Accounts Expense and credit Allowance for Uncollectible
Accounts.
D.debit Allowance for Uncollectible Accounts and credit Accounts Receivable.
If a company’s flexible budget formula is $11.25 per unit plus $72,100, what would be
the total budget for evaluating operating performance if 28,650 units were sold and
38,500 units were produced?
A.$433,125
B.$505,225
C.$811,125
D.$72,100
Under the perpetual inventory system
A.the cost of each item is recorded in the Merchandise Inventory account when it is
purchased.
B.when an inventory item is sold, its cost is transaferred to the Cost of Goods Sold
account.
C.the balance of the Merchandise Inventory account equals the cost of goods on hand.
D.All of these choices.
The manipulation of revenues and expenses to achieve a specific outcome is called
A.earnings management.
B.the matching rule.
C.adjusting entries.
D.revenue recognition.
In a period of rising prices, which of the following inventory methods generally results
in the highest gross margin figure?
A.Cannot tell without more information
B.LIFO
C.FIFO
D.Average-cost