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
Variable costs are costs that vary on a perunit basis as the level of manufacturing
activity changes.
a. True
b. False
The role of accounting in business is best defined as:
a. an information system that provides reports to stakeholders about the economic
activities and condition of a business.
b. a method of forecasting the future profitability of a company.
c. the policies, procedures, and strategies used in a business.
d. transaction analysis.
_____ analysis is used while selecting the mix of products to sell.
a. Costvolumeprofit
b. Activitybased
c. Discounted
d. Receivables
If the total unit cost of manufacturing Product Y is currently $40 and the total unit cost
after modifying the style is estimated to be $48, the differential cost for this situation is
$48.
a. True
b. False
Direct materials and direct labor costs are examples of variable costs of production.
a. True
b. False
The service department will determine its service department charge rate and charge the
company’s divisions or departments based on the usage of the service by each
department.
a. True
b. False
The cash budget presents the expected inflow and outflow of cash for a specified period
of time.
a. True
b. False
Based on the following information, calculate the direct labor rate variance.
Actual rate 2,500 hours at $15.00
Standard rate 2,650 hours at $15.50
a. 1,250 favorable
b. 1,000 unfavorable
c. 2,500 favorable
d. 1,300 unfavorable
Which of the following accounts would require an adjustment when making an
adjusting entry for a deferral?
a. Accrued interest
b. Unearned rent
c. Salary expense
d. Notes receivable
The economic performance of a business is of importance to the government because:
a. of tax collections.
b. they sell their products to the business.
c. of the amount owed by them to the business.
d. all of these.
From the following data for the current year, compute the average accounts receivable.
Net sales on account during the year$ 420,500
Cost of merchandise sold during the year362,000
Accounts receivable at the beginning of the year36,120
Accounts receivable at the end of the year33,200
Inventory at the beginning of the year63,000
Inventory at the end of the year92,000
a. 31,140
b. 28,250
c. 34,660
d. 25,200
For EFG Co., the transaction “billed a customer for fees earned” would:
a. increase total assets.
b. decrease total assets.
c. have no effect on total assets.
d. increase total liabilities.
Merchandise is sold for $2,500, terms FOB destination, 2/10, n/30, with transportation
costs of $150. If $500 of the merchandise is returned prior to payment and the invoice is
paid within the discount period, the amount of the sales discount is $40.
a. True
b. False
Federal unemployment compensation tax becomes an employer’s liability at the time
the employees are paid.
a. True
b. False
Which of the following is a qualitative consideration that influences capital investments
analysis?
a. Time value of money
b. Internal rate of return
c. Changes in price level
d. Manufacturing flexibility
Revenue and expense data for Reuters Company are as follows:
20172016
Administrative expenses$ 24,750$ 18,000
Cost of goods sold500,000375,000
Income tax11,60012,000
Net sales750,000600,000
Selling expenses182,250154,800
(a)Prepare a comparative income statement, with vertical analysis, stating each item for
both 2017 and 2016 as a percent of sales.
(b)Comment upon significant changes disclosed by the comparative income statement.
The fixed asset section of a balance sheet may also be labeled as property, plant, and
equipment.
a. True
b. False
Which of the following elements of internal control includes maintaining records of
employees documenting their compensation and promotion?
a. Risk assessment
b. Control environment
c. Monitoring
d. Control procedures
Based on the following data, what is the quick ratio, rounded to one decimal place?
Accounts payable$ 32,000
Accounts receivable64,000
Accrued liabilities7,000
Cash20,000
Intangible assets40,000
Inventory72,000
Longterm investments100,000
Longterm liabilities75,000
Marketable securities35,000
Notes payable (shortterm)25,000
Property, plant, and equipment625,000
Prepaid expenses2,000
a. 2.1
b. 1.9
c. 1.4
d. 3.2
X. Bonds Company
The following is a singlestep income statement for the X. Bonds Company:
X. Bonds Company
Income Statement
For the Year Ended December 31, 2016
Revenues:
Net Sales$300,000
Interest Income20,000
Total Revenues$320,000
Expenses:
Cost of Goods Sold$60,000
Selling Expenses25,000
General and Administrative Expenses30,000
Interest Expense14,000
Income Tax Expense45,000
Total Expenses174,000
Net Income$146,000
Refer to X. Bonds Company. If the income statement were prepared in a multiplestep
format, income from operations would be:
a. $126,000.
b. $171,000.
c. $146,000.
d. $185,000.
Favorable volume variances are never harmful since achieving them encourages
managers to run the factory above normal capacity.
a. True
b. False
Using the highlow method, calculate variable utilities costs per machine hour.
Cost Machine Hours
January$ 8,20014,900
February 13,60021,200
March 5,600 5,200
April 9,40017,900
a. $0.33
b. $0.64
c. $0.50
d. $0.25
A responsibility center in which the department manager has responsibility for and
authority over costs in the department is termed a cost center.
a. True
b. False
On May 31, 2016, Deana’s Services Company had account balances as follows:
Accounts payable$ 9,900
Accounts receivable26,950
Cash11,390
Fees earned70,800
Insurance expense1,475
Land74,400
Miscellaneous expense1,510
Prepaid insurance2,000
Rent expense8,000
Salary expense35,300
Dividends15,100
Supplies950
Supplies expense825
Utilities expense3,800
Capital stock81,000
Retained earnings (beginning balance on May 1, 2016)20,000
Present, in good form, (a) an income statement for May, (b) a statement of shareholders’
equity for May, and (c) a balance sheet as of May 31.
Any given transaction must affect at least two different parts of the accounting
equation.
a. True
b. False
The costs of materials and labor that do not enter directly into the finished product are
classified as cost of goods sold.
a. True
b. False
Materials used by MeetaProducts Inc. in producing Division A’s product are currently
purchased from outside suppliers at a cost of $12 per unit. However, the same materials
are available from Division B. Division B has unused capacity and can produce the
materials needed by Division A at a variable cost of $7 per unit. A transfer price of $9
per unit is established, and 35,000 units of material are transferred with no reduction in
Division B’s current sales.
How much would MeetaProducts total operating income increase?
a. $70,000
b. $175,000
c. $105,000
d. $100,000
The two methods of accounting for uncollectible receivables are the:
a. direct method and the indirect method.
b. allowance method and the direct writeoff method.
c. cash method and the accrual method.
d. percent of sales method and the analysis of receivables method.