Consistency requires that a company use the same accounting procedures as other
companies in the same industry.
Cash equivalents include money market accounts, commercial paper, and U.S. Treasury
bills.
Customer lists are classified as intangible assets.
A 20 percent change in net sales will result in a 20 percent change in net income.
The receiving department must compare goods received with goods purchased, as
indicated on the purchase order.
In practice, accounting information is quite simple and precise.
The Allowance to Adjust Long-Term Investments to Market account appears in the
assets section of the balance sheet.
If direct materials costs are increased, the breakeven point will decrease.
When salary and interest allocations exceed net income, a net loss has occurred.
Under the perpetual inventory system, the return of goods from a customer is recorded
with a debit to Sales Returns and Allowances.
On a statement of cash flows prepared using the direct method, if Income Taxes
Payable decreased during the accounting period, cash payments for taxes will be less
than the expense shown on the income statement.
Horizontal analysis will result in common-size statements.
Sales budget is the final product of the budgeting process.
Product unit cost is computed by dividing the cost of goods sold by the number of units
sold.
Only the chief financial officer and the company’s CPAs must certify that, to their
knowledge, the statements are accurate and complete.
Which of the following statements is FALSE?
A.The Work in Process Inventory account is the focal point of process costing.
B.Labor costs are accounted for differently from overhead costs in a process costing
system.
C.Equivalent units usually are computed for direct materials and overhead combined.
D.A process cost report should be prepared only if the average costing method is used.
The personal assets and liabilities of an owner are not shown on the business’s financial
statements because of the
A.separate entity concept.
B.sole proprietorship concept.
C.financial position concept.
D.objectivity concept.
Applied overhead is less than actual overhead incurred during the year. Which of the
following journal entries is made to close the Overhead account if this difference is
immaterial?
A.Overhead
Work in Process
B.Cost of Goods Sold
Overhead
C.Overhead
Finished Goods Inventory
D.Cost of Goods Sold
Finished Goods Inventory
Failure to prepare closing entries will produce a misstated
A.total liabilities figure on the balance sheet.
B.total assets figure on the balance sheet.
C.owner’s Capital account balance.
D.Income Summary account balance.
The receivables turnover is expressed in terms of
A.times.
B.days.
C.a percentage.
D.dollars.
Win Shield International manufactures trophies. Each trophy goes through two
departments in the production process and requires two direct labor hours in
Department A and one hour in Department B. Labor cost is $8 per hour in Department
A and $10 per hour in Department B.
The budgeted overhead rate is $5 per direct labor hour. What is the budgeted overhead
cost of Win Shield for March given a budgeted production of 30,000 units?
A.$450,000
B.$150,000
C.$330,000
D.$300,000
Which of the following represents the number of sales dollars generated by each dollar
invested in assets?
A.Asset turnover
B.Average assets invested
C.Profit margin
D.Operating income
Lincoln Company engaged in this transaction:
Received 6-month’s rent in advance from a tenant in its office building.
Indicate which section, if any, the above transaction would appear in, or relate to, on a
statement of cash flows.
A.Financing activities section.
B.Schedule of noncash investing and financing transactions.
C.Operating activities section.
D.Investing activities section.
Major assumptions made in measuring business income include all of the following
except
A.continuity.
B.periodicity.
C.matching.
D.accrual accounting.
The direct materials standards for the main product of Duchess Company are 8 grams
of direct materials per product at a cost of $3 per gram. During April, 969 grams of
direct materials were used to produce 120 products at a direct materials cost of $2,900.
The direct materials quantity variance for April was
A.$57 (U).
B.$77 (U).
C.$27 (U).
D.$97 (F).
Which of the following might be motivation for fraudulently covering up a financial
weakness?
A.to obtain a loan
B.to meet stockholder expectations
C.to obtain bonus compensation
D.all of these are possible motivations
You are given the following present value factors at 8 percent, The Rogers Company’s
minimum desired rate of return:
The Rogers 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 $400 for the old
machine and $150 for the new machine. (Round your 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?
An amount would not appear opposite the Withdrawals account in which of the
following work sheet columns?
A.Trial Balance
B.Income Statement
C.Balance Sheet
D.Adjusted Trial Balance
Sinoyianis Realty Company had the following balance sheet accounts and balances:
If, $6,000 of Accounts Payable were paid in cash, what would be the total of liabilities
and owner’s equity?
A.$28,000
B.$34,000
C.$46,000
D.$52,000
Which of the following costs are the benefits that are forfeited or lost when one
alternative is chosen over another?
A.Incremental cost
B.Sunk cost
C.Opportunity cost
D.Direct cost
Company A’s current assets = $10,000, total assets = $26,000, current liabilities =
$7,000 and total liabilities = $47,000. What is Company A’s working ratio?
A.$3,000
B.$21,000
C.1.43
D.0.55
Use this information to answer the following question.
Panadora Company has the following information for the pay period of January 1-15,
2014. Payment occurs on January 20.
The entry to record the payroll would include a
A.debit to Salaries Payable for the net amount.
B.credit to State Unemployment Tax Payable.
C.debit to Salaries Expense for the amount paid to the employees.
D.debit to Salaries Expense for the gross payroll.
During the most recent month, Campbell Company began operations with a cash
balance of $0 and made made cash sales of $162,000. During this same time period, the
company paid $64,000 in cash expenses. Additionally, the company purchased supplies
on account, $68,000, made sales on account, $180,000, and paid cash on account
$12,000.
a. If cash at the end of the month totals $148,000, how much cash was received on
account?
b. What is the total amount still to be paid?
c. What is the total amount still to be received?
Plum Corporation issues $400,000 of 7 percent, five-year bonds on January 1, 20×5,
and sells them on the same date for their face value. The bond indenture states that
interest is to be paid on January 1 and July 1 of each year. The entry to record the
issuance includes
A.a credit to Cash.
B.a credit to Bonds Payable.
C.a credit to Interest Expense.
D.All of these choices.
Which costing method assumes that the cost of the first few items acquired should be
assigned to the first items sold?
A.Specific identification
B.FIFO
C.Average-cost
D.LIFO
Investors and creditors would find the statement of cash flows least useful in assessing
A.financial position at a point in time.
B.need for additional financing.
C.ability to pay dividends and liabilities.
D.ability to generate positive future cash flows.
How does the perpetual inventory system differ from the periodic inventory system in
the determination of cost of goods sold?
The following information relates to the number of common shares of the Jackson
Corporation:
60,000 Authorized shares 25,000 Unissued shares 3,500 Treasury shares
Calculate the number of outstanding shares from the information given. Show your
calculations.
Using the alphabetical list of account balances presented below, all of which are
normal, prepare a trial balance for Cookies and Cream Company at June 30, 2014, in
proper order. Compute the balance of the Cash account.
The following data exist for Weaver Company:
Calculate the receivables turnover and the average days’ sales uncollected for 2014.
(Round to 1 decimal point and even days, respectively.)