A bill of activities is used to compute both the costs assigned to activities and the
product unit cost.
Trading securities are always short-term investments.
Financing a business with common stock is more risky than financing it with bonds.
If a long-term investment suffers a permanent decline in value, a loss only has to be
recorded if the investment is solD)
In a process costing system, product costs are traced to work cells.
If 45,000 units of ending work in process inventory are 60 percent complete as to
conversion costs, 27,000 equivalent units of conversion costs must be incurred to
complete these units during the next period.
Management accountants who alter reports to meet targeted levels of performance are
not acting unethically, because their job is to provide information that will aid in
communicating the goals of the business.
In a backflush environment, costs are tracked through the various production
departments as products or services move through the production process.
A typical operations costing system for a manufacturer incorporates parts of both job
order costing and process costing.
A revenue expenditure results in the immediate recognition of an expense.
The relevant range of activity is the range in which actual operations of a company are
likely to occur.
Investments with a maturity of less than ninety days are generally classified as cash
equivalents.
Many management decisions are unique and hence incompatible with strict rules, steps,
or timetables.
Connie and Marcos are partners who share profits and losses in a ratio of 3:2,
respectively, and have the following capital balances on September 30, 20×5:
The partners agree to admit Trevor to the partnership. Calculate the capital balances of
each partner after the admission of Trevor, assuming that bonuses are recorded when
appropriate for each of the following assumptions:
a. Trevor pays Connie $50,000 for 50 percent of her interest
b. Trevor invests $50,000 for a one-fourth interest in the partnership
c. Trevor invests $50,000 for a 30 percent interest in the partnership
d. Trevor invests $50,000 for a 20 percent interest in the partnership
Lincoln Company engaged in this transaction:
Accrued employee wages earned but not yet paid at year-end.
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.Investing activities section.
C.Does not represent a cash flow.
D.Operating activities section.
For which of the following errors should the appropriate amount be added to the
balance per bank on a bank reconciliation?
A.Deposit of $250 recorded by the bank as $25
B.Deposit of $25 recorded by the bank as $250
C.Check for $25 recorded as $52
D.Check for $52 recorded as $25
The most common type of long-term debt is a
A.note payable.
B.bond payable.
C.mortgage payable.
D.pension.
The federal government grants patents for
A.10 years.
B.20 years.
C.40 years.
D.the useful life of the patent.
Expenses are incurred
A.to generate revenue.
B.to produce liabilities.
C.only during the adjustment process.
D.to produce assets.
Gunnie Inc. produces and sells dog food. Each bag contains 20 pounds of dog food.
Following additional information is provided by the company:
Compute the standard unit cost for each bag.
A.$2.55
B.$2.21
C.$2.15
D.$2.80
Which of the following do not serve as a source of data while preparing a cash budget?
A.A sales budget
B.Collection records
C.A budgeted balance sheet
D.A budgeted income statement
Emerald Corporation’s overhead budget for 2013 was as follows:
750,000 units were produced in 2013.
Direct labor cost is $42,000,000.
For both 2013 and 2014, each unit required 4 direct labor hours at $14 per hour.
In 2014, property taxes, insurance, and depreciation are expected to stay at 2013 levels.
Utilities costs vary proportionally with units produced.
Factory supervision increases by increments of $45,000 for every 300,000 increase in
direct labor hours.
The 2014 expected production is 1,200,000 units.
What will be the value for factory supervision of Emerald in the 2014 overhead budget?
A.$720,000
B.$270,000
C.$450,000
D.$990,000
Boston Corp. is evaluating three projects. Each project will return a total of $600,000 to
the company in cash flows over a three-year period. The cash flows for the three
projects are as follows:
Using the payback period method, which project represents the best investment for
Boston?
A.Project A
B.Project B
C.Project C
D.All projects are equally good investments.
If it takes Diamondback Enterprises 90 days to sell inventory, 46 days to collect from
the sale, and creditors’ payment terms are 60 days, the financing period is
A.196 days.
B.46 days.
C.90 days.
D.76 days.
A company’s ability to attract and hold investment capital ultimately depends on its
A.budgeting.
B.planning.
C.liquidity.
D.profitability.
Chad invests $20,000 for a one-third interest in a partnership in which the other partners
have capital totaling $52,000 before admitting Chad. After distribution of the bonus,
what is Chad’s capital?
A.$10,666
B.$17,334
C.$20,000
D.$24,000
The Finishing Department of White Light Company has the following information
available for 2014:
Assuming that the Company uses the FIFO process costing method, what are the
equivalent units for conversion costs for 2014?
A.51,400
B.45,000
C.48,200
D.45,400
Use this information to answer the following question.
A deposit of $5,800 made at the end of each year for three years would grow to how
much, assuming an APR of 12 percent?
A.$8,149.00
B.$19,569.20
C.$17,400.00
D.$19,488.00
The sale of treasury stock cannot result in
A.an increase in Retained Earnings.
B.the crediting of Paid-in Capital, Treasury Stock.
C.the debiting of Paid-in Capital, Treasury Stock.
D.an increase in total stockholders’ equity.
Newberry Company’s owner’s equity equals one-fourth of the company’s total assets.
The company’s liabilities are $309,000. What is the amount of the company’s owner’s
equity?
Prepare a trend analysis of the following data, using 20×4 as the base year. Place your
answers in the chart provided. Comment on the trend.
Warren and Spencer are partners in a drilling operation. Warren purchased a drilling rig
to be used in the partnership’s operations. Is this purchase binding on Spencer even
though he was not involved in it? Explain your answer.
The following data exist for Sexton Company:
Calculate the receivables turnover and the average days’ sales uncollected for 2014.
(Round to 1 decimal point and even days, respectively.)
What does it mean when a company has positive free cash flow? What does it mean
when a company has negative free cash flow?
Cruz Corporation purchased a warehouse by signing a long-term $1,600,000 mortgage
with monthly payments of $12,400. The mortgage carries an interest rate of 9 percent.
Prepare entries in journal form without explanations to record the purchase and the first
two monthly payments. Round answers to the nearest dollar.
Data for Osaka Corporation for the month of June 2014 are as follows:
Assume the company uses average costing method.
Prepare a process cost report for June. Round cost per equivalent unit to nearest cent.
Sonora Corporation had 45,000 shares of $5 par value common stock issued and
outstanding on December 31, 20×4. Each share was issued during 20×2 at $14 per
share. Prepare the entries in journal form without explanations for the following
transactions occurring in 20×5:
In recent years, Redbird Corporation, a small manufacturer of jet skis for the leisure
industry, has followed the practice of issuing a 10 percent stock dividend annually.
Although the company’s net income has been almost $4 million in each of the past three
years, retained earnings have declined from about $10 million to about $6 million.
What is the probable motivation for management’s decision to issue an annual 10
percent stock dividend? What is the most likely explanation for the decrease in retained
earnings? Given your explanation, would stockholders’ equity also decrease by a like
amount?