Cash receipts from interest and dividends are classified as:
a. investing activities.
b. operating activities.
c. either financing or investing activities.
d. financing activities.
Subtracting operating expenses from gross profit gives us ____.
a. net sales
b. total purchases
c. income from operations
d. cost of goods sold
Which of the following is a control that is built into the integrated financial statement
approach?
a. Assets + Liabilities = Stockholders’ Equity
b. Cash from operating activities is equal to cash on the balance sheet.
c. Net income on the income statement must equal the net effects of revenues and
expenses on retained earnings.
d. Total assets on balance sheet should equal income from investing activities on the
statement of cash flows.
Jack Co. issued 675,000 shares at $0.25 per share of common stock. If 75,000 shares
were subsequently reacquired, _____ shares are considered outstanding.
a. 750,000
b. 600,000
c. 675,000
d. 75,000
Day Time Company records the receipts from cash sales of $41,200 as $12,400. What
adjustment is required in the bank’s accounts?
a. No adjustment needed
b. Increase Sales; decrease Cash
c. Increase Cash; decrease Sales
d. Increase Cash; decrease Accounts Receivable
In preparing a bank reconciliation, the amount indicated by a debit memorandum for
bank service charges is added to the cash balance per books.
a. True
b. False
The credit terms of a sale are normally indicated on a(n):
a. purchase order.
b. invoice.
c. bill of lading.
d. check.
For each of the following items indicate whether the transactions listed below
increased (+), decreased (–) or had no effect (0) by inserting the appropriate symbol.
Net
Income
Assets
Liab.Owners’
EquityCash
Flows
(a)Sold equipment for cash at a gain
(b)Recorded amortization expense on patents
(c)Paid cash for minor repairs to an asset
(d)Recorded a revenue expenditure incurred on account
(e)Paid cash to remove old building from land being prepared for use
Loise Inc., a manufacturing company, forecasts that total overhead for the current year
will be $19,250,000, and total machine hours will be 350,000 hours. However, the
actual overhead is $6,095,000, and the actual machine hours are 142,000 hours. If the
company uses a predetermined overhead rate based on machine hours for applying
overhead, what is the predetermined overhead rate?
a. $23 per machine hour
b. $192 per machine hour
c. $55 per machine hour
d. $43 per machine hour
7920.6830.636
a. $26,285
b. $29,400
c. $24,920
d. $23,905
One of the qualitative characteristics that influence capital investment analysis is
product quality.
a. True
b. False
If operating income for a division is $30,000, sales are $243,750, and invested assets
are $187,500, the investment turnover would be 1.3.
a. True
b. False
For a construction contractor, the wages of carpenters would be classified as direct
labor cost.
a. True
b. False
If title to merchandise purchases passes to the buyer when the goods are delivered to the
buyer, the terms are:
a. consigned.
b. n/30.
c. FOB shipping point.
d. FOB destination.
If cash dividends of $145,000 were declared during the year and the decrease in
dividends payable from the beginning to the end of the year was $7,000, the statement
of cash flows would report $152,000 in the financing activities section.
a. True
b. False
7920.6830.636
a. $22,500
b. $25,000
c. $27,275
d. $22,725
Goal conflict can be avoided if budget goals are carefully designed for consistency
across all areas of the organization.
a. True
b. False
A commonsized balance sheet is prepared by expressing each liability item as a percent
of:
a. total sales.
b. total stockholders’ equity.
c. total liabilities.
d. total liabilities plus stockholders’ equity.
Increase in the WorkinProcess account occur when:
a. materials are received into the storeroom.
b. factory overhead costs are incurred.
c. direct labor is recorded from the time sheets.
d. materials are ordered.
A fully depreciated asset must be:
a. removed from the books.
b. kept on the books until sold or discarded.
c. disclosed only in the notes to the financial statements.
d. recognized on the income statement as a loss.
Lewis Company has $25,000 in retained earnings, $40,000 in assets, and $11,000 in
liabilities. How much is in common stock?
a. $29,000
b. $25,000
c. $14,000
d. $4,000
Which of the following can be used to place capital investment proposals involving
different amounts of investment on a comparable basis for purposes of net present value
analysis?
a. Pricelevel index
b. Present value factor
c. Annuity
d. Present value index
Merchandise with a list price of $7,500 and a cost of $7,000 is sold on account, terms
1/10, n/30. Prior to payment, merchandise with a list price of $1,000 and a cost of $800
is returned. The correct amount is paid within the discount period.
Record the following transactions, using the integrated financial statement framework
that follows:
(a)Sold the merchandise.
(b)Received the returned merchandise
(c)Received the amount owed.
Assets = Liabilities + Stockholders’ Equity
CashAccounts
ReceivableMerchandise
InventoryAccounts
PayableCapital
StockRetained
Earnings
a.
Statement of Cash FlowsIncome Statement
Assets = Liabilities + Stockholders’ Equity
CashAccounts
ReceivableMerchandise
InventoryAccounts
PayableCapital
StockRetained
Earnings
b.
Statement of Cash FlowsIncome Statement
Assets = Liabilities + Stockholders’ Equity
CashAccounts
ReceivableMerchandise
InventoryAccounts
PayableCapital
StockRetained
Earnings
c.
Statement of Cash FlowsIncome Statement
Profitability refers to the ability of the business to:
a. pay its current and noncurrent liabilities.
b. earn a reasonable amount of income.
c. manage its accounts receivable and inventory.
d. provide owners with dividends.
Which of the following activity bases would be the most appropriate for food costs of a
hospital?
a. Number of cooks scheduled to work
b. Number of xrays taken
c. Number of patients who are admitted in the hospital
d. Number of scheduled surgeries
A bank reconciliation is an important part of the system of internal controls.
a. True
b. False
The summary of the time tickets at the end of each month is the basis for recording the
direct and indirect labor costs incurred in production.
a. True
b. False
If the volume of sales is $4,000,000 and sales at the breakeven point amount to
$3,200,000, the margin of safety will be 20%.
a. True
b. False
Longlived assets that are intangible in nature, used in the operations of the business,
and not held for sale in the ordinary course of business are called fixed assets.
a. True
b. False
If fixed costs are $220,000 and the unit contribution margin is $25, the sales necessary
to earn an operating income of $30,000 are 10,000 units.
a. True
b. False
ASE Company sold goods, receiving $35,000 in cash and $15,000 on credit. How much
revenue should it record under the accrual basis of accounting?
a. $35,000
b. $15,000
c. $50,000
d. $50,000
A sales invoice included the following information: merchandise price, $8,000; terms
2/10, n/eom. Assuming that a credit for merchandise returned of $1,000 is granted prior
to payment, and that the invoice is paid within the discount period, what is the amount
of cash received by the seller?
a. $6,840
b. $7,000
c. $6,860
d. $7,840