1) A salary owed to employees is an example of an accrued expense.
2) When an investor company owns more than 25% of the voting stock of an investee
company, it has a controlling influence.
3) A stock split increases total stockholders’ equity.
4) Process costing is applied to operations with repetitive production and heterogeneous
products.
5) Known liabilities are obligations set by agreements, contracts, or laws, and are
measurable and definitely determinable.
6) Interest payments on bonds are determined by multiplying the par value of the bond
by the stated contract rate.
7) Each adjusting entry can only affect a balance sheet account.
8) An important assumption in multiproduct analysis is that the sales mix is known and
remains constant.
9) A company invests $10,000 at 7% compounded annually. At the end of the second
year, the company should have $11,400 in the fund.
10) The assignment of costs to the cost of goods sold and to ending inventory using
FIFO is the same for both the perpetual and periodic inventory systems.
11) If a machine is damaged during unpacking, the repairs are added to its cost.
12) U. S. Government Treasury bonds provide high return and low risk to investors.
13) A schedule of accounts receivable is a listing of all creditor accounts and account
balances.
14) Subsidiary ledgers are not needed in perpetual inventory systems because the
accounting system captures sufficient details to support analyses that decision makers
need.
15) The principles of internal control include: establish responsibilities, maintain
adequate records, insure assets, separate recordkeeping from custody of assets, and
perform regular and independent reviews.
16) Financial accounting and tax accounting require the same recordkeeping and there
should be no difference in results between the two accounting systems.
17) A company received dividends of $0.35 per share on 300 shares of stock. The
journal entry to record this transaction would be to debit Cash for $105 and credit
Dividend Revenue for $105.
18) List the steps in the accounting cycle.
19) The difference between the unit sales price and the unit variable cost of an item is
defined as the ________________________.
20) Annette has a loan that requires a $25,000 payment at the end of three years. The
interest rate on the loan is 5%, compounded annually. How much did Annette borrow
today?
21) On January 1, a company borrowed $50,000 cash by signing a 7% installment note
that is to be repaid in 5 annual end-of-year payments of $12,195. The first payment is
due on December 31. Prepare the journal entries to record the first and second
installment payments.
22) Prepare general journal entries for the following transactions of Viking Company,
assuming they use the allowance method to account for uncollectible accounts.
23) Perkins Company provides the following data developed for its master budget:
Required: Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a
contribution margin format.
24) A stock _________________ keeps stockholder records and prepares official lists
of stockholders for stockholder meetings and dividend payments.
25) A ______________________ system means that a company acquires or produces
inventory only when needed.
