The heading of a work sheet might contain the line ‘As of February 28, 20×5.’
Segment profitability analysis includes the preparation of a segmented income
statement.
Budgeting is the process of identifying, gathering, summarizing, and communicating
financial and nonfinancial information about an organization’s future activities.
Under an effective system of internal control, errors occur only as a result of fraud or
dishonesty.
On a work sheet, the balance of the owner’s Capital account is its ending amount for the
period.
Journal entries are typically posted to the ledger only at the end of the year.
In a process costing system, the average costing method assumes that cost flows mirror
the logical physical flow of production.
ROI, residual income, and economic value added all represent performance measures
that can be utilized to determine investment center performance.
Accountants consider money the common unit of measure for all business transactions.
If a retailer makes a sale of $100 on a MasterCard, and MasterCard takes a 5 percent
discount on the sale, the retailer would record Cash for $100 and Accounts Payable for
$5.
The accounting convention that is most responsible for the increase in the number of
notes to financial statements is
A.materiality.
B.full disclosure.
C.consistency.
D.conservatism.
Determine the October 2014 ROI for an investment center with the following
information:
Round percentage answer to two decimal places.
A.26.8 percent
B.22.8 percent
C.24.8 percent
D.28.8 percent
Share and Care International is trying to determine how many clients must be serviced
in order to cover its monthly service overhead. Using the high-low method, it has
determined that the variable cost per client is $800 and that the monthly fixed overhead
is $28,000.
Assuming an average fee of $1,200 per client, the breakeven point per month is
A.35 clients.
B.80 clients.
C.70 clients.
D.55 clients.
A result of a separation of duties is that
A.operations become extremely inefficient because of constant training of employees.
B.more employees will need to be bonded.
C.theft by employees becomes impossible.
D.theft is possible only if several employees scheme together
The basic document for keeping track of all costs in a job order costing system is a
A.job order cost card.
B.labor time card.
C.process cost report.
D.materials requisition form.
Use the following information to perform the calculations requested below, assuming
that the average costing approach to a process costing system is being used.
Beginning work in process inventory: 7,000 units, 100 percent complete as to direct
materials, 65 percent complete as to conversion costs
Ending work in process inventory: 22,500 units, 100 percent complete as to direct
materials, 75 percent complete as to conversion costs
Units started during the month: 46,000
a. Calculate units completed and transferred out during the month.
b. Calculate units to be accounted for during the month.
c. Calculate equivalent units for conversion costs.
d. Calculate equivalent units for direct materials.
Which of the following financial statements is concerned with the enterprise at a point
in time?
A.Statement of owner’s equity
B.Income statement
C.Statement of cash flows
D.Balance sheet
On November 15, 2014, The Cooper Co. received a special order for 6,000 three-wood
golf club sets. These golf clubs will be marketed in Asia. Seto Imports Inc. the
purchasing company, wants the clubs bulk packaged and is willing to pay $72 per set
for the clubs. The president of The Cooper Co. has gathered the following product
costing information about the set of woods being discussed:
– Direct materials (wood), $900 per 100 sets
– Direct materials (metal shafts), $1,200 per 100 sets
– Direct materials (grips), $200 per 100 sets
– Direct labor is $27 per set
– Variable manufacturing costs are $19 per set
– Fixed manufacturing costs are 20 percent of direct labor dollars
– Variable selling expenses are $14 per set
– Variable shipping costs are $9 per set
– Fixed general and administrative costs are 30 percent of direct labor dollars
Bulk shipping costs will total $10,000, thus eliminating both variable selling and
variable shipping costs from consideration. The company did not expect this order and
will reach planned production capacity for the year. However, there is enough plant
capacity for the special order. Round answers to two decimal places.
a. Prepare an analysis for the president to use in deciding whether to accept or reject the
offer by Seto Imports, Inc. What decision should be made?
b. What is the lowest possible price The Cooper Co. could charge per set of woods and
still make a $12,000 profit on this order? Round your answers to two decimal places.
The controller for Tires and More, Inc. has recorded the following transactions during
the month: the purchase of supplies on credit, $4,200; receipt of a bill for utilities for
the month which is due on the 15th of the next month, $1,200; and, partial payment on
the balance due for supplies, $800. What is the balance in the Accounts Payable account
at the end of the month assuming a beginning balance of $0, and is the balance a debit
or a credit?
A.$4,600 debit.
B.$4,600 credit.
C.$3,400 credit.
D.$5,400 credit.
Nader Inc. has the following information available:
At the beginning of the period, there were 500 units in process that were 40 percent
complete as to conversion costs and 100 percent complete as to direct materials costs.
During the current period, 4,300 units were started and completed. Ending inventory
contained 320 units that were 80 percent complete as to conversion costs and 100
percent complete as to direct materials costs. (Assume that the company uses the FIFO
costing method.)
The cost of completing a unit of Nader Inc. during the current period was
A.$39.50.
B.$35.60.
C.$35.21.
D.$35.79.
The total of the dollar amounts on the job order cost cards that have not been completed
would be equal to the
A.cost of goods completed.
B.balance in the Finished Goods Inventory account.
C.cost of goods sold.
D.balance in the Work in Process Inventory account.
Fantastic Futons manufactures futons. The estimated number of futon sales for the first
three months of 2014 are as follows:
Finished goods inventory at the end of 2013 was 10,000 units. On average, 25 percent
of the futons to be sold in the next month are produced and kept as ending balance in
finished goods inventory. The planned selling price is $150 per unit.
Fantastic Futons buys direct materials for the futons in cloth rolls priced at $80 each.
Each roll provides direct material for 40 futons. There was one roll in the direct
materials inventory at the beginning of January, and the company expects to have four
rolls in inventory at the end of the month. Assuming the production budget calls for
60,000 units to be produced in January, what would be the amount of the cloth rolls
direct materials purchases budget for that month?
A.$119,760
B.$114,000
C.$120,000
D.$120,240
The petty cash fund should be replenished
A.only for the total amount of expense receipts on hand.
B.for the total amount that was originally set up in the imprest fund.
C.for the total amount of expense receipts on hand plus cash remaining before
replenishment.
D.for the amount needed to bring the petty cash fund back to its imprest amount.
Answer the following questions. (Show your work.)
a. Revenue of $60,000 was earned, but only $45,000 was collected. Expenses of
$36,000 were incurred, but only $30,000 was paid. What is reported net income?
b. Wages of $4,000 are paid every Friday for a five-day workweek. If year end falls on
a Tuesday, the adjusting entry for wages would be recorded at what amount?
c. A company vehicle is purchased for $24,000. Assuming an eight-year useful life and
zero value at that time, what is the balance of accumulated depreciation after five years?
d. Supplies Expense of $3,600 was recorded for a given year. Assuming that $2,400 in
supplies were purchased during the year and that $640 in supplies remained at year end,
what was the cost of supplies at the beginning of the year?
Which of the following types of incentives encourages an employee to think as both
investor and employee?
A.Profit-sharing plans
B.Awards
C.Cash bonuses
D.Stock option programs
Use this information to answer the following question.
A periodic inventory system is used.
Using the average-cost method, the cost assigned to ending inventory is
A.$3,036.
B.$3,168.
C.$3,384.
D.$8,556.
Which of the following accounts would not be closed?
A.Design Revenue
B.Interest Income
C.Accumulated Depreciation – Equipment
D.Interest Expense
Lilly LLC wants to make a profit of $30,000. It has variable costs of $99 per unit and
fixed costs of $20,000. How much must it charge per unit if 5,000 units are sold?
A.$84
B.$69
C.$99
D.$109
Chin Company’s owner’s equity equals one-third of the company’s total assets. The
company’s liabilities are $120,000. What is the amount of the company’s owner’s
equity?
Rufina Corp. sold for $20,000 plant assets that cost $40,000 and that had an
accumulated depreciation of $8,000. The journal entry to record the transaction is:
Feathertouch Company sold merchandise worth $1,600 on credit, terms n/15. The
merchandise sold had cost $1,100. What is the required journal entry to record the
transaction and to transfer the cost of merchandise inventory to cost of goods sold under
the periodic inventory system?
Contrast the circumstances where horizontal analysis would be an effective analysis
tool with those where common-sized analysis would be more useful.
A partner invests into a partnership a building with a $50,000 carrying value and
$40,000 fair market value. The related mortgage payable of $25,000 is assumed by the
partnership. The entry to record the investment in partnership is:
Which four types of transactions affect owner’s equity, and how do they affect it?
What is vertical analysis, and why is it useful in performing financial performance
measurement?
Special-purpose journals can promote efficiency, economy, and control. Describe how
special-purpose journals promote control, and how they promote efficiency and
economy.