ACCOUNTING 231 Final exam
If a company uses the perpetual inventory method and it purchases inventory on account worth $2,000 with terms 2/10 n/30 what will be the cost of the inventory when the inventory is purchased if it is using the net method? $2,200 $2,000 Correct! $1,960 $1,800
$1,960
Which of the following strategies focuses mainly on reduction of cost? Decentralized strategy Flexible strategy Correct! Efficiency Strategy Organic strategy
Efficiency Strategy
The balanced scorecard approach has four perspectives, which of the following is not one of those perspectives? Customer Perspective Financial Perspective Learning and Growth Perspective Correct! Internal Control Perspective
Internal control perspective
Which of the following is an internal stakeholder? General Public Correct! Management Suppliers Creditors
Management
Which of the following describes the practice of setting the price of a product at less than cost to take over a market and then to raise the price? Dumping Penetrating Pricing Correct! Predatory Pricing Price Skimming
Predatory Pricing
Safety stock is kept in order to: Correct! Prevent losses created by a stockout Prevent people from being injured by dangerous inventory Guard against defective products. Help identify the reorder point
Prevent losses created by a stockout
Which of the following is not part of revenue process planning? Cash receipts budget Production budget Sales budget Marketing and Distribution Budget
Production budget
Which of the following is considered value added time? Queue time Shipping time Order response time Correct! Production time
Production time
The Report of the Independent Auditor is the opinion of the CPA firm that examined the financial statements of a company and states which of the following? The financial statements are fairly presented The financial statements are correct as reported The financial statements are presented fairly in accordance with GAAP. The financial statements are free from fraud
The financial statements are presented fairly in accordance with GAAP.
The Gross Margin Ratio measures which of the following? The liquidity of the firm's profit. Correct! The percent of each dollar of sales that can cover the firm's operating expenses. The profitability of the firm's debt. The percent of the assets that generate profit for the firm and that covers operating and financing expenses.
The percent of each dollar of sales that can cover the firm's operating expenses.
Malsom Corp's monthly payroll is $100,000. If the FICA rate is 7.65% , income tax is withheld at a 15% rate, the State Unemployment (SUTA) rate is 2.8% and the Federal Unemployment (FUTA) tax rate is .8%, how much is withheld from the workers' wages and how much does Malsom have to pay in payroll taxes? Withheld: $7,650; Payroll Taxes: $8,450 Withheld: $22,650; Payroll Taxes: $8,450 Correct! Withheld: $22,650; Payroll Taxes: $11,250 Withheld: $7,650; Payroll Taxes: $11,250
Withheld: $22,650; Payroll Taxes: $11,250
All of the following accounts are increased by credits except: liabilities contributed capital accounts revenues Correct! assets
assets
The owners of a pizzeria invest $90,000 into the business for expansion purposes. This is an example of a(n): financing activity investing activity planning activity operating activity
financing activity
In times of rising prices, ______ generally result(s) in the ______ cost of goods sold. LIFO and FIFO, same LIFO, lower FIFO, higher Correct Answer FIFO, lower
FIFO, lower
Which of the following is not one of the four business processes? Capital Resources Process Performance Measurement and Management Process Correct! Internal Control Process Business organization and Strategy Process
Internal control process
Which of the following is the ratio for calculating the return on sales ratio? Current Assets / Total Sales Current Liabilities / Total Sales Net Income / Total Stockholders' Equity Net Income / Total Sales
Net Income / Total Sales
Which of the following appears on both the income statement and the statement of stockholders' equity? Unearned revenue Retained earnings Operating income Correct! Net income
Net income
Which of the following is not part of the conversion process? Storing the raw material used in production. Storing finished manufactured goods until sold Machine set ups. Correct! Paying for the raw material used in production.
Paying for the raw material used in production.
A linear regression analysis indicated a constant of 6,025.50, an X coefficient of 24.75, and an R-squared of 0.65. The estimated cost when the independent variable is 350 is: $11,657 $10,629 $55,386 Correct! $14,688
$14,688
Which of the following is not part of the expenditure process? Correct! Receive cash from sales during the period Determine the need for goods/services Pay suppliers of goods and services Receive goods and services
Receive cash from sales during the period
The entry to record the full payment of the premium on a two-year insurance policy would include a: debit to insurance expense credit to accounts payable Correct! debit to prepaid insurance credit to accounts receivable
debit to prepaid insurance
The standard cost for direct labor is $190,000 if the company produces 15,200 units of product. Actual direct labor cost to produce 15,800 units of product totaled $213,300. What is the standard cost for direct labor at the actual level of production: $213,300 $205,200 Correct! $197,500 $190,000
$197,500
Hoxie Inc is an advertising agency and has the following data for the most recent year. Using this data determine Hoxie's net income. Revenues from Fees $855,000 Cash $25,000 Utilities Expense $52,000 Building $900,000 Notes Payable $300,000 Salaries Expense $125,000 Office Supplies $10,000 Interest Expense $30,000 Office Equipment $200,000 Administrative Expense $75,000 $648,000 $700,00 Correct! $573,000 $678,000
$573,000
Determine each of the following: If your current ratio is 2 and your current assets are $600,000 what is the amount of your current liabilities? If your debt to equity ratio is 1.5 and your total liabilities are $200,000 what is your total stockholders' equity? If your return on sales is 8% and your net income is $2,000,000, how much sales did you generate during the year? CL: $300,000; SE: $233,333: SALES:$30,000,000 CL: $200,000; SE: $233,333: SALES:$20,000,000 CL: $350,000; SE: $133,333: SALES:$40,000,000 Correct! CL: $300,000; SE: $133,333: SALES:$30,000,000
CL: $300,000; SE: $133,333: SALES:$30,000,000
The current liquidity of a company is measured by which of the following? Return on Assets Ratio Current Ratio Return on Sales Ratio Debt to Equity Ratio
Current Ratio
For the revenue process which of the following document sequences is correct? Correct! Customer order, sales order, packing slip, bill of lading Customer order, packing slip, sales order, bill of lading Customer order, bill or lading, sales order, packing slip Sales order, packing slip, customer order, bill of lading
Customer order, sales order, packing slip, bill of lading
Which of the following ratios measures the profitability of the money invested in the firm's assets? Gross Margin Ratio Correct! Return on Investment Quick Ratio Return on Owners' Equity
Return on investment
The formula for a mixed cost is: Correct! Y = m(X) + b Y = m(X) + b(X) Y = m(X) Y = b
Y = m(X) + b
If only the selling price increase the breakeven point Depends on customer demand Correct! Decreases Increases Stays the same
decreases
The differences between standard and actual financial amounts of inputs are referred to as: appraisals Correct! variances exceptions standard deviations
variances
A linear regression analysis indicated a constant of 895.00, an X coefficient of 125.60, and an R-squared of 0.72. The dollar value of the dependent variable given an independent variable of 275 is: Correct! $35,435 $35,184 $25,764 $27,555
$35,435
The function of business responsible for providing the information used by other functional areas to perform their jobs is referred to as: Correct! Accounting and Information Systems Human Resources Production and Operations Marketing
Accounting and Information Systems
Net income would increase as a result of which of the following adjustments: Recording depreciation Adjusting a prepaid account Correct! Accruing a revenue Accruing an expense
Accruing a revenue
Net income would decrease as a result of which of the following adjustments: Accruing a revenue Correct! Accruing an expense Adjusting an unearned revenue account Billing a customer for services rendered
Accruing an expense
Which of the following is not a key feature of a JIT inventory system? Quality and reliable suppliers Correct! Adequate safety stock Customer demand pulls the system Well-trained employees
Adequate safety stock
Which of the following is a short-term operating decision? Decision to discontinue a product line Decision to make a new product Correct! Decision to reduce the normal price to get large order from one customer Decision to buy a new plant
Decision to reduce the normal price to get large order from one customer
Which of the following is not considered manufacturing overhead? Correct Answer Depreciation on warehouse that stores finished goodsAnswer: D Difficulty: Medium Cost of utilities for factory Depreciation on factory equipment You Answered Supervisors salaries
Depreciation on warehouse that stores finished goodsAnswer: D Difficulty: Medium
Ideal standards used in the budgeting process - Requires that deviations between actual and budgeted results be minimized. Is based on ideal working conditions but will permit some slack in operations Allows for small deviations from perfection Correct! Do not factor in operating inefficiencies in the budgeting process
Do not factor in operating inefficiencies in the budgeting process
Delivery of goods is associated with which of the following process? Evaluation process Conversion process Correct! Revenue process Expenditure process
Revenue process
Which of the following generates the contribution margin? Fixed cost per unit - Selling price per unit Selling price per unit - fixed cost per unit Correct! Selling price per unit - variable cost per unit Variable cost per unit - fixed cost per unit
Selling price per unit - variable cost per unit
In general, which of the following is true about the pricing of products? Correct! When demand increases prices increase Correct! When supply decreases prices increase When supply increases prices increase When demand decreases prices increase
When demand increases prices increase When supply decreases prices increase
If only the variable cost decreases the breakeven point Stays the same Depends on customer demand Correct! Decreases Increases
decreases
All of the following are external stakeholders except: creditors suppliers Correct! employees customers
employees
Indirect labor would most likely be shown on the: production budget direct labor budget sales budget Correct! manufacturing overhead budget
manufacturing overhead budget
The breakeven point is the point at which: the total cost line intersects the X axis total fixed costs equal total variable costs the total revenue line intersects the Y axis Correct! total contribution margin equals total fixed costs
total contribution margin equals total fixed costs
Which of the following payroll-related items is paid only by the employee? Correct! Union dues Federal unemployment tax State unemployment tax FICA tax
union dues
Which of the following must be estimated before a production budget can be completed? cash collection pattern raw materials purchases fixed factory overhead Correct! unit sales
unit sales
The Pacioli Manufacturing Company has kept track of the number of units they have produced each month and the cost to produce those units for the past 6 months. Using regression, determine the R2 for the equation. Month Number of Units Cost of Units Produced July 10,000 $60,000 August 11,000 66,000 September 20,000 110,000 October 16,000 90,000 November 12,000 70,000 December 18,000 102,000 .8882 .9992 .2222 .6662
.9992
The adjusting entry to record depreciation of a building would be: Depreciation Expense Accumulation Depreciation- Building Depreciation Expense Building Building Expense Building Accumulated Depreciation-Building Building
Accumulation Depreciation- Building
Which of the following statements about LIFO is false? The cost of ending inventory will probably be very different from current replacement cost. Correct Answer Firms that use LIFO run the risk of inventory obsolescence because they are keeping old goods on hand. If inventory declines, it will result in a matching of current revenues and old costs It results in a higher cost of goods sold during periods of rising prices.
Firms that use LIFO run the risk of inventory obsolescence because they are keeping old goods on hand.
Which of the following is not included in cost of work-in-process? Correct Answer Purchase of raw material Requisition of raw material Application of overhead Direct labor
Purchase of raw material
Short-term decision making differs from normal operating decision in two ways, which of the following are the two ways? Short-term operating decisions are unique and will expand plant capacity Short-term decision can not be planned and address routine operating decision. Short-term operating decisions are routine and anticipated Correct! Short-term operating decisions are unique and can not be planned
Short-term operating decisions are unique and can not be planned
The Debt to Equity Ratio is measure with which of the following? Total Stockholders' Equity / Total Liabilities Total Liabilities / Total Assets Correct Answer Total Liabilities / Total Stockholders' Equity You Answered Long-term Liabilities / Total Stockholders' Equity
Total Liabilities / Total Stockholders' Equity
Which of the following is not part of the expenditure process? Receiving goods and services Correct! Using equipment to manufacture products Paying suppliers Ordering goods and services
Using equipment to manufacture products
Net income would decrease as a result of which of the following adjustments? Adjusting unearned revenue Accruing a revenue Recording revenue earned but not received Correct! Accruing an expense
accruing an expense
Opportunity costs: are irrelevant are the combined benefits of all alternatives other than the one selected Correct! are the foregone benefits of the next best alternative are the costs associated with the selected alternative
are the foregone benefits of the next best alternative
Short-term operating decisions: Correct! assume current capacity is fixed arise during the evaluating phase of the management cycle arise during the planning phase of the management cycle are usually routine decisions which are not unique to any particular situation
assume current capacity is fixed
The accounting concept which assumes that, absent any information to the contrary, the business will continue into the foreseeable future is the: periodicity concept Correct! going concern concept business entity concept future entity concept
going concern concept
Information from the 2010 financial statements of Bravura Corporation is shown below. Calculate the cash paid for merchandise inventory. Sales $800,000 Cost of goods sold 600,000 Ending inventory 60,000 Beginning inventory 70,000 Accounts payable, beginning balance 6,000 Accounts payable, ending balance 8,000 Accounts receivable, beginning balance 27,000 Accounts receivable, ending balance 23,000 $596,000 $800,000 $600,000 Correct! $588,000
$588,000
The direct materials price variance is calculated as: (Standard Price - Actual Price) x Standard Quantity Allowed (Actual Quantity Purchased - Standard Quantity Allowed) x Standard Price (Standard Quantity Allowed - Actual Quantity Purchased) x Actual Price Correct! (Actual Price - Standard Price) x Actual Quantity Purchased
(Actual Price - Standard Price) x Actual Quantity Purchased
The direct labor usage variance is calculated as: Correct! (Actual Quantity - Standard Quantity Allowed) x Standard Price (Standard Quantity Allowed - Actual Quantity) x Actual Price (Standard Price - Actual Price) x Actual Quantity (Actual Price - Standard Price) x Standard Quantity Allowed
(Actual Quantity - Standard Quantity Allowed) x Standard Price
Bollinger Industries manufactures back-packs. Selected data regarding standard costs follow: Direct materials per unit 0.6 yards at $4.20 per yard Direct labor per unit 4.5 hours at $8.75 per hour Unit-related overhead $7.30 per machine hour; 1.5 machine hours required per unit Actual selected results for the month of January are shown below: Units produced 33,800 Machine hours used 49,300 Direct materials purchased 19,200 yards At a total cost of $83,520 Direct materials used 19,750 Yards Direct labor used 151,750 hours At total cost of $1,350,575 Unit-related overhead $385,240 Calculate the following variances: (a) direct labor price variance (b) direct labor usage variance (c) direct materials price variance (d) direct materials usage variance (e) direct materials inventory variance (a) $22,762.50F; (b) $3,062.50F; (c) $2,880U; (d) $2,226U; (e) $2,310F (a) $22,762.50U; (b) $3,062.50U; (c) $2,880U; (d) $2,226U; (e) $2,310U Correct! (a) $22,762.50U; (b) $3,062.50F; (c) $2,880U; (d) $2,226F; (e) $2,310F (a) $22,762.50F; (b) $3,062.50F; (c) $2,880F; (d) $2,226F; (e) $2,310F
(a) $22,762.50U; (b) $3,062.50F; (c) $2,880U; (d) $2,226F; (e) $2,310F
Carolina Corporation reported the following account balances at the beginning and end of 2010: 1/1/10 12/31/10 Accounts Receivable $15,500 $ 19,200 Office Supplies 3,800 2,600 Inventory 85,700 72,300 Accounts Payable 32,300 36,100 Salaries Payable 26,200 23,400 Sales 865,000 Cost of Goods Sold 549,500 Supplies Expense 4,900 Salaries Expense 237,800 Determine the amount of cash paid for (a) supplies, (b) salaries, and (c) inventory during 2010. Correct! (a) $3,700; (b) $240,600; (c) $532,300 (a) $3,700; (b) $237,800; (c) $532,300 (a) $3,700; (b) $240,600; (c) $549,500 (a) $4,900; (b) $240,600; (c) $532,300
(a) $3,700; (b) $240,600; (c) $532,300
Reeves Company maintains a perpetual inventory system inventory costing. Reeves reported the following events during the month of June: Date Event Number of Units Unit Cost June 1 Beginning Inv. 500 $120 4 Purchase 600 126 7 Sale 450 11 Purchase 900 128 14 Sale 850 17 Sale 160 25 Purchase 1,000 130 30 Sale 980 Assume Reeves sells each unit of inventory for $150 Required: Assuming LIFO, determine the cost of goods sold, the gross margin and the cost of ending inventory for June. Assuming FIFO, determine the cost of goods sold, the gross margin and the cost of the ending inventory for June. (a) $52,840; (b) $72,800 (a) $80,000; (b) 72,800 (a) $67,640; (b) $105,600 Correct! (a) $67,640; (b) $72,800
(a) $67,640; (b) $72,800
Promotion Industries manufacturers license plates for automobiles. The license plates sell for $10.50 each. During 2008, Miller sold 750,000 plates incurring total variable costs of $1,462,500 and fixed costs of $3,268,720. (a) Determine the contribution margin per unit. (b) Determine the breakeven point in units for 2008. (a) $10.55; (b) 400,306 units (a) $8.55; (b) 482,306 units (a) $8.55; (b) 382,306 units (a) $6.55; (b) 282,306 units
(a) $8.55; (b) 382,306 units
Which of the following events results in a revenue event? A customer pays for services to be provided over the next four months. Correct! A customer purchases merchandise on open account A customer pays for merchandise previously purchased on account. A bank loan is obtained
A customer purchases merchandise on open account
From the information below create a two-column bank reconciliation for the month of November 2008 for the Purinton Corporation. (a.) Nov 30, 2008 cash balance per book is $35,152.22 (b.) Bank statement balance at Nov 30, 2008 is $32,450.78 (c.) The following checks are outstanding. Checks 2156 $528.34 2175 $378.00 2199 $185.22 (d.) A memo included in the bank statement indicates that Dan Short had a NSF check for $933. (e.) The bank service charge for the month is $38. (f.) Cash receipts of $2,300 deposited Nov 30, 2008 were not included in the bank statement. (g.) A check for $483 was deposited and correctly recorded by the bank but the company incorrectly recorded the deposit for $438 on their books. A check for $567 written by another company was incorrectly deducted from the Purinton checking account. Adjusted Bank Balance: $32,226.22; Adjusted Book Balance: $32,226.22 Adjusted Bank Balance: $30,226.22; Adjusted Book Balance: $30,226.22 Adjusted Bank Balance: $36,226.22; Adjusted Book Balance: $36,226.22 Adjusted Bank Balance: $34,226.22; Adjusted Book Balance: $34,226.22
Adjusted Bank Balance: $34,226.22; Adjusted Book Balance: $34,226.22
Which of the following is not a factor in the EOQ inventory model? Cost to place one additional order Cost to carry one additional unit in inventory Annual demand for the inventory in units Correct! All of the following are factors in the EOQ model.
All of the following are factors in the EOQ model.
Which of the following is the ratio for calculating the current ratio? Current Assets / Total Liabilities Correct! Current Assets / Current Liabilities Current Liabilities / Current Assets Current Assets / Total Sales
Current Assets / Current Liabilities
The balanced scorecard approach is successful in reducing budgetary slack because: It uses actual results rather than estimated budgeted figures to measure performance. It uses those measures that make the assets balance with the liabilities and owners' equity. It uses only those measures that balance the budgeted figures with the actual figures. Correct! It uses several different measures to assess how successful a department performed.
It uses several different measures to assess how successful a department performed.
In times of rising prices, ______ generally result(s) in the ______ ending inventory. You Answered FIFO, lower LIFO, higher LIFO and FIFO, same Correct Answer LIFO, lower
LIFO, lower
Which of the following is has limited liability for all owners and is not subject to double taxation? Sole Proprietorship Corporation Limited Partnership Limited Liability Corporation
Limited Liability Corporation
Onaga Corporation has the production budget described below. Each unit requires 4 hours of direct labor time at $15 per hour. Unit-related overhead is $20 per machine hour and each unit requires one-quarter of an hour. Batch-related overhead is $2,000 per batch with a batch-size of 500 units. Facility overhead, including depreciation of $150,000 is $820,000 per month. January February March Budgeted Production 200,000 210,000 190,000 Required: Prepare Onaga's direct labor and manufacturing overhead budget for February. Manufacturing OH: $12,000,000 Manufacturing OH: $13,620,000 Manufacturing OH: $12,620,000 Manufacturing OH: $14,620,000
Manufacturing OH: $14,620,000
Which of the following would not be collected from the customer when an order is received? Price Quoted Delivery Date Type of inventory ordered Correct! Name of common carrier that will deliver the goods All of the above will be collected
Name of common carrier that will deliver the goods
The following adjusted trial balance was taken from the accounting records of Shipley Corporation as of December 31, 2010. Required: (A) Calculation Net Income (B) Calculate Total Assets, Total Liabilities, and Total Equity Shipley Corporation Adjusted Trial Balance December 31, 2010 Debits Credits Cash $ 27,500 Accounts Receivable 8,600 Supplies 3,100 Prepaid Rent 4,700 Equipment 43,800 Accum Depn - Equipment $ 8,200 Accounts Payable 5,600 Salaries Payable 1,700 Note Payable 20,000 Capital Stock 35,000 Retained Earnings 12,100 Management Fees Earned 89,500 Appraisal Fees Earned 12,700 Salaries Expense 46,800 Advertising Expense 18,300 Depreciation Expense 4,200 Supplies Expense 4,600 Interest Expense 3,100 Utilities Expense 7,700 Rent Expense 8,500 Insurance Expense 3,900 Total $184,800 $184,800 Net Income: $5,100; Total Assets: $79,000; Total Liabilities: $17,300; Total Equity $79,500 Net Income: $5,100; Total Assets: $59,000; Total Liabilities: $27,300; Total Equity $52,200 Correct! Net Income: $5,100; Total Assets: $79,500; Total Liabilities: $27,300; Total Equity $52,200 Net Income: $7,100; Total Assets: $79,000; Total Liabilities: $27,300; Total Equity $79,500
Net Income: $5,100; Total Assets: $79,500; Total Liabilities: $27,300; Total Equity $52,200
During the current year, cost of goods sold was higher under the LIFO method than under the FIFO method. Which of the following statements about price changes is true? Prices were unchanged. Correct Answer Prices were increasing. You Answered Prices were decreasing. Unable to determine from the information given
Prices were increasing.
Which of the following is part of the revenue process? Convert raw material into inventory for sale Pay suppliers for inventory Correct! Provide customer support Order inventory for resale
Provide customer support
Which of the following is the formula for the contribution margin ratio? Fixed cost per unit/selling price per unit Variable cost per unit/selling price per unit Selling price per unit - fixed cost per unit/ selling price per unit Correct! Selling price per unit - variable cost per unit/ selling price per unit
Selling price per unit - variable cost per unit/ selling price per unit
Short-term decision making differs from long-term decision making because: Correct! Short-term decision making assumes capacity is fixed. Short-term decision making assumes that variable costs are fixed. Short-term decision making assumes selling prices are fixed. Short-term decision making assumes the accounting data is fixed.
Short-term decision making assumes capacity is fixed.
In a perpetual inventory system that uses the gross method which of the following is true? When a discount is taken the Purchase Discount account is credited. The Accounts Payable account is debited for the cash paid. The Purchase Discount Lost account is debited when the discount is not taken. Answer: C Difficulty: The Inventory account is reduced when the discount is taken.
The Inventory account is reduced when the discount is taken.
The costing system that reflects the amount of raw materials purchased, direct labor used, and manufacturing overhead applied in the Cost of Goods Sold account is the: process costing system Correct! backflush costing system direct costing system job order costing system
backflush costing system
Which of the following is not an advantage of LIFO over FIFO? You Answered lower income taxes Correct Answer better inventory figure on balance sheet better matching of revenues and costs on the income statement cost of goods sold better approximates current replacement cost
better inventory figure on balance sheet
The point where the total revenue line intersects the total cost line is called the: origin Y axis intercept X axis intercept Correct! breakeven point
breakeven point
The accounting concept requiring that an accounting system reflect information relating only to those economic events pertaining to a particular entity is the: monetary unit concept Correct! business entity concept periodicity concept going entity concept
business entity concept
The accounting concept requiring that the profits of a business be determined at regular intervals throughout the life of the business is the: monetary unit concept Correct! periodicity concept going concern concept business entity concept
causes users to reach a different decision.
All of the following are steps in incremental analysis except: determine the relevant costs of each alternative determine the incremental revenue choose the alternative that produces the highest revenue identify the alternative actions
choose the alternative that produces the highest revenue
The entry to record collections from credit customers would include a: Correct! credit to accounts receivable debit to unearned revenue credit to cash debit to accounts payable
credit to accounts receivable
In a perpetual inventory system, the journal entry to record the sale of merchandise on account would include a: debit to Inventory credit to Cash debit to Cost of Goods Sold credit to Accounts Payable
debit to Cost of Goods Sold
In a perpetual inventory system, the journal entry to record the purchase of merchandise on account includes a: Correct! debit to Inventory credit to Cash credit to Accounts Receivable debit to Purchases
debit to Inventory
The adjusting entry to accrue interest earned would include a: Correct! debit to interest receivable debit to cash credit to interest payable credit to interest expense
debit to interest receivable
In a perpetual inventory system, if the terms of sale are FOB shipping point the journal entry to record the payment of freight charges on purchased merchandise includes a: debit to Inventory credit to Freight Out debit to Cost of Goods Sold credit to Accounts Payable
debit to inventory
The following journal entry affected the accounting equation by: Depreciation Expense Accumulated Depreciation-Equipment increasing assets and increasing liabilities decreasing assets and increasing owners' equity Correct! decreasing assets and decreasing owners' equity increasing liabilities and decreasing owners' equity
decreasing assets and decreasing owners' equity
All of the following are categories of adjusting entries except: estimated allocations accruals deferrals estimated payments
estimated payments
The rule for making sound economic decisions is that one should choose the alternative with the lowest opportunity cost highest revenue highest contribution margin lowest sunk costs
highest contribution margin
The following journal entry affected the accounting equation by: Cash Notes Payable decreasing assets and increasing owners' equity Correct! increasing assets and increasing liabilities increasing liabilities and decreasing owners' equity increasing assets and increasing owners' equity
increasing assets and increasing liabilities
An increase in prepaid insurance indicates that insurance expense and insurance paid were equal no insurance expense was recorded during the period insurance expense for the period exceeded insurance paid insurance paid during the period exceeded insurance expense
insurance paid during the period exceeded insurance expense
Which of the following best describes the competitive environment for Sony high definition TVs? monopoly free competition Correct! monopolistic competition pure competition
monopolistic competition
If an adjustment for expense that has been incurred but not paid was not recorded. revenues and liabilities would be overstated assets and owners' equity would be overstated liabilities and owners' equity would be understated net income and assets would be understated
net income and assets would be understated
If an adjustment for revenue that has been earned but not recorded was not made Correct! net income and assets would be understated assets and owners' equity would be overstated revenues and liabilities would be overstated liabilities and owners' equity would be understated
net income and assets would be understated
In a periodic inventory system, the journal entry to record the sale of merchandise on account would include a: debit to Cost of Goods Sold Correct Answer no entry involving Inventory or Cost of Goods Sold Answer: D Difficulty: debit to Inventory credit to Accounts Payable
no entry involving Inventory or Cost of Goods Sold Answer: D Difficulty:
Which of the following best describes the competitive environment for Microsoft Windows? oligopoly monopolistic competition monopoly pure competition
oligopoly
The salary of an executive who decides to quit her job and return to school full time is a(n): sunk cost incremental cost Correct! opportunity cost incremental revenue
opportunity cost
The pricing strategy where a company initially sets the price of its product low and then raises it later on in the product's life cycle is called: target pricing price skimming life-cycle pricing Correct! penetration pricing
penetration pricing
The accounting concept requiring that the profits of a business be determined at regular intervals throughout the life of the business is the: monetary unit concept Correct! periodicity concept going concern concept business entity concept
periodicity concept
During the current year, ending inventory was higher under the LIFO method than under the FIFO method. Which of the following statements about price changes is true? Correct! Prices were decreasing. Prices were increasing. Prices were unchanged. Unable to determine from the information given
prices were decreasing
Which of the following is not part of expenditure process planning? Correct! Production budget Cash disbursements schedule Direct materials purchases budget Direct labor and overhead budget
production budget
The primary objective of financial reporting is to provide information useful for making economic decisions. keep businesses from going bankrupt. determine taxable income and income tax of a business. provide management with information needed to run the day-to-day operations of a business.
provide information useful for making economic decisions.
Conversion cycle planning consists of all the following except: planning manufacturing overhead scheduling production Correct! purchasing merchandise scheduling labor
purchasing merchandise
A data storage device listing each customer, along with all the credit sales made to, as well as payments received on account from that customer is called a(n): marketing survey Correct! subsidiary accounts receivable ledger aging schedule sales returns and allowances report
subsidiary accounts receivable ledger
When deciding to purchase new equipment the cost of equipment being replaced is a(n): incremental cost opportunity cost incremental revenue Correct! sunk cost
sunk cost
Which of the following is an external stakeholder in a supermarket? the manager of the produce department the cashier at the checkout counter Correct! the company which supplies the baked goods for the bakery the chief financial officer at the supermarket's corporate headquarters
the company which supplies the baked goods for the bakery
