Managerial Accounting Midterm

Decision-makers should consider: a. both quantitative and qualitative factors. b. only quantitative factors. c. only sunk costs. d. only qualitative factors.

a. both quantitative and qualitative factors.

Clyde Retailers is a local merchandiser which buys vintage clothing and sells it to local college students. Clyde began the year with inventory costing $60,000. During the year inventory costing $300,000 was purchased. At the end of the year, inventory costing $45,000 still remained. What was Clyde's cost of goods sold for the year? a. $285,000 b. $315,000 c. $300,000 d. $255,000

b. $315,000

Franklin Street Manufacturing Franklin Street Manufacturing has the following cost information available for 2011: Direct materials used $10,000 Direct labor costs 25,000 Factory overhead 20,000 Marketing expenses 4,000 Administrative expenses 6,000 20,000 units were produced during the year out of which 19,000 units were sold for $10 each. Refer to the Franklin Street Manufacturing information above. What is cost of goods sold for 2011? a. $55,000 b. $52,250 c. $61,750 d. $65,000

b. $52,250

Jasper Corporation Jasper Corporation incurred the following costs which includes salaries and wages in April: Salesperson's salaries $32,000 Factory maintenance $25,000 Factory insurance 10,000 Administrative utilities 4,000 Factory supervisor salary 30,000 Administrative supplies 1,500 Advertising 10,000 Delivery truck insurance 5,000 Factory machine operator 22,000 Factory machine depreciation 5,500 Direct materials used 30,000 Receptionist salary 17,500 Refer to the Jasper Corporation information above. Total period costs are: a. $65,000 b. $70,000 c. $60,000 d. $38,000

b. $70,000

Gregson Company had the following noncash current asset and current liabilities balances at the end of 2010 and 2011: 2010 2011 Accounts receivable $60,000 $68,000 Inventory 230,000 210,000 Prepaid insurance 15,000 13,000 Accounts payable 20,000 30,000 Net income for 2011 was $750,000 and depreciation expense was $40,000. All sales and all purchases are on account. Gregson uses the indirect method for preparing the statement of cash flows. Net cash flows from operating activities for 2011 would be: a. $774,000 b. $814,000 c. $786,000 d. $766,000

b. $814,000

Which of the following is not a required external financial statement? a. Statement of changes in stockholders' equity b. Budgeted income statement c. Balance sheet d. Statement of cash flows

b. Budgeted income statement

Jones Manufacturing Inc. Jones Manufacturing Inc. incurred the following costs in November: Direct labor $ 50,000 Advertising costs $ 3,000 Indirect labor 20,000 Factory rent 10,000 Administrative salaries 25,000 Factory depreciation 6,000 Direct materials purchased 23,000 Administrative rent 5,000 Indirect materials used 4,000 Administrative depreciation 7,000 In addition, the following information is also available: Beginning Ending Raw materials $ 5,000 $ 8,000 Work in process 60,000 55,000 Finished goods 17,250 9,200 Number of units produced 20,000 units Number of units sold (sales price of $25 per unit) 21,400 units Refer to the Jones Manufacturing Inc. information above. Cost of goods manufactured in November is a. $155,000. b. $143,000. c. $115,000. d. $91,000.

c. $115,000.

Which of the following types of employees would most likely have their wage be classified as direct labor? a. Managerial accountant b. Factory maintenance worker c. Assembly-line factory worker d. Factory supervisor

c. Assembly-line factory worker

An example of qualitative data is: a. budgeted hours. b. net income. c. customer satisfaction. d. warranty claims.

c. customer satisfaction.

Which of the following ratios would be the best measure of profitability? a. Times-interest-earned ratio b. Current ratio c. Debt-to-equity ratio d. Return on assets

d. Return on assets

Relevant costs: a. are unavoidable. b. are sunk costs. c. can not be opportunity costs. d. are costs that differ among alternatives.

d. are costs that differ among alternatives.

The payment of a cash dividend will be depicted on the statement of cash flows as a: a. cash outflow for an investing activity. b. cash outflow for an operating activity. c. cash inflow from an operating activity. d. cash outflow for a financing activity.

d. cash outflow for a financing activity.

Working capital is a measure of: a. solvency. b. profitability. c. marketability. d. liquidity.

d. liquidity.

Jasper Corporation Jasper Corporation incurred the following costs which includes salaries and wages in April: Salesperson's salaries $32,000 Factory maintenance $25,000 Factory insurance 10,000 Administrative utilities 4,000 Factory supervisor salary 30,000 Administrative supplies 1,500 Advertising 10,000 Delivery truck insurance 5,000 Factory machine operator 22,000 Factory machine depreciation 5,500 Direct materials used 30,000 Receptionist salary 17,500 Refer to the Jasper Corporation information above. Total product costs are: a. $122,500 b. $127,500 c. $154,500 d. $132,500

a. $122,500

Hardister Corp. Hardister Corp. has the following information available from its financial statements for 2012: Balance sheet information: Assets Current assets $400,000 Long-term assets 600,000 Total assets $1,000,000 Income statement information: Sales (all on account) $3,000,000 Cost of goods sold 1,500,000 Salary expense 200,000 Miscellaneous expenses 400,000 Interest expense 100,000 Income before taxes $800,000 Income tax expense 300,000 Net income $500,000 Liabilities Current liabilities $200,000 Long-term liabilities 100,000 Total liabilities $300,000 Stockholders' Equity Capital stock $300,000 Retained earnings 400,000 Total Stockholders' Equity $700,000 Refer to the Hardister Corp. information above. Assuming Hardister has no preferred stock and the average number of common shares outstanding was 10,000, what would be earnings per share for 2012? (round to two decimal places) a. $50.00 b. $.02 c. $300.00 d. $80.00

a. $50.00

Partin Manufacturing Partin Manufacturing has the following information available from its 12/31/12 and 12/31/11 financial statements: 12/31/12 Cash $12,000 Accounts payable $10,000 Accounts receivable 6,000 Salaries payable 3,000 Inventory 40,000 Taxes payable 9,000 Prepaid insurance 2,000 Total current liabilities $22,000 Total current assets $60,000 Notes payable 50,000 Property and equipment 80,000 Total long-term liabilities $50,000 Land 20,000 Total liabilities $72,000 Long-term assets $100,000 Capital stock 60,000 Retained earnings 28,000 Total stockholders' equity $88,000 Total assets $160,000 Total liabilities and stockholders' equity $160,000 Other information: Net income in 2012 $25,000 Inventory (12/31/11) 50,000 Credit sales in 2012 80,000 Cost of goods sold in 2012 45,000 Accounts receivable (12/31/11) 10,000 Refer to the Partin Manufacturing information above. Partin's inventory turnover ratio for the year 2012 is: (round to two decimal places) a. 1.00. b. 2.00. c. .50. d. .56.

a. 1.00.

Partin Manufacturing Partin Manufacturing has the following information available from its 12/31/12 and 12/31/11 financial statements: 12/31/12 Cash $12,000 Accounts payable $10,000 Accounts receivable 6,000 Salaries payable 3,000 Inventory 40,000 Taxes payable 9,000 Prepaid insurance 2,000 Total current liabilities $22,000 Total current assets $60,000 Notes payable 50,000 Property and equipment 80,000 Total long-term liabilities $50,000 Land 20,000 Total liabilities $72,000 Long-term assets $100,000 Capital stock 60,000 Retained earnings 28,000 Total stockholders' equity $88,000 Total assets $160,000 Total liabilities and stockholders' equity $160,000 Other information: Net income in 2012 $25,000 Inventory (12/31/11) 50,000 Credit sales in 2012 80,000 Cost of goods sold in 2012 45,000 Accounts receivable (12/31/11) 10,000 Refer to the Partin Manufacturing information above. Partin's current ratio for the year 2012 is: (round to two decimal places) a. 2.73. b. 2.67. c. .82. d. 1.39.

a. 2.73.

Which of the following types of employees would most likely have their wage be classified as indirect labor? a. Factory supervisor b. Salesperson c. Managerial accountant d. Machine operator

a. Factory supervisor

Which of the following statements is true? a. Financial accounting is less flexible than managerial accounting. b. External and internal users of accounting information have exactly the same information needs. c. Managerial accounting emphasizes the organization as a whole more than financial accounting. d. Managerial accounting provides the best information to external users.

a. Financial accounting is less flexible than managerial accounting.

Which of the following is a product cost? a. Insurance on factory machinery b. Advertising costs c. Lease expense on office computer d. Insurance on delivery trucks

a. Insurance on factory machinery

Which of the following is not true regarding the statement of cash flows? a. It is not a required component of a company's external financial statements. b. It explains how cash changed from the end of the previous year to the end of the current year. c. It reports the impact of a firm's operating, investing, and financing activities on cash flows during the accounting period. d. It discloses items that affect the balance sheet, but do not show up on the income statement, such as issuance of stock.

a. It is not a required component of a company's external financial statements.

Hansen Inc. has the following information available for 2011 and 2012: 2011 2012 Net income $600,000 $500,000 Which of the following statements is true regarding horizontal analysis with respect to Hansen? a. It would show net income has decreased by 16.7 percent. b. It would show net income has decreased by 20 percent. c. There is not enough information available to perform horizontal analysis. d. Horizontal analysis can not be performed using net income.

a. It would show net income has decreased by 16.7 percent.

Which of the following is an example of an internal user of accounting information? a. Managers b. Federal tax agency c. Creditors d. Suppliers

a. Managers

Burrows Inc. had an outstanding loan at the beginning of 2011 totaling $50,000. During 2011, $16,800 was paid out related to this loan broken down as follows: $15,000 towards principal and $1,800 in interest. Which of the following statements is correct regarding how the $16,800 payment should be depicted on the statement of cash flows? a. The $15,000 principal portion should be shown as a cash outflow for financing activities, and the $1,800 in interest should be shown as a cash outflow for operating activities. b. The $15,000 principal portion should be shown as a cash outflow for investing activities, and the $1,800 in interest should be shown as a cash outflow for operating activities. c. The entire $16,800 should be shown as a cash outflow for investing activities. d. The entire $16,800 should be shown as a cash outflow for financing activities.

a. The $15,000 principal portion should be shown as a cash outflow for financing activities, and the $1,800 in interest should be shown as a cash outflow for operating activities.

Product costs transferred out of finished goods are called: a. cost of goods sold. b. period costs. c. cost of goods manufactured. d. work in process.

a. cost of goods sold.

A(n) ____ decides whether a company should borrow money or issue stock as a way to raise capital. a. finance manager b. operations/production manager c. human resource manager d. marketing manager

a. finance manager

Drucker Inc. has the following information available for 2011 and 2012: 2011 2012 Current assets $500,000 $700,000 Performing a horizontal analysis on current assets shows that they have: a. increased by 40 percent. b. increased by 3.5 percent. c. increased by 28.6 percent. d. increased by 2.5 percent.

a. increased by 40 percent.

When nonmanufacturing costs are subtracted from gross margin, the result is called: a. net operating income. b. sales. c. nonmanufacturing income. d. cost of goods sold.

a. net operating income.

A(n) ____ decides how much inventory should be kept on hand by the business. a. operations/production manager b. marketing manager c. finance manager d. human resource manager

a. operations/production manager

Costs that differ between alternatives are called: a. relevant costs. b. irrelevant costs. c. sunk costs. d. unavoidable costs.

a. relevant costs.

The easiest part of ratio analysis is: a. the computation of the ratio. b. using the ratio to make decisions. c. the interpretation of the ratio. d. analyzing trends or changes in them.

a. the computation of the ratio.

Solvency measures a company's ability: a. to meet long-term obligations as they become due. b. to make a profit in the long-run. c. to make a profit in the short-run. d. to meet short-term obligations as they become due.

a. to meet long-term obligations as they become due.

Comparing financial statements of different companies and financial statements of the same company across time after controlling for differences in size is called: a. vertical analysis. b. liquidity analysis. c. horizontal analysis. d. price-earnings analysis.

a. vertical analysis.

Johnson Manufacturing has the following selected information available for the year: Direct material purchased $ 40,000 Direct material used 45,000 Direct labor incurred 75,000 Manufacturing overhead incurred 50,000 Cost of goods manufactured 100,000 In addition, the cost of the finished goods inventory increased by $10,000 from the beginning to the end of the year. Cost of goods sold for the year is: a. $110,000. b. $90,000. c. $80,000. d. $170,000.

b. $90,000.

Which ratio measures the length of time between the purchase of inventory and the eventual collection of cash from sales? a. Inventory turnover ratio b. Cash-to-cash operating cycle ratio c. Accounts receivable turnover ratio d. Quick ratio

b. Cash-to-cash operating cycle ratio

Which of the following would be an irrelevant cost? a. Future costs that differ among alternatives. b. Costs that have already been incurred. c. Costs that are avoidable. d. Benefits foregone by choosing one alternative over another.

b. Costs that have already been incurred.

Cash received from the borrowing on a note payable is classified in which section of the statement of cash flows? a. Investing b. Financing c. Operating d. Noncash

b. Financing

Cash received from the issuance of capital stock is classified in which section of the statement of cash flows? a. Operating b. Financing c. Noncash d. Investing

b. Financing

Which ratio gives an indication of how investors believe a company's stock will perform in the future compared to other companies? a. Return on assets b. Price earnings (P/E) c. Return on stockholders' equity d. Earnings per share

b. Price earnings (P/E)

Which of the following is a risk that would more likely be seen in a lean production and just-in-time (JIT) manufacturing environment than in a traditional production environment? a. Increased inventory storage costs. b. Reduced raw material supply bringing the production process to a halt. c. Increased production time resulting in lost sales. d. Reduced customer satisfaction due to product quality.

b. Reduced raw material supply bringing the production process to a halt.

Which of the following statements would be the best interpretation of a company's low debt-to-equity ratio? a. The company prefers to pay stockholders high dividends out of their retained earnings. b. The company prefers to raise funds by issuing capital stock rather than long-term borrowing. c. The company is not liquid. d. The company chooses to pay cash for most of its major purchases.

b. The company prefers to raise funds by issuing capital stock rather than long-term borrowing.

Plumeria Inc. has recently calculated the accounts receivable turnover for the current year to be 15. In prior years, the same ratio was always higher. Which of the following statements would be the best interpretation for the reason for the ratio's change? a. The company had less cash sales in the current year than in prior years. b. The company took longer to collect on their accounts receivable in the current year than in prior years. c. The company had fewer accounts receivable in the current year than in prior years. d. The company had more sales in the current year than in prior years.

b. The company took longer to collect on their accounts receivable in the current year than in prior years.

Materials that can be directly traced to a particular product and become an integral part of the finished product are called: a. product materials. b. direct materials. c. indirect materials. d. supplies.

b. direct materials.

Under ideal conditions, companies operating in a ____ environment would reduce inventories of raw materials, work in process and finished goods to very low levels or even zero. a. traditional manufacturing b. just-in-time c. volatile d. favorable

b. just-in-time

A quick ratio ____ is often a concern for creditors and managers. a. of more than one b. of less than one c. equal to one d. of more than two

b. of less than one

On a common-size income statement, net income should be stated as a percentage of: a. gross profit. b. sales revenue. c. net income. d. total assets.

b. sales revenue.

A company's decision on where to locate a new factory is most likely a result of: a. controlling activities. b. strategic planning. c. operational planning. d. operating activities.

b. strategic planning.

On a common-size balance sheet, current liabilities should be stated as a percentage of: a. net income. b. total liabilities and stockholders' equity. c. total liabilities. d. current liabilities.

b. total liabilities and stockholders' equity.

Franklin Street Manufacturing Franklin Street Manufacturing has the following cost information available for 2011: Direct materials used $10,000 Direct labor costs 25,000 Factory overhead 20,000 Marketing expenses 4,000 Administrative expenses 6,000 20,000 units were produced during the year out of which 19,000 units were sold for $10 each. Refer to the Franklin Street Manufacturing information above. What is net operating income for 2011? (Ignore taxes) a. $137,750 b. $125,000 c. $127,750 d. $128,250

c. $127,750

Hillsborough Street Manufacturing Inc. Hillsborough Street Manufacturing Inc. incurred the following costs in 2011: Direct materials used $51,000 Direct labor costs 45,000 Factory rent and utilities 18,000 Factory equipment depreciation 7,500 Marketing expenses 8,000 Administrative expenses 10,000 45,000 units were produced during the year out of which 38,000 units were sold for $10 each. There was no beginning or ending raw materials or work in process inventory. Refer to the Hillsborough Street Manufacturing Inc. information above. What is the product cost per unit? a. $3.67 b. $3.10 c. $2.70 d. $3.20

c. $2.70

Brenda's Bakery has the following information available for October: Beginning Ending Raw materials $ 4,000 $ 2,000 Work-in-process 32,000 17,000 Finished goods 5,000 3,000 Cost of goods manufactured Ending: 88,000 Cost of goods sold Ending: 90,000 Direct labor costs Ending: 35,000 Factory rent and depreciation Ending: 10,000 Selling expenses Ending: 3,000 How much raw material was purchased in October? a. $28,000 b. $25,000 c. $26,000 d. $23,000

c. $26,000

Jones Manufacturing Inc. Jones Manufacturing Inc. incurred the following costs in November: Direct labor $ 50,000 Advertising costs $ 3,000 Indirect labor 20,000 Factory rent 10,000 Administrative salaries 25,000 Factory depreciation 6,000 Direct materials purchased 23,000 Administrative rent 5,000 Indirect materials used 4,000 Administrative depreciation 7,000 In addition, the following information is also available: Beginning Ending Raw materials $ 5,000 $ 8,000 Work in process 60,000 55,000 Finished goods 17,250 9,200 Number of units produced 20,000 units Number of units sold (sales price of $25 per unit) 21,400 units Refer to the Jones Manufacturing Inc. information above. Net operating income for November is: (Ignore taxes) a. $369,150. b. $411,950. c. $371,950. d. $382,000.

c. $371,950.

Hardister Corp. Hardister Corp. has the following information available from its financial statements for 2012: Balance sheet information: Assets Current assets $400,000 Long-term assets 600,000 Total assets $1,000,000 Income statement information: Sales (all on account) $3,000,000 Cost of goods sold 1,500,000 Salary expense 200,000 Miscellaneous expenses 400,000 Interest expense 100,000 Income before taxes $800,000 Income tax expense 300,000 Net income $500,000 Liabilities Current liabilities $200,000 Long-term liabilities 100,000 Total liabilities $300,000 Stockholders' Equity Capital stock $300,000 Retained earnings 400,000 Total Stockholders' Equity $700,000 Refer to the Hardister Corp. information above. Hardister's debt-to-equity ratio is: (round to two decimal places) a. .25. b. .75. c. .43. d. .50.

c. .43.

Bernstein Inc. Bernstein Inc. is a local retailer. The following selected information is available from their 2011 and 2012 financial statements: Accounts receivable at 12/31/11 $160,000 Accounts receivable at 12/31/12 240,000 Inventory at 12/31/11 300,000 Inventory at 12/31/12 360,000 Net credit sales for 2012 3,400,000 Cost of goods sold for 2012 1,980,000 Net income for 2012 1,000,000 Refer to the Bernstein Inc. information above. What was Bernstein's number of days sales in receivables for 2012? (round to two decimal places) a. 73.00 days b. 146.00 days c. 21.47 days d. 42.94 days

c. 21.47 days

Neptune Ltd. has the following information available for 2011 and 2012: 2011 2012 Current assets $120,000 $240,000 Long-term assets 60,000 120,000 Total assets $180,000 $360,000 Converting the 2012 column into a common-size statement would show current assets as being: a. 50 percent higher than 2012 long-term assets. b. 60 percent higher than 2011 current assets. c. 67 percent of 2012 total assets. d. 71 percent of 2011 total assets.

c. 67 percent of 2012 total assets.

Working capital is computed as: a. Long-term assets - Long-term liabilities. b. Current assets - Long-term assets. c. Current assets - Current liabilities. d. Current assets ÷ Current liabilities.

c. Current assets - Current liabilities.

Which of the following is an advantage of lean production and just-in-time (JIT) manufacturing systems? a. Reduced reliance on highly skilled employees b. Increased reliance on more suppliers. c. Improved product quality and reduced processing time. d. Deliver the product to the customer on time, even if the workers go on a strike.

c. Improved product quality and reduced processing time.

Companies that operate in a lean production and just-in-time manufacturing environment are more likely to experience which of the following? a. Increased levels of raw materials inventory. b. Increased production time. c. Increased product quality. d. Reduced manufacturing flexibility.

c. Increased product quality.

Which of the following is a characteristic of managerial accounting? a. It is used primarily by external users. b. The information it provides is extremely precise. c. It is often future-oriented. d. It often lacks flexibility.

c. It is often future-oriented.

Which of the following is an example of a manufacturing overhead cost? a. Supplies used by a salesperson. b. Materials easily traced to a specific product. c. Lubricants used by factory maintenance workers. d. Supplies used by administrative staff.

c. Lubricants used by factory maintenance workers.

Which of the following is not an example of an external user of accounting information? a. Government taxing agencies b. Potential and existing stockholders c. Management d. Potential and existing creditors

c. Management

Cash received from customers is classified in which section of the statement of cash flows? a. Noncash b. Financing c. Operating d. Investing

c. Operating

Which of the following ratios is the best measure of liquidity? a. Times-interest-earned ratio b. Debt-to-equity ratio c. Quick ratio d. Return on assets ratio

c. Quick ratio

Which of the following statements is false regarding nonmanufacturing costs? a. They include selling and administrative costs. b. They are incurred outside the factory. c. They include indirect materials and indirect labor costs. d. They are not directly incurred to make a product.

c. They include indirect materials and indirect labor costs.

Which of the following ratios would be the best measure of solvency? a. Return on assets ratio b. Price earnings ratio c. Times-interest-earned ratio d. Current ratio

c. Times-interest-earned ratio

The main purpose of the statement of cash flows is to provide information about: a. a company's assets, liabilities, and stockholders' equity at a point in time. b. a company's revenues and expenses for a period of time. c. a company's cash inflows and outflows for a period of time. d. the changes in stockholders' equity of a company for a period of time.

c. a company's cash inflows and outflows for a period of time.

In a just-in-time environment, the production process often begins when: a. products are moved from raw materials to work in process. b. the product is delivered to a customer. c. a customer places an order. d. products are moved from work in process to finished goods.

c. a customer places an order.

ERP systems capture: a. the same information as traditional accounting information systems. b. only quantitative data. c. both qualitative and quantitative data. d. only qualitative data.

c. both qualitative and quantitative data.

Manufacturing costs typically consist of: a. direct materials, direct labor, and administrative costs. b. manufacturing overhead and selling costs. c. direct materials, direct labor, and manufacturing overhead. d. production and shipping costs.

c. direct materials, direct labor, and manufacturing overhead.

Analyzing financial statement account balances over time for the same company is called: a. vertical analysis. b. price analysis. c. horizontal analysis. d. common-size analysis.

c. horizontal analysis.

An example of quantitative data is: a. company reputation. b. product quality. c. number of customer complaints. d. employee satisfaction.

c. number of customer complaints.

Products and their costs flow through a production facility in the following order: a. work in process, raw materials, cost of goods sold, finished goods b. work in process, finished goods, cost of goods sold c. raw materials, work in process, finished goods, cost of goods sold d. work-in-process, cost of goods manufactured, cost of goods sold

c. raw materials, work in process, finished goods, cost of goods sold

Partin Manufacturing Partin Manufacturing has the following information available from its 12/31/12 and 12/31/11 financial statements: 12/31/12 Cash $12,000 Accounts payable $10,000 Accounts receivable 6,000 Salaries payable 3,000 Inventory 40,000 Taxes payable 9,000 Prepaid insurance 2,000 Total current liabilities $22,000 Total current assets $60,000 Notes payable 50,000 Property and equipment 80,000 Total long-term liabilities $50,000 Land 20,000 Total liabilities $72,000 Long-term assets $100,000 Capital stock 60,000 Retained earnings 28,000 Total stockholders' equity $88,000 Total assets $160,000 Total liabilities and stockholders' equity $160,000 Other information: Net income in 2012 $25,000 Inventory (12/31/11) 50,000 Credit sales in 2012 80,000 Cost of goods sold in 2012 45,000 Accounts receivable (12/31/11) 10,000 Refer to the Partin Manufacturing information above. Partin's debt-to-equity ratio for the year 2012 is: (round to two decimal places) a. .14. b. .25. c. .45. d. .82.

d. .82.

Partin Manufacturing Partin Manufacturing has the following information available from its 12/31/12 and 12/31/11 financial statements: 12/31/12 Cash $12,000 Accounts payable $10,000 Accounts receivable 6,000 Salaries payable 3,000 Inventory 40,000 Taxes payable 9,000 Prepaid insurance 2,000 Total current liabilities $22,000 Total current assets $60,000 Notes payable 50,000 Property and equipment 80,000 Total long-term liabilities $50,000 Land 20,000 Total liabilities $72,000 Long-term assets $100,000 Capital stock 60,000 Retained earnings 28,000 Total stockholders' equity $88,000 Total assets $160,000 Total liabilities and stockholders' equity $160,000 Other information: Net income in 2012 $25,000 Inventory (12/31/11) 50,000 Credit sales in 2012 80,000 Cost of goods sold in 2012 45,000 Accounts receivable (12/31/11) 10,000 Refer to the Partin Manufacturing information above. Partin's quick (or acid-test) ratio for the year 2012 is: (round to two decimal places) a. 1.39. b. 2.67. c. 2.73. d. .82.

d. .82.

Hardister Corp. Hardister Corp. has the following information available from its financial statements for 2012: Balance sheet information: Assets Current assets $400,000 Long-term assets 600,000 Total assets $1,000,000 Income statement information: Sales (all on account) $3,000,000 Cost of goods sold 1,500,000 Salary expense 200,000 Miscellaneous expenses 400,000 Interest expense 100,000 Income before taxes $800,000 Income tax expense 300,000 Net income $500,000 Liabilities Current liabilities $200,000 Long-term liabilities 100,000 Total liabilities $300,000 Stockholders' Equity Capital stock $300,000 Retained earnings 400,000 Total Stockholders' Equity $700,000 Refer to the Hardister Corp. information above. Assuming Hardister had total assets at the end of 2011 of $800,000 and an income tax rate of 37.5 percent, what would be return on assets for 2012? (round to the nearest whole percent) a. 43% b. 59% c. 57% d. 63%

d. 63%

Grogan Inc. Grogan Inc. had the following information available from its 2011 and 2012 financial statements: Balance sheet information: 2011 2012 Current assets $15,000 $20,000 Long-term assets 107,000 207,000 Total assets $122,000 $227,000 Current liabilities $16,000 $11,500 Long-term liabilities 40,000 60,000 Total liabilities $56,000 $71,500 Common stock $30,000 $71,750 Retained earnings 36,000 83,750 Total stockholders' equity $66,000 $155,500 Income statement information: Income before interest and taxes $50,000 $105,000 Interest expense 4,000 6,000 Tax expense 10,000 26,250 Net income $36,000 $72,750 Other information: Dividends paid to stockholders $0 $25,000 Average income tax rate 20% 25% Net cash flows from operations $25,000 $75,000 Cash paid for acquisitions $10,000 $85,000 Refer to the Grogan Inc. information above. Grogan had an average of 7,000 shares of common stock outstanding during 2012. At the end of the year, the market price per share was $100. The company's price earnings (P/E) ratio for 2012 is: (round to two decimal places) a. 6.67 to 1. b. 19.44 to 1. c. 14.66 to 1. d. 9.62 to 1.

d. 9.62 to 1.

Which of the following types of organizations is most likely to have a raw materials inventory account? a. A retailer. b. A service provider. c. A wholesaler. d. A manufacturer.

d. A manufacturer.

Which of the following statements is true regarding ratio analysis? a. A ratio for a particular company is unique and, therefore, should not be compared to other companies' ratios. b. Ratio analysis should be kept as simple as possible, which is often accomplished by using just one ratio to measure a company's performance. c. Ratio analysis will not be affected by different accounting methods or assumptions. d. A ratio for a particular company is often compared to industry standards using various publications.

d. A ratio for a particular company is often compared to industry standards using various publications.

Which of the following statements is true regarding ethics in decision-making? a. Since most business decisions are simply a matter of economics, ethical considerations should be ignored. b. Business managers will always agree on ethical choices. c. Managerial accountants do not face ethical issues. d. Decision-making can have an ethical as well as an economic impact.

d. Decision-making can have an ethical as well as an economic impact.

Which of the following is a disadvantage of lean production and just-in-time (JIT) manufacturing systems? a. Increased product defects b. Decreased flexibility of manufacturing facilities c. Increased customer delivery time d. Increased reliance on fewer suppliers

d. Increased reliance on fewer suppliers

Which of the following items is not typically used to prepare financial statements? a. Assumptions b. Historical costs c. Estimations d. Inflation adjustments

d. Inflation adjustments

Cash received from the sale of long-term investments is classified in which section of the statement of cash flows? a. Operating b. Financing c. Noncash d. Investing

d. Investing

Cash received from the sale of property is classified in which section of the statement of cash flows? a. Operating b. Financing c. Noncash d. Investing

d. Investing

____ involve(s) the development of short-terms objectives and goals. a. Strategic planning b. Financial activities c. Controlling activities d. Operational planning

d. Operational planning

Which of the following statements about decision-making is true? a. Objectives should be quantitative and not qualitative. b. Risk should not be taken into account. c. Sunk costs should usually be taken into account. d. Opportunity cost should be considered.

d. Opportunity cost should be considered.

Which of the following statements about manufacturing in a traditional environment is true? a. Factories are organized with machines that are dissimilar grouped together. b. The process begins with a customer order and products are "pulled" through the manufacturing process. c. It is not desirable to accumulate raw materials inventory to serve as buffers in case of unexpected demand for products. d. Partially completed inventory is accumulated in a work in process inventory account.

d. Partially completed inventory is accumulated in a work in process inventory account.

Which of the following statements is true about manufacturing companies over the past 20 years? a. The basic production process has changed very little over the past 20 years. b. They have moved from a "pull" approach to more of a "push" approach. c. Carrying large amounts of inventory is often less costly than carrying small amounts of inventory. d. The grouping of machines into "manufacturing cells" has increased.

d. The grouping of machines into "manufacturing cells" has increased.

Which of the following statements is true regarding manufacturing costs? a. They will be appear on the income statement as the product is made. b. They will not appear on the income statement or the balance sheet until the product is completed. c. They will appear on the balance sheet as an inventory cost after the product is sold. d. They will appear on the balance sheet as an inventory cost until the product is sold.

d. They will appear on the balance sheet as an inventory cost until the product is sold.

Which of the following statements is true regarding period costs? a. They will not impact gross margin or net operating income. b. They will appear the balance sheet until the product is sold. c. They "attach" themselves to the product. d. They will appear on the income statement in the year they are incurred.

d. They will appear on the income statement in the year they are incurred.

Product costs transferred into finished goods inventory are called: a. raw materials used. b. cost of goods sold. c. period costs. d. cost of goods manufactured.

d. cost of goods manufactured

The main focus of managerial accounting is: a. the preparation of budgets. b. the preparation of financial statements. c. documenting cash flows. d. decision making.

d. decision making.

Relevant costs are costs that: a. have already been incurred. b. do not differ between alternatives. c. may not be eliminated by choosing one alternative over another. d. differ between alternatives.

d. differ between alternatives.

Manufacturing overhead includes: a. sales commissions. b. advertising costs. c. shipping charges for finished goods. d. indirect materials.

d. indirect materials.

Mary Ann is trying to decide whether to fly to Florida or New York. The cost of her ticket will be the same either way. The cost of the ticket is an example of: a. sunk cost. b. avoidable cost. c. opportunity cost. d. irrelevant cost.

d. irrelevant cost.

Sunk costs are: a. costs that will occur in the future. b. costs that can be avoided. c. opportunity cost. d. not relevant.

d. not relevant.

You are now considering your housing options for next semester. If the cost of a dorm room and the cost of an apartment are exactly the same, housing costs are: a. an opportunity cost. b. avoidable. c. sunk costs. d. not relevant.

d. not relevant.

A(n) ____ would most likely decide whether or not employees need to work overtime in order to fill a special order. a. finance manager b. marketing manager c. human resource manager d. operations/production manager

d. operations/production manager

On a common-size income statement, operating expenses should be stated as a percentage of: a. total assets. b. operating income. c. net income. d. sales revenue.

d. sales revenue.

You are now considering your housing options for next semester. If the cost of a dorm room and the cost of an apartment are the same, but the apartment is larger, then: a. both cost and size are relevant. b. cost is relevant but size is not. c. neither cost nor size is relevant. d. size is relevant but cost is not.

d. size is relevant but cost is not.

On a common-size balance sheet, current assets should be stated as a percentage of: a. net income. b. current assets. c. cash. d. total assets.

d. total assets.