Acct Exam 4

A $1,000 face value bond with a quoted price of 98 is selling for a) $980. b) $908. c) $1,000. d) $98.

A

A corporation recognizes a gain or loss a) only when bonds are redeemed before maturity. b) when bonds are converted into common stock and when they are redeemed before maturity. c) only when bonds are converted into common stock. d) when bonds are redeemed at or before maturity.

A

Financing activities involve a) issuing debt. b) acquiring long-lived assets. c) acquiring investments. d) lending money.

A

Generally, the most important category on the statement of cash flows is cash flows from a) operating activities. b) financing activities. c) investing activities. d) significant noncash activities.

A

If a company reports a net loss on the income statement, it a) may still have a net increase in cash. b) will not be able to make capital expenditures. c) will not be able to get a loan. d) will not be able to pay cash dividends.

A

Indicate where the issuance of common stock issued for cash would appear, if at all, on the indirect statement of cash flows. a) Financing activities section b) Investing activities section c) Does not represent a cash flow d) Operating activities section

A

Managerial accounting reports can be described as a) special-purpose. b) classified financial statements. c) general-purpose. d) macro-reports.

A

Secured bonds are bonds that a) have specific assets of the issuer pledged as collateral. b) are registered in the name of the owner. c) have detachable interest coupons. d) are in the possession of a bank.

A

The acquisition of land by issuing common stock is a) a noncash transaction which is not reported in the body of a statement of cash flows. b) only reported if the statement of cash flows is prepared using the direct method. c) a noncash transaction and would be reported in the body of a statement of cash flows. d) a cash transaction and would be reported in the body of a statement of cash flows.

A

The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is a) direct labor. b) manufacturing overhead. c) indirect labor. d) indirect materials.

A

Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2,050,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2,100,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12? a) $102,500 b) $105,000 c) $2,100 d) $2,050

A

Which of the following transactions does not affect cash during a period? a) Write-off of an uncollectible account b) Sale of treasury stock c) Collection of an accounts receivable d) Exercise of the call option on bonds payable

A

Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period? a) The sum of the costs shown on the job cost sheets of unfinished jobs b) The total of the amounts transferred from raw materials for the current period c) The total manufacturing costs for the period d) The total of manufacturing overhead applied to work in process for the period

A

Bond interest paid is a) higher when bonds sell at a discount and lower when bonds sell at a premium. b) lower when bonds sell at a premium. c) the same whether bonds sell at a discount or a premium. d) higher when bonds sell at a discount.

C

Direct materials $80,000, direct labor 120,000 manufacturing overhead applied 60,000: units produced 5,000 units sold 4,000: The cost of the finished goods on hand from this job is? a) $40,000 b) $260,000 c) $52,000 d) $208,000

C

If the market interest rate is greater than the contractual interest rate, bonds will sell a) only after the stated interest rate is increased. b) at a premium. c) at a discount. d) at face value.

C

In Jude Company, land decreased $150,000 because of a cash sale for $150,000, the equipment account increased $60,000 as a result of a cash purchase, and Bonds Payable increased $120,000 from issuance for cash at face value. The net cash provided by investing activities is a) $150,000. b) $270,000. c) $90,000. d) $210,000.

C

Overhead application is recorded with a a) debit to Manufacturing Overhead. b) credit to job cost sheets. c) credit to Manufacturing Overhead. d) credit to Work in Process Inventory.

C

Planning is a function that involves a) hiring the right people for a particular job. b) coordinating the accounting information system. c) setting goals and objectives for an entity. d) analyzing financial statements.

C

Premium on Bonds Payable a) is deducted from bonds payable on the balance sheet. b) is a contra account. c) is considered to be a reduction in the cost of borrowing. d) has a debit balance.

C

Rikki Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2020. The bonds had a face value of $200,000, pay interest annually on December 31, and have a call price of 101. Rikki uses the straight-line method of amortization. What is the amount of interest Rikki must pay the bondholders in 2020? a) $10,800 b) $11,200 c) $12,000 d) $13,200

C

Sales commissions are classified as a) indirect labor. b) product costs. c) period costs. d) overhead costs.

C

Significant noncash transactions would not include a) asset acquisition through bond issuance. b) conversion of bonds into common stock. c) treasury stock acquisition. d) exchange of plant assets.

C

The labor costs that have been identified as indirect labor should be charged to a) the individual jobs worked on. b) direct labor. c) manufacturing overhead. d) salary expense.

C

The statement of cash flows a) is another name for the income statement. b) is a special section of the income statement. c) summarizes the operating, financing, and investing activities of an entity. d) must be prepared on a daily basis.

C

The wages of a timekeeper in the factory would be classified as a) direct labor. b) compliance costs. c) indirect labor. d) a period cost.

C

Vision Company purchased treasury stock with a cost of $16,000 during 2020. During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $860,000. Cash flows from financing activities for 2020 total a) $860,000 net cash outflow. b) $856,000 net cash inflow. c) $824,000 net cash inflow. d) $840,000 net cash inflow.

C

What is work in process inventory generally described as? a) Beginning stage production costs associated with labor costs dealing with bringing in raw materials from the shipping docks b) Costs strictly associated with direct labor c) Costs applicable to units that have been started in production but are only partially completed d) Costs associated with the end stage of manufacturing that are almost always complete and ready for customers

C

Which of the following is not an internal user? a) Treasurer b) Controller c) Creditor d) Department manager

C

A company assigned overhead to work in process. At year end, what does the amount of over applied overhead mean? a) The overhead assigned to work in process is less than the actual overhead. b) The overhead assigned to work in process is less than the estimated overhead costs. c) The overhead assigned to work in process is greater than the estimated overhead costs. d) The overhead assigned to work in process is greater than the overhead incurred.

D

A company expected its annual overhead costs to be $1,500,000 and direct labor costs to be $1,000,000. Actual overhead was $1,450,000, and actual labor costs totaled $1,100,000. How much is the company's predetermined overhead rate to the nearest cent? a) $1.45 b) $1.37 c) $1.31 d) $1.50

D

A process cost system would most likely be used by a company that makes a) repairs to automobiles. b) college graduation announcements. c) motion pictures. d) breakfast cereal.

D

An important feature of a job order cost system is that each job a) must be completed before a new job is accepted. b) consists of one unit of output. c) must be similar to previous jobs completed. d) has its own distinguishing characteristics.

D

At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting a) Finished Goods Inventory. b) Raw Materials Inventory. c) Work In Process Inventory. d) Cost of Goods Sold.

D

Edmiston Company reported the following year-end information: beginning work in process inventory, $80,000; cost of goods manufactured, $750,000; beginning finished goods inventory, $50,000; ending work in process inventory, $70,000; and ending finished goods inventory, $40,000. How much is Edmiston's cost of goods sold for the year? a) $770,000 b) $740,000 c) $750,000 d) $760,000

D

Indicate where the purchase of land for cash would appear, if at all, on the indirect statement of cash flows. a) Financing activities section b) Does not represent a cash flow c) Operating activities section d) Investing activities section

D

Lending money and collecting the loans are a) Non-cash investing and financing activities. b) financing activities. c) operating activities. d) investing activities.

D

On the cost of goods manufactured schedule, the cost of goods manufactured agrees with the a) total debits to Work in Process Inventory during the period. b) debits to Cost of Goods Sold during the period. c) balance of Finished Goods Inventory at the end of the period. d) amount transferred from Work in Process Inventory to Finished Goods during the period.

D

On the costs of goods manufactured schedule, depreciation on factory equipment a) is not listed because it is not a product cost. b) is not an inventoriable cost. c) is not listed because it is included with Depreciation Expense on the income statement. d) appears in the manufacturing overhead section.

D

The contractual interest rate of a bond is always stated as a(n) a) monthly rate. b) daily rate. c) semiannual rate. d) annual rate.

D

The two basic types of cost accounting systems are a) process cost and batch systems. b) job order and batch systems. c) job order and job accumulation systems. d) job order and process cost systems.

D

When authorizing bonds to be issued, the board of directors does not specify the a) contractual interest rate. b) total number of bonds authorized to be sold. c) total face value of the bonds. d) selling price.

D

Which of the following is not classified as direct labor? a) Bottlers of beer in a brewery b) Bakers in a bakery c) Copy machine operators at a copy shop d) Wages of supervisors

D

Which one of the following best describes a job cost sheet? a) It is a daily form that management uses for tracking worker productivity on which employee raises are based. b) It is used to track manufacturing overhead costs to specific jobs. c) It is used by management to understand how direct costs affect profitability. d) It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.

D

Which one of the following is not a direct material? a) A tire used for a lawn mower b) Plastic used in the covered case for a home PC c) Steel used in the manufacturing of steel-radial tires d) Lubricant for a ball-bearing joint for a large crane

D

Which one of the following items is not necessary in preparing a statement of cash flows? a) Determine cash from financing and investing activities b) Determine the cash provided by operations c) Determine the change in cash d) Determine the cash in all bank accounts

D

Accounts receivable arising from sales to customers amounted to $86,000 and $77,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $290,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a) $280,000. b) $299,000. c) $213,000. d) $290,000.

B

Because of automation, which component of product cost is declining? a) Advertising b) Direct labor c) Direct materials d) Manufacturing overhead

B

Bonds issued against the general credit of the borrower are called a) mortgage bonds. b) debenture bonds. c) sinking fund bonds. d) callable bonds.

B

Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer are called a) early retirement bonds. b) callable bonds. c) debentures. d) options.

B

Bonds that may be exchanged for common stock at the option of the bondholders are called a) options. b) convertible bonds. c) callable bonds. d) stock bonds.

B

Cash receipts from interest and dividends are classified as a) either financing or investing activities. b) operating activities. c) investing activities. d) financing activities.

B

Cost of raw materials is debited to Raw Materials Inventory when the a) materials are put into production. b) materials are received. c) bill for the materials is paid. d) materials are ordered.

B

Factory Labor is a(n) a) control account. b) temporary account. c) subsidiary account. d) expense account.

B

Financial statements for external users can be described as a) special-purpose. b) general-purpose. c) user-specific. d) managerial reports.

B

In the balance sheet, mortgage notes payable are reported as a) a current liability only. b) both a current and a long-term liability. c) a long-term liability only. d) a current liability except for the reduction in principal amount.

B

Managerial accounting applies to each of the following types of businesses except a) merchandising firms. b) Managerial accounting applies to all types of firms. c) service firms. d) manufacturing firms.

B

The interest rate investors demand for loaning funds is the a) stated rate. b) market interest rate. c) bond interest rate. d) contractual interest rate.

B

The predetermined overhead rate is a) determined at the end of the current year. b) determined at the beginning of the year. c) determined on a moving average basis throughout the year. d) not calculated until actual overhead costs are incurred.

B

Which one of the following would not be classified as manufacturing overhead? a) Insurance on factory building b) Direct materials c) Indirect labor d) Indirect materials

B

A bond with a face value of $200,000 and a quoted price of 102⅛ has a selling price of a) $200,225. b) $240,225. c) $204,250. d) $204,025.

C