Final Exam Review ACG Ch.11-15

Ch.11 The balance in the discount on bonds payable account would usually be reported on the balance sheet in the: "Current assets" section. "Current liabilities" section. "Long-term liabilities" section. "Investments" section.

"Long-term liabilities" section.

ch.15 For the month of May, Latter Company has beginning finished goods inventory of $50,000, ending finished goods inventory of $35,000, and cost of goods manufactured of $125,000. What is the cost of goods sold for May? $90,000 $110,000 $140,000 $170,000

$140,000 Beg. Inv. 50,000 COGM 125,000 End. Inv. (35,000) = COGS 140,000

Ch.11 Which of the following is the entry to amortize a discount on bonds? Debit Discount on Bonds Payable; credit Interest Expense; credit Cash Debit Bonds Payable; credit Discount on Bonds Payable; credit Cash Debit Interest Expense; credit Discount on Bonds Payable; credit Cash Debit Premium on Bonds Payable; credit Interest Expense; credit Cash

Debit Interest Expense; credit Discount on Bonds Payable; credit Cash

ch.15 Which of the following costs would be included as part of the factory overhead costs of a microcomputer manufacturer? The cost of memory chips Depreciation of testing equipment Wages of microcomputer assemblers The cost of disk drives

Depreciation of testing equipment this is F/OH

Ch.14 The ability of a company to pay its debts is called: earnings per share. liquidity. profitability. solvency.

Solvency Earnings per share (answer a) measures the share of profits that are earned by a share of common stock. Liquidity (answer b) is the ability of a company to convert current assets into cash. Profitability (answer c) focuses on the ability of a company to earn profits by examining the relationship between operating results and the resources available.

Ch.14 What type of analysis is indicated by the following? Current assets 100,000 20% Prop, Plant, equip 400,000 80% Total assets 500,000 100% Vertical analysis Horizontal analysis Liquidity analysis Profitability analysis

Vertical Analysis Vertical analysis compares each component in a financial statement to a total within the statement.

ch.14 A measure useful in evaluating efficiency in the management of inventories is the: working capital. quick ratio. days' sales in inventory. ratio of fixed assets to long-term liabilities.

days' sales in inventory The days' sales in inventory is a measure of the length of time it takes to purchase, sell, and replace the inventory.

ch.15 Which of the following is not one of the four basic functions of the management process? Strategic planning Evaluation Control Operating

operating the missing one of the four basic functions is measurement

Ch.13 An example of a cash flow for a financing activity is: receipt of cash from customers on account. receipt of cash from the sale of equipment. payment of cash for dividends. payment of cash to acquire land.

payment of cash for dividends

ch.14 The ratio that measures the "instant" debt-paying ability of a firm, by focusing on current assets that can be easily converted to cash, is the: working capital. quick ratio. days' sales in inventory. ratio of fixed assets to long-term liabilities.

quick ratio

Ch.14 The ratio that measures how much of a company is financed by debt and equity is the: current ratio. ratio of fixed assets to long-term liabilities. ratio of liabilities to stockholders' equity. price-earnings ratio.

ratio of liabilities to stockholders' equity.

Ch.13 An example of a cash flow from an operating activity is: receipt of cash from the sale of stock. receipt of cash from the sale of bonds. payment of cash for dividends. receipt of cash from customers on account.

receipt of cash from customers on account.

Ch.13 An example of a cash flow from an investing activity is: receipt of cash from the sale of equipment. receipt of cash from the sale of stock. payment of cash for dividends. payment of cash to acquire treasury stock.

receipt of cash from sale of equipment

ch.15 Which of the following is not considered a cost of manufacturing a product? Direct materials cost Factory overhead cost Sales salaries Direct labor cost

sales salaries this is a selling expense and not part of manufacturing

Ch.13 The net income reported on the income statement for the year was $55,000, and depreciation of fixed assets for the year was $22,000. The balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of YearCash$ 65,000 $ 70,000 Accounts receivable100,000 90,000 Inventories145,000 150,000 Prepaid expenses7,500 8,000 Accounts payable (merchandise creditors)51,000 58,000 The net cash flows from operating activities on the statement of cash flows using the indirect method is: $33,000. $55,000. $65,500 $77,000.

$65,500. Net Income $55,000 Depreciation $22,000 Increase in A/R (10,000) Decrease in Inventories 5,000 Decrease in prepaid expenses 500 Decrease in A/P (7,000)

Ch.11 If the bonds payable account has a balance of $900,000 and the discount on bonds payable account has a balance of $72,000, what is the carrying amount of the bonds? $828,000 $900,000 $972,000 $580,000

$828,000 900,000 - 72,000 The bond carrying amount is the face amount less any unamortized discount.

Ch.13 Which of the following methods of reporting cash flows from (used for) operating activities adjusts net income for revenues and expenses not involving the receipt or payment of cash? Direct method Purchase method Reciprocal method Indirect method

Indirect method Reason: The indirect method (answer d) reports cash flows from (used for) operating activities by beginning with net income and adjusting it for revenues and expenses not involving the receipt or payment of cash.

ch.15 Which of the following best describes the difference between financial and managerial accounting? Managerial accounting provides information to support decisions, while financial accounting does not. Managerial accounting is not restricted to generally accepted accounting principles, while financial accounting is restricted to GAAP. Managerial accounting does not result in financial reports, while financial accounting does result in financial reports. Managerial accounting is concerned solely with the future and does not record events from the past, while financial accounting records only events from past transactions.

Managerial accounting is not restricted to generally accepted accounting principles, while financial accounting is restricted to GAAP.

Ch.11 If a corporation plans to issue $1,000,000 of 5% bonds at a time when the market rate for similar bonds is 4%, the bonds can be expected to sell at: their face amount. a premium. a discount. a premium or discount.

a premium

Ch.11 The proceeds received from issuing bonds depends on which of the following? Coupon rate of interest Market rate of interest Principal All of these

all of these