Accounting 600 Final

Prepaid expenses have a. been incurred and paid b. been recorded as expenses and paid c. not yet been recorded as expenses but have been paid d. not yet been recorded as expenses or paid

? d. not yet been recorded as expenses or paid

A business organized as a separate legal entity from its owners is a: Partnership Government unit Corporation Proprietor

Corporation

Astin Company has current assets of $82,530, total assets of $242,050, total net income of $58,240, current liabilities of $72,120, and total liabilities of $205,300. Astin's Company's working capital is a. $68,650 b. $24,920 c. $10,410 d. $36,570

c. $10,410

For Year 2 Daisy Corporation reported net income of $60; net sales $800; and average shares outstanding 6. There were no preferred stock dividends. What were the Year 2 earnings per share for Daisy? $10.00 $143.33 $133.33 $0.40

$10.00

If total assets are $100,000, liabilities are $60,000, and Common Stock is $25,000, the Retained Earnings of the firm is: $160,000 $15,000 $135,000 $185,000

$15,000

The interest charged on a $400 note payable, at the rate of 6%, on a 90-day note would be $12 $24 $2 $6

$6

ABC Company showed the following information at the end of the first year: Cash received from customers $600 Revenue earned $700 Expenses accrued, including depreciation 146 Proceeds from a bank loan to purchase computer 160 Cash paid for computer to be used for 4 years 200 Cash paid for expenses 340 What is the company's net income for the year based on the accrual basis of accounting? $214 $554 $604 $864

?

As of January 1 of the current year, Grackle Company had accounts receivable of $50,000. The sales for January, February, and March were $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. The total cash collected (both from accounts receivable and cash sales) in the month of March is a. $74,800 b. $146,800 c. $116,800 d. $102,000

?

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations. May 1 Purchased 500 units @ $25.00 each 4 Purchased 300 units @ $24.00 each 6 Sold 400 units @ $38.00 each 8 Purchased 700 units @ $23.00 each 13 Sold 450 units @ $37.50 each 20 Purchased 250 units @ $25.25 each 22 Sold 275 units @ $36.00 each 27 Sold 300 units @ $37.00 each 28 Purchased 550 units @ $26.00 each 30 Sold 100 units @ $39.00 each Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the LIFO perpetual inventory method. a. Total sales: $56,975.00 Cost of goods sold: $36,587.50 Gross profit: $20,387.50 Ending inventory: $19,825.00 b. Total sales: $56,975.00 Cost of goods sold: $36,431.25 Gross profit: $20,543.75 Ending inventory: $19,981.2 c. Total sales: $56,975.00 Cost of goods sold: $37,401.75 Gross profit: $19,573.25 Ending inventory: $19,010.75 d. Total sales: $56,975.00 Cost of goods sold: $37,312.50 Gross profit: $19,662.50 Ending inventory: $19,573.25

?

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations. May 1 Purchased 500 units @ $25.00 each 4 Purchased 300 units @ $24.00 each 6 Sold 400 units @ $38.00 each 8 Purchased 700 units @ $23.00 each 13 Sold 450 units @ $37.50 each 20 Purchased 250 units @ $25.25 each 22 Sold 275 units @ $36.00 each 27 Sold 300 units @ $37.00 each 28 Purchased 550 units @ $26.00 each 30 Sold 100 units @ $39.00 each Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the average cost periodic inventory method. Round the average to the nearest cent. a. Total sales: $56,975.00 Cost of goods sold: $36,431.25 Gross profit: $20,543.75 Ending inventory: $19,981.2 b. Total sales: $56,975.00 Cost of goods sold: $37,401.75 Gross profit: $19,573.25 Ending inventory: $19,010.75 c. Total sales: $56,975.00 Cost of goods sold: $36,587.50 Gross profit: $20,387.50 Ending inventory: $19,825.00 d. Total sales: $56,975.00 Cost of goods sold: $37,312.50 Gross profit: $19,662.50 Ending inventory: $19,573.25

?

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations. May 1 Purchased 500 units @ $25.00 each 4 Purchased 300 units @ $24.00 each 6 Sold 400 units @ $38.00 each 8 Purchased 700 units @ $23.00 each 13 Sold 450 units @ $37.50 each 20 Purchased 250 units @ $25.25 each 22 Sold 275 units @ $36.00 each 27 Sold 300 units @ $37.00 each 28 Purchased 550 units @ $26.00 each 30 Sold 100 units @ $39.00 each Question 26 Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the FIFO perpetual inventory method. a. Total sales: $56,975.00 Cost of goods sold: $37,401.75 Gross profit: $19,573.25 Ending inventory: $19,010.75 b. Total sales: $56,975.00 Cost of goods sold: $36,587.50 Gross profit: $20,387.50 Ending inventory: $19,825.00 c. Total sales: $56,975.00 Cost of goods sold: $37,312.50 Gross profit: $19,662.50 Ending inventory: $19,573.25 d. Total sales: $56,975.00 Cost of goods sold: $36,431.25 Gross profit: $20,543.75 Ending inventory: $19,981.2

?

Richardson Company has a condensed income statement as shown. Year 2 Year 1 Sales $150,000 $165,500 Total operating expenses 133,000 147,500 Net income 17,000 18,000 Using horizontal analysis, calculate the amount and percent change for sales. Round percentages to one decimal place. a. $15,500, 10.3% b. ($15,500), (9.4%) c. $15,500, 19.6% d. ($15,500), (10.3%)

?

Shores Sports rents canoes and kayaks. Below is the adjusted trial balance at December 31. Debit Credit Cash 1,500 Accounts Receivable 2,000 Interest Receivable 100 Prepaid Insurance 1,600 Notes Receivable (longterm) 2,800 Equipment 15,000 Accumulated Depreciation 3,000 Accounts Payable 2,400 Accrued Expenses Payable 3,920 Income Taxes Payable 2,700 Unearned Rent Fees 500 Common Stock 7,700 Dividends 2,000 Rental Revenue 37,000 Service Revenue 1,300 Wages Expense 19,000 Depreciation Expense 1,800 Utilities Expense 320 Insurance Expense 700 Maintenance Expense 9,000 Income Tax Expense 2,700 Totals 58,520 58,520 The entry required to close the revenue and expense accounts at the end of the period includes a: a. credit to Retained Earnings for $33,520 b. credit to Retained Earnings for $4,780 c. debit to Retained Earnings for $33,520 d. debit to Retained Earnings for $4,780

?

The accounts in the ledger of Nilles Consulting Co. are listed below. All accounts have normal balances. Accounts Payable $1,800 Fees Earned $6,800 Accounts Receivable 2,800 Insurance Expense 1,300 Prepaid Insurance 1,000 Land 5,000 Cash 5,500 Wages Expense 2,100 Unearned Rent 1,800 Utilities Expense 300 Office Equipment 3,600 Common Stock 10,000 Dividends 1,000 Retained Earnings 5,800 Prepare a trial balance. The total of the credits is a. $21,300 b. $26,200 c. $22,600 d. $15,800

?

Use the adjusted trial balance for Stockton Company below to answer the questions that follow. Stockton Company Adjusted Trial Balance December 31 Cash 7,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100 Accounts Payable 1,900 Notes Payable 4,300 Common Stock 1,000 Retained Earnings 12,940 Dividends 790 Fees Earned 9,250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 185 Totals 30,490 30,490 Determine the total liabilities for the period. a. $1,900 b. $6,200 c. $20,240 d. $4,300

?

Calculate the gross profit for Jefferson Company based on the following: Sales $764,000 Selling expenses $42,500 Cost of goods sold $538,000 a. $495,500 b. $183,500 c. $721,500 d. $226,000

? b. $183,500 764,000 - (42,500 + 538,000) = 183,500

For April, sales revenue is $700,000, sales commissions are 5% of sales, the sales manager's salary is $98,000, advertising expenses are $90,000, shipping expenses total 2% of sales, and miscellaneous selling expenses are $2,100 plus 1/2 of 1% of sales. Total selling expenses for the month of April are a. $182,100 b. $242,600 c. $186,000 d. $159,100

? b. $242,600

If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is a. a $159,000 decrease b. an $88,000 decrease c. a $159,000 increase d. a $17,000 increase

? c. a $159,000 increase Assets = liabilities + stockholders equity -88,000 (assets) = x (liabilities) + 71,000 (stockholders equity) x (liabilities) = +88,000 (assets) + 71,000 (stockholders equity) = 159,000

The Corbit Corp. sold merchandise for $10,000 cash. The cost of the goods sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be a. Cash 7,590 Sales 7,590 Cost of Goods Sold 7,590 Inventory 7,590 b. Cash 10,000 Sales 10,000 Cost of Goods Sold 10,000 Inventory 10,000 c. Cash 10,000 Inventory 10,000 Cost of Goods Sold 7,590 Sales 7,590 d. Cash 10,000 Sales 10,000 Cost of Goods Sold 7,590 Inventory 7,590

? d. Cash 10,000 Sales 10,000 Cost of Goods Sold 7,590 Inventory 7,590

An internal Control system is important to a business because it Helps ensure that accurate and reliable accounting records are produced. Is a system which promotes operational efficiencies and protects the business assets from waste, fraud, and theft. Involves procedures adopted by a business to encourage adherence to prescribed managerial. policies and safeguard assets. All of the above.

All of the above

A corporation purchased a three-year insurance policy on December 1, Year A for $7,200. Assuming that the. corporation debited the prepaid insurance account in recording the original transaction, the adjusting entry on December 31, Year A, the company's yearend, will include a: Credit to prepaid insurance for $200 Debit to insurance expense for $7,000 Credit to insurance expense for $7,000 Debit to prepaid insurance for $200

Credit to prepaid insurance for $200

Cash, Accounts Receivable and Prepaid Insurance will be classified on a balance sheet as Long-term assets Property, plant and equipment Current assets Intangible assets

Current assets

Retained Earnings is reduced by which of the following? Collection of an Account Receivable Net Income Purchase of an asset Dividends

Dividends

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is: Earned Collected Most likely to be collected Earned and collected

Earned

Which of the following principles dictates that expenses are recognized in the same accounting period as their related revenue? Cost (Measurement) Expense recognition (Matching) Time Period (Periodicity) Cash Basis

Expense recognition (Matching)

Which of the following terms fit this definition: "The area of accounting principally concerned with reporting to external users." Managerial accounting Double-entry concept Financial accounting Matching principle

Financial accounting

Which of the following would be unethical? Recording backdated revenue. Recording accrued salaries and wages expense. Recording accrued interest revenue. Recording prepaid expense adjustments.

Recording backdated revenue.

Which one of the following relationships shows the proper structure of a corporation? Stockholders select the board of directors, who select officers. Officers select stockholders, who select the board of directors. Officers select board of directors, who select the stockholders. Stockholders select officers, who select the board of directors.

Stockholders select the board of directors, who select officers.

Net Income may be defined as follows: The excess of expenses over revenues for the time period. The cost of assets consumed or services used in the process of generating revenues. The increase in assets arising from the sale of a product or service. The excess of revenues over expenses for the time period.

The excess of revenues over expenses for the time period

If the expected sales volume for the current period is 8,000 units, the desired ending inventory is 1,400 units, and the beginning inventory is 1,200 units, the number of units set forth in the production budget, representing total production for the current period, is a. 8,200 units b. 66,000 units c. 6,800 units d. 10,600 units

a) 8,200 8000-1200+1400=8200

Gently Laser Clinic purchased laser equipment for $8,500 and paid $2,250 down, with the remainder to be paid later. The correct entry would be a. Equipment 8,500 Accounts Payable 6,250 Cash 2,250 b. Equipment Expense 8,500 Accounts Payable 2,250 Cash 6,250 c. Cash 2,250 Accounts Payable 6,250 Equipment 8,500 d. Equipment 2,250 Cash 2,250

a. Equipment 8,500 Accounts Payable 6,250 Cash 2,250

The primary difference between a static budget and a flexible budget is that a static budget a. is a plan for a single level of activity, whereas a flexible budget adjusts for changes in the activity level b. is suitable in a volatile demand situation while a flexible budget is suitable in a stable demand situation c. is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales d. includes only fixed costs, whereas a flexible budget includes only variable costs

a. is a plan for a single level of activity, whereas a flexible budget adjusts for changes in the activity level

A fiscal year for a business a. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month b. always begins on January 1 and ends on December 31 of the same year c. is determined by the federal government d. should end at the height of the business's annual operating cycle

a. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month

A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating income (loss) was a. $(30,000) b. $370,000 c. $670,000 d. $140,000

a. $(30,000)

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is a. LIFO b. weighted average c. average cost d. FIFO

a. LIFO

The budget that summarizes future plans for the acquisition of fixed assets is the _____ budget. a. capital expenditures b. direct materials purchases c. sales d. production

a. capital expenditures

If variable costs per unit decreased because of a decrease in utility rates, the break-even point would a. decrease b. increase c. increase or decrease, depending on the percentage increase in utility rates d. remain the same

a. decrease

As production increases, the fixed cost per unit a. decreases b. increases c. remains the same d. either increases or decreases, depending on the variable costs

a. decreases

For a supervisor of a manufacturing department, which of the following costs is controllable? a. direct materials b. insurance on factory building c. depreciation of factory building d. sales salaries

a. direct materials

When a manager seeks to achieve personal departmental objectives that may work to the detriment of the overall firm, the manager is experiencing a. goal conflict b. budgetary slack c. cushions d. padding

a. goal conflict

A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing the a. income statement b. balance sheet c. statement of cash flows d. statement of stockholders' equity

a. income statement

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would a. increase b. increase or decrease, depending on the percentage increase in wage rates c. remain the same d. decrease

a. increase

When a single manufacturing process generates multiple outputs, it is called a(n) a. joint activity manufacturing process b. multiple output manufacturing process c. activity-based manufacturing process d. joint manufacturing process

a. joint activity manufacturing process

Which of the following budgets provides the starting point for the preparation of the direct labor cost budget? a. production budget b. sales budget c. cash budget d. direct materials purchases budget

a. production budget

Which of the following is not a characteristic of the accrual basis of accounting? a. revenues and expenses are reported in the period in which cash is received or paid b. revenues are reported when services have been performed or products have been delivered to customers c. accrual basis of accounting supports the matching concept d. expenses are reported in the same period as the revenues to which they relate

a. revenues and expenses are reported in the period in which cash is received or paid

A chart of accounts is a. usually a listing of accounts in financial statement order b. the same as a balance sheet c. used in place of a ledger d. usually a listing of accounts in alphabetical order

a. usually a listing of accounts in financial statement order

Which of the following terms is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost? a. variable costing b. differential costing c. standard costing d. absorption costing

a. variable costing

Which of the following has steps of the accounting cycle in proper sequence (some steps may be missing)? a. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger b. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and prepare a post-closing trial balance c. prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries d. analyze and record transactions, post transactions to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries

b. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and prepare a post-closing trial balance

Profit is the difference between a. assets and liabilities b. the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services c. the incoming cash and outgoing cash d. the assets purchased with cash contributed by the owner and the cash spent to operate the business

b. the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services

Revenues for the year totaled $162,000 and expenses totaled $174,000. The stockholders purchased $15,000 of common stock and were paid $6,000 in dividends during the year. What was the net income or net loss for the year? a. $12,000 net income b. $12,000 net loss c. $6,000 net loss d. $18,000 net loss

b. $12,000 net loss 162,000 - 174,000

At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. The appropriate total budget for the department, assuming it uses flexible budgeting, is a. $368,889 b. $370,500 c. $335,000 d. $416,000

b. $370,500 ($155,000 + 165,000 = $320,000 $320,000 / 9,000 = $35.556 $35.56 x (10,000 - 9,000) = $35,560 $35,560 + 320,000 + 15,000 = $370,556

If the equipment account has a balance of $80,400 and its accumulated depreciation account has a balance of $22,500, the book value of the equipment is a. $102,900 b. $57,900 c. $22,500 d. $80,400

b. $57,900

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand at January 31 were $2,000. The amount to be used for the appropriate adjusting entry is a. $12,000 b. $8,000 c. $5,000 d. $4,300

b. $8,000

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, the contribution margin ratio is a. 26.8% b. 38.0% c. 11.8% d. 62.0%

b. 38.0% (Sales - variable expense) / Sales 425,000 - (.62 * 425,000) = 161,500 425,000 / 161,500 = .38 * 100 = 38%

Carter Co. sells two products: Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are as follows: Product Unit Selling Price Unit Variable Cost Unit Contribution Margin Arks $120 $80 $40 Bins 80 60 20 Assuming that last year's fixed costs totaled $960,000, Carter Co.'s break-even point in units was a. 35,000 units b. 40,000 units c. 12,000 units d. 28,000 units

b. 40,000 units

Which group of accounts is composed of only assets? a. Unearned Revenues, Prepaid Expenses, Cash b. Prepaid Expenses, Buildings, Patents c. Cash, Accounts Payable, Buildings d. Accounts Receivable, Revenue, Cash

b. Prepaid Expenses, Buildings, Patents

Which of the following terms is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost? a. standard costing b. absorption costing c. marginal costing d. variable costing

b. absorption costing

Accrued revenues would appear on the balance sheet as a. prepaid expenses b. assets c. common stock d. liabilities

b. assets

Unearned Fees appear on the a. balance sheet in the stockholders' equity section b. balance sheet as a current liability c. income statement as revenue d. balance sheet in the current assets section

b. balance sheet as a current liability

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents the a. maximum possible operating income b. break-even point c. total fixed costs d. maximum possible operating loss

b. break-even point

Which of the following would be included in the cost of a product manufactured according to absorption costing? a. office supplies costs b. depreciation expense on factory building c. sales salaries d. advertising expense

b. depreciation expense on factory building

The production budget is used to prepare which of the following budgets? a. sales in units b. direct materials purchases, direct labor cost, and factory overhead cost c. sales in dollars d. operating expenses

b. direct materials purchases, direct labor cost, and factory overhead cost

The budget process involves all of the following except a. periodically comparing actual results with the goals b. dismissing all managers who fail to achieve operational goals specified in the budget c. establishing specific goals d. executing plans to achieve the goals

b. dismissing all managers who fail to achieve operational goals specified in the budget

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured a. are equal to or greater than units sold b. exceed units sold c. are less than units sold d. equal units sold

b. exceed units sold

Costs that remain constant in total dollar amount as the level of activity changes are called ________ costs. a. variable b. fixed c. product d. mixed

b. fixed

The three most common cost behavior classifications are a. variable costs, sunk costs, and opportunity costs b. fixed costs, variable costs, and mixed costs c. variable costs, product costs, and sunk costs d. variable costs, period costs, and differential costs

b. fixed costs, variable costs, and mixed costs

Which of the following methods allocates joint costs based on the potential market value at the point where the products will be separated to be processed further? a. weighted average method b. market value at split-off method c. net realizable value method d. physical units method

b. market value at split-off method

A cost that has characteristics of both a variable cost and a fixed cost is called a a. variable/fixed cost b. mixed cost c. sunk cost d. discretionary cost

b. mixed cost

Which of the following activity bases would be the most appropriate for food costs of a hospital? a. number of nurses scheduled to work b. number of patients who stay in the hospital c. quantity of prescriptions filled d. how many MRIs are taken

b. number of patients who stay in the hospital

Understanding how costs behave is useful to management for all of the following reasons except a. predicting profits as sales and production volumes change b. predicting customer demand c. estimating costs d. changing an existing product production

b. predicting customer demand

Net income will result when a. expenses (credits) = revenues (debits) b. revenues (debits) > expenses (credits) c. revenues (credits) = expenses (debits) d. revenues (credits) > expenses (debits)

b. revenues (debits) > expenses (credits)

Which of the following is an example of an accrued expense? a. a two-year premium paid on a fire insurance policy b. salary owed but not yet paid c. fees received but not yet earned d. supplies on hand

b. salary owed but not yet paid

Gross profit is equal to a. sales plus cost of goods sold b. sales less cost of goods sold c. sales plus selling expenses d. sales less selling expenses

b. sales less cost of goods sold

Which of the following terms is commonly used to describe the departments within a company that provide a necessary service to produce a product but are not directly involved in production? a. investment center departments b. support departments c. expense departments d. costing departments

b. support departments

Costs that vary in total in direct proportion to changes in an activity level are called ______ costs. a. differential b. variable c. sunk d. fixed

b. variable

Which of the following methods allocates joint costs based on physical units that are weighted and then multiplied by actual physical units? a. net realizable value method b. weighted average method c. market value at split-off method d. physical units method

b. weighted average method

Accountants prefer the variable costing method over the absorption costing method for evaluating the performance of a company because a. by using the variable costing method, all fixed and variable costs are included in the unit cost of the product manufactured. b. by using the variable costing method, the cost of goods sold will be higher as more units are manufactured and sales remain the same. c. by using the absorption costing method, income could appear to be higher by producing more inventory. d. by using the absorption costing method, income could appear to be lower by producing more inventory.

c. by using the absorption costing method, income could appear to be higher by producing more inventory.

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round your answer to the nearest cent. --------|--Cost---|----Machine Hours March-|-$3,100--|----15,000 April---|--2,700--|----10,000 May----|--2,900-|----12,000 June----|--3,600-|----18,000 a. $0.67 b. $0.63 c. $0.11 d. $10.00

c. $0.11 High low method = (High cost - Low cost) ÷ (High machine hours - Low machine hours) = ($3,600 - $2,700) ÷ (18000 - 10,000) = 900 ÷ 8000 = 0.11

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is a. $58,000 b. $69,300 c. $107,000 d. $91,000

c. $107,000

If budgeted beginning finished goods inventory is $8,000, budgeted ending finished goods inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted cost of goods manufactured should be a. $1,400 b. $9,600 c. $11,660 d. $11,550

c. $11,660 Budgeted ending finished goods inventory $9,400 Budgeted cost of goods sold 10,260 Total cost of finished goods available for sale $19,660 Budgeted beginning finished goods inventory (8,000) Budgeted cost of goods manufactured $11,660

The following accounts were taken from the Adjusted Trial Balance columns of the end-of-period spreadsheet: Accumulated Depreciation $ 3,200 Fees Earned 17,400 Depreciation Expense 1,300 Insurance Expense 400 Prepaid Insurance 4,800 Supplies 900 Supplies Expense 3,800 Net income for the period is a. $17,400 b. $8,700 c. $11,900 d. $5,500

c. $11,900 17,400 - (1,300+400+3800) = $11,900

Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. The company's monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is a. $2,800 b. $1,400 c. $2,100 d. $700

c. $2,100

A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period? a. $30,000 b. $29,400 c. $24,990 d. $24,900

c. $24,990 Price after Trade Discount = Catalog Price - Trade Discount = $30,000 - (15% × $30,000) = $30,000 - $4,500 = $25,500; Cash Required to Pay Invoice = Price after Trade Discount - Purchase Discount = $25,500 - (2% × $25,500) = $25,500 - $510 = $24,990

As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $940,000 and liabilities of $300,000. During Year 2, stockholders invested an additional $73,000 and received $33,000 in dividends from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $995,000 and liabilities were $270,000? a. $370,000 b. $50,000 c. $45,000 d. $106,000

c. $45,000

How does paying a liability in cash affect the accounting equation? a. assets increase; liabilities increase b. liabilities decrease; stockholders' equity increases c. assets decrease; liabilities decrease d. assets increase; liabilities decrease

c. assets decrease; liabilities decrease

Accumulated Depreciation appears on the a. balance sheet in the long-term liabilities section b. income statement as an operating expense c. balance sheet in the property, plant, and equipment section d. balance sheet in the current assets section

c. balance sheet in the property, plant, and equipment section

The income statement should be prepared a. after the statement of stockholder's equity and balance sheet b. after the balance sheet and before the statement of stockholder's equity c. before the statement of stockholder's equity and balance sheet d. after the statement of stockholder's equity and before the balance sheet

c. before the statement of stockholder's equity and balance sheet

When preparing the cash budget, all the following should be considered except a. cash payments for equipment b. cash receipts from customers c. depreciation expense d. cash payments to suppliers

c. depreciation expense

Another name for variable costing is a. differential costing b. indirect costing c. direct costing d. process costing

c. direct costing

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured a. are less than units sold b. exceed units sold c. equal units sold d. are equal to or greater than units sold

c. equal units sold

Debts owed by a business are referred to as a. stockholders' equity b. expenses c. liabilities d. accounts receivables

c. liabilities

The accounting principle upon which deferrals and accruals are based is a. price-level adjustment b. conservatism c. matching d. cost

c. matching

Which of the following methods allocates joint costs using a measure such as pounds, gallons, or inches at the split-off point? a. net realizable value method b. market value at split-off method c. physical units method d. weighted average method

c. physical units method

FIFO reports higher gross profit and net income than the LIFO method when a. prices are reduced by 50% b. prices remain stable c. prices are increasing d. prices are decreasing

c. prices are increasing

The increases in stockholders' equity attributable to selling services or products to customers are called a. assets b. liabilities c. revenues d. expenses

c. revenues

The first budget customarily prepared as part of an entity's master budget is the _____ budget. a. cash b. direct materials purchases c. sales d. production

c. sales

As production increases, variable costs per unit a. increase b. decrease c. stay the same d. either increase or decrease, depending on the fixed costs

c. stay the same

Based on the following information, what is (1) inventory turnover; (2) average daily cost of goods sold using a 365 day year; and (3) number of days' sales in inventory. Cost of goods sold $195,640 Inventory: Beginning of year 20,500 End of year 18,628 a. (1) 9.9 times (2) $543.44 (3) 36.3 days b. (1) 10.5 times (2) $536 (3) 34.8 day c. (1) 9.5 times (2) $543.44 (3) 37.7 days d. (1) 10 times (2) $536 (3) 36.5 days

d. (1) 10 times (2) $536 (3) 36.5 days

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show a. the same cost structure in total b. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $29,000 c. total variable costs of $148,000 d. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000

d. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000 *Direct Materials: (50,000/10,000) x 12,000 units = 60,000 *Direct Labor: (44,000 / 10,000) x 12000 units = 52,800 *Variable utilities: (5000 / 10,000) x 12000 units = 6,000 *supervisor salaries = 24,000 (given)

During the current year, merchandise is sold for $147,500 cash and $381,750 on account. The cost of the goods sold is $242,000. What is the amount of the gross profit? a. $7,750 b. $771,250 c. $476,250 d. $287,250

d. $287,250

A company using the periodic inventory system has inventory costing $210 on hand at the beginning of a period. During the period, merchandise costing $635 is purchased. At year-end, inventory costing $160 is on hand. The cost of goods sold for the year is a. $795 b. $265 c. $635 d. $685

d. $685

If fixed costs are $500,000 and the unit contribution margin is $20, the break-even point in units if fixed costs are reduced by $80,000 is a. 4,000 units b. 25,000 units c. 29,000 units d. 21,000 units

d. 21,000 units

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, the break-even sales (units) is a. 2,000 units b. 3,425 units c. 2,381 units d. 4,808 units

d. 4,808 units Fixed costs / (Sales price per unit - variable costs per unit) 250,000 / (125-73) = 4807.69

Which of the following is not a characteristic of a corporation? a. Corporations are organized as a separate legal taxable entity. b. Ownership is divided into shares of stock. c. Corporations experience an ease in obtaining large amounts of resources by issuing stock. d. A corporation's resources are limited to its individual owners' resources

d. A corporation's resources are limited to its individual owners' resources.

The accounting equation may be expressed as a. Assets = Revenues − Liabilities b. Assets = Expenses − Liabilities c. Assets + Liabilities = Stockholders' Equity d. Assets − Liabilities = Stockholders' Equity

d. Assets − Liabilities = Stockholders' Equity

Which of the following entries records the receipt of cash for two months' rent? The cash was received in advance of providing the service. a. Cash, debit; Rent Expense, credit. b. Cash, debit; Prepaid Rent, credit. c. Prepaid Rent, debit; Rent Revenue, credit. d. Cash, debit; Unearned Rent, credit.

d. Cash, debit; Unearned Rent, credit.

All of the following accounts are increased with a debit except a. Cash b. Accounts Receivable c. Land d. Unearned Revenues

d. Unearned Revenues

Contribution margin reporting can be beneficial for analyzing which of the following? a. sales personnel b. products c. sales territory d. all of these choices

d. all of these choices

Principal components of a master budget include a. production budget b. sales budget c. capital expenditures budget d. all of these choices

d. all of these choices

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured a. equal units sold b. are equal to or greater than units sold c. exceed units sold d. are less than units sold

d. are less than units sold

A key aspect to the multiple production department rate method for overhead application is a. choosing an appropriate cost driver for each product manufactured b. choosing an appropriate number of support departments to include in overhead c. determining the amount of support activity used by the entire production facility d. choosing an appropriate cost driver for each production department

d. choosing an appropriate cost driver for each production department

The contribution margin ratio is computed as a. contribution margin divided by cost of sales b. contribution margin divided by variable cost of sales c. sales divided by contribution margin d. contribution margin divided by sales

d. contribution margin divided by sales

Costs that can be influenced by management at a specific level of management are called a. direct costs b. variable costs c. noncontrollable costs d. controllable costs

d. controllable costs

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a a. credit to Salary Expense of $16,000 b. debit to Salaries Payable of $8,000 c. debit to Salary Expense of $8,000 d. credit to Salaries Payable of $16,000

d. credit to Salaries Payable of $16,000

Which of the following would be included in the cost of a product manufactured according to variable costing? a. sales commissions b. office supply costs c. interest expense d. direct materials

d. direct materials

Accrued expenses are ordinarily reported on the balance sheet as a. fixed assets b. prepaid expenses c. assets d. liabilities

d. liabilities

Management should focus its sales and production efforts on the product or products that will provide the a. lowest direct labor hours b. lowest product costs c. highest sales revenue d. maximum contribution margin

d. maximum contribution margin

Which of the following methods allocates joint costs based on measures estimated after the final products are fully processed and are ready to be sold? a. physical units method b. market value at split-off method c. weighted average method d. net realizable value method

d. net realizable value method

Contribution margin is a. the same as sales revenue b. another term for volume in cost-volume-profit analysis c. profit d. the excess of sales revenue over variable cost

d. the excess of sales revenue over variable cost

In a cost-volume-profit chart, the a. total cost line begins at zero b. total cost line normally ends at the highest sales value c. slope of the total cost line is dependent on the fixed cost per unit d. total cost line begins at the total fixed cost value on the vertical axis

d. total cost line begins at the total fixed cost value on the vertical axis

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service? a. number of packages picked up b. number of truck drivers c. number of trucks in service d. total miles driven

d. total miles driven

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is a. variable cost of goods sold b. fixed manufacturing costs c. fixed selling and administrative expenses d. variable selling and administrative expenses

d. variable selling and administrative expenses