Accounting Quizzes
Smith and Sons had a net income of $50 and an increase in AR of $40. Considering only these two items, the effect on operating cash flow is:
$10 increase
Green t-shirt processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. What is their breakeven point in sales dollars?
$14,286
Javier Company reported net income of $4,550 million in 2021. The weighted average number of common shares outstanding during 2021 was 1.662 million shares. Javier paid $135 million in dividends on preferred stock. How much is basic earnings per share amount for 2021?
$2.65
An engineering consulting firm reported beginning WIP of $45,000 and ending WIP of $75,000. If the firm recorded direct labor of $120,000 and cost of services as $425,000, how much overhead did the firm apply during the period?
$335,000
The following information is available from the financial statements of Samuels Corporation for the year ended December 31: Net Income: $400,000 Increase in Accounts Payable: $10,000 Depreciation Expense: $20,000 Payment of Dividends: $5,000 Decrease in Accounts Receivable: $15,000 Increase in Inventories: $10,000 Decrease in Income Taxes Payable: $20,000 What is Samuels Corporation's net cash flow from operating activities?
$415,000
Baxa company has an accrual basis net ncome of $360,000 in 2019 and the following related items: Depreciation expense: $76,000 AR increase: $24,000 Inventory decrease: $28,000 AP decrease: $16,000 How much is Baxa's net cash flow from operating activities in 2019?
$424,000
Smith and Sons reported the following data: Cash flow from operations: $80,000 Annual capital expenditures: $25,000 Average current liabilities: $60,000 Calculate the company's free cash flow
$55,000
If beginning and ending finished goods inventory were $100,000 and $80,000 respectively, and cost of goods sold was $695,000 for the period, what was the cost of goods manufactured?
$675,000
Green t-shirt processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. If they sold 7000 shirts last quarter and fixed costs totaled $10,000, what is their net operating income
$88,000
Aladdin Grocer's 2021 financial statements show average shareholder's equity of $15,309 million, net income of $2,940 million and average total assets of $69,525 million. How much is Aladdin Grocer's return on sales for the year?
1.28%
Using the following data, calculate the company's operating-cash-flow-to-current-liabilities ratio Cash flow from operations: $80,000 Annual capital expenditures: $25,000 Average current liabilities: $60,000
1.33
The following amounts have been taken from the recent financial statements for Merema industries: Current liabilities (1/1/2019): $1,860,000 Current liabilities (12/31/2019): $2,925,000 Cash from operations: $5,335,000 Expenditures on PPE: $840,000 To the closest hundredth, what is their operating-cash-flow-to-current-liabilities ratio?
2.23
At December 31, 2021, David Bash Company has total assets of $1,000,000, total liabilities of $720,000 and total owner's equity of $280,000. At December 31, 2021, David Bash's company's Debt-to-Equity ratio is:
2.57
Use the following to compute the gross profit percentage to the nearest hundredth of a percent: Net Income $104,940 Gross profit on sales: $1,050,600 Average total assets: $631,050 Sales $2,373,882 Tax rate on operating profit: 35%
44.26%
The journal entry to record the completion of units of product for sale would include
A credit to work-in-process inventory
Zebra company sells a segment of its operations at a loss. Zebra has not previously experienced such an event and does not expect to again. The loss from the disposal of the segment should be reported in the income statement as:
A separate amount in a discontinued operations section
What differentiates a sunk cost from a relevant cost?
A sunk cost occurred in the past and doesn't affect decision making. A relevant cost differs between alternatives and is used in decision making.
Activity based costing is best explained by what statement?
Accumulating and allocating overhead costs based on a variety of activity drivers
On the income statement of a merchandising company, interest income and interest expense are reported
As separate items of other income and expense below the net operating income or loss
What is true of opportunity costs in making decisions?
Because opportunity costs represent the future benefit that is given up when a choice is made, managers should consider them.
Cost of Goods Sold can be calculated in the following manner
Beginning finished goods + cost of goods manufactured - ending finished goods
The statement of cash flows explains changes in a firm's
Cash and cash equivalents
Proceeds from issuance of long-term debt would appear on the statement of ash flows as:
Cash inflows from financing activities
The purchase of treasury stock will have what impact on the statement of cash flows?
Cash outflow from financing activities
A firm's cash flow from financing activities includes
Cash paid to reacquire treasury stock
A firm's cash flow from investing activities includes
Cash received from the sale of a plant asset
A firm's net cash flow from operating activities includes:
Cash received from the sale of merchandise
A typical example of a cash equivalent is an investment in:
Commercial paper
Cost of goods manufactured plus beginning finished goods inventory less ending finished goods inventory equals
Cost of goods sold
If production increases within a given range, fixed costs per unit will:
Decrease
To qualify as a cash equivalent, an investment must be:
Easily convertible into a known cash amount
Job order costing is typically employed in companies that use assembly lines for producing identical products
False
True or false: In the journal entries to record the issuance of materials into production, the costs of both direct and indirect materials are credited to the materials inventory account and debited directly to work in process inventory
False
True or false: Production department overhead costs are those costs directly related to production, such as direct materials and direct labor
False
True or false: Traditional product costing systems are structured on multiple, volume-based cost drivers
False
Green t-shirt processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. What is true of Green T-shirt's processing breakeven point.
For each unit sold beyond the breakeven point, $14 of additional contribution margin is generated to help produce a profit.
Which of the following would not appear on a job order cost sheet? a) Direct labor costs incurred b) Direct materials recquisitioned for the job c) General administrative expense d) Total cost of the job e) All of the above would appear on the job order cost sheet
General administrative expense
If you wanted to determine whether accounts recievable grew at the same rate as sales, what type of financial statement analysis would you perform?
Horizontal analysis of both the balance sheet and the income statement
What is the proper order of determining and identifying cost drivers and pools, then assigning and calculating pool rates?
Identify cost pools, identify cost drivers, calculate pool rates, assign costs to products
What is the relationship between indirect costs and cost objects in activity based costing
Indirect costs are assigned to products via activity cost pools
Which ratio can provide an indication of the salability of the company's products?
Inventory turnover
If a company uses a perpetual inventory system, what journal entry would correctly record a purchase on account of materials to be used in production?
Materials Inventory Accounts payable
Prime cost is
Materials and labor cost
What is the correct order of the flow of product costs through the inventory system?
Materials inventory, work in process, finished goods, cost of goods sold
In a statement of cash flows, interest paid to creditors is classified as a cash flow from
Operating activities
Future benefits foregone when one option is chosen over another is called
Opportunity costs
The purchase of equipment is reported in the statement of cash flows as an:
Outflow under investing activities
What happens during the evaluation of phase of decision making? a) Performance measurement b) A look at alternative course of action to achieve desired goals c) Long run optimization of net income d) A specific plan of action is developed
Performance measurement
Which product costing system would most likely be used to account for electric utility?
Process costing
A manufacturer budgets $300,000 in overhead and 5,000 direct labor hours. Actual overhead for the period was $286,700 and employees worked 4,700 hours. Overhead is applied on the basis of direct labor hours. What was the predetermined overhead rate and the amount of applied overhead for the period
Rate: $60 per labor hour. Applied overhead: $282,000
The return on assets ratio can be broken down into two individual ratios which are:
Return on sales and asset turnover
A company is in the process of preparing their annual budgets. The company should start with which budget?
Sales budget
Green t-shirt processing has a unit sales price of $20 for their t-shirt. Variable cost per t-shirt is $6. If they sold 7000 shirts last quarter, what is their net operating income?
Since fixed costs are not given, we cannot answer this question.
A paint manufacturing company produces three paint bases of differing quality. Due to throughput limitations (measured in gallons) at their facility, they are unable to meet total demand for their products. In determining which of their products they should produce, what should they consider>
The contribution margin per gallon of throughput for each product.
Total manufacturing costs for the period include
Total direct labor
True or false: Activity-based costing is based on a deep understanding of the activities that a company engages in while pursuing economic objectives
True
True or false: Often, companies maintain traditional costing for external reporting purposes and ABC for pricing and making other internal decisions
True
A job order costing system does which of the following? a) Allocates manufacturing costs to individual jobs to determine unit costs b) Is used to determine period costs in a service company c) is used to determine unit costs when products are manufactured in a continuous flow process d) Both B and C e) None of the above
a) Allocates manufacturing costs to individual jobs to determine unit costs
Which of the following lists the materials necessary to complete a job? a) Bill of materials b) Production order c) Job order cost sheet d) Materials requisition
a) Bill of materials
Which of the following statements regarding activity based costing is correct? a) Cost drivers and cost objects are essential parts of activity based costing b) Overhead costs are allocated based on actual costs incurred in a period c) Direct costs (materials and labor) are accumulated in cost pools and assigned based on driver usage
a) Cost drivers and cost objects are essential parts of activity based costing
Which of the following is true of cost drivers? a) If the cost per unit is the same for traditional costing and activity based costing, the company is using the same cost driver b) If cost distortion exists between traditional costing and activity based costing, the company has no need to analyze costs based on cost pools
a) If the cost per unit is the same for traditional costing and activity based costing, the company is using the same cost driver
Which of the following is an element of manufacturing overhead? a) Indirect labor b) Advertising c) Professional fees d) Company president's salary
a) Indirect labor
Jon and Marshall is a CPA firm. Which of the following would be an appropriate driver for a client audit a) Number of hours billed b) Number of tax returns filed c) Number of new CPAs hired during the year d) All of the above
a) Number of hours billed
Using job order costing over activity based costing might lead to which of the following problems? a) Overpricing products b) Over-application of overhead to services c) Discontinuing unprofitable operations d) Continuing profitable operations e) All of the above
a) Overpricing products
Which of the following are factors to consider when deciding whether to accept a special order? a) Whether there is sufficient excess production capacity b) The fixed costs that will be allocated to the units produced c) The projected salvage value of current production equipment d) Last year's budgeted level of production e) All of the above
a) Whether there is sufficient excess production capacity
Which of the following would not be considered product costs? a) Wages paid to assembly line workers b) Cleaning supplies for an administration building c) Electricity bill for a manufacturing facility d) Salary of a factory supervisor e) Parts used in the production of an automobile
b) Cleaning supplies for an administration building
Which of the following is correctly included in the entry to record the sale of finished goods? a) Credit to WIP inventory b) Credit to FG inventory c) Credit to COGS d) Debit to sales revenue e) Debit to accounts payable
b) Credit to FGI
Service firms generally include which of the following as product or job costs: a) Supervisor salaries b) Direct labor wages c) Utilities d) Service firms do not track job costs
b) Direct labor wages
Jasmine Inc. manufactures plant-based meat products. They have always used a predetermined overhead rate based on labor hours. The production manager is switching to Activity-Based costing and is assigning costs based on Processing and Packaging cost pools. This switch would be expected to result in all of the following except: a) More accurate pricing b) Overcosting of high volume, low complexity products c) Increased profitability from elimination of unprofitable products d) Identification of activities that could be eliminated to improve productivity
b) Overcosting of high volume, low complexity products
Which of the following is never an element of product cost? a) Depreciation b) Sales commissions c) Rent d) Property taxes
b) Sales commissions
Cash inflows or outflows from investing activities would involve all of the following except: a) The purchase of marketable securities b) The receipt of interest income on short-term investments c) The proceeds from the sale of equipment d) The purchase of buildings
b) The receipt of interest income on short-term investments
Which one of the following refers to a cost that decreases as the volume of activity decreases within the relevant range? a) Average cost per unit b) Variable cost per unit c) Fixed cost per unit d) Total variable cost
c) Fixed cost per unit
If a company has sufficient excess capacity, which of the following costs are not relevant to the decision to make or buy a new product? a) Direct materials b) Variable overhead c) Fixed overhead d) Costs of buying from the outside vendor
c) Fixed overhead
Which of the following combinations of products would be considered joint products? a) Chairs and tables b) Corn and alfalfa c) Machine oil and gasoline d) Hamburgers and hotdogs e) None of the above
c) Machine oil and gasoline
Which of the following is one measure of liquidity? a) Debt-to-equity ratio b) Times-interest-earned ratio c) Quick ratio d) None of the above
c) Quick ratio
Which of the following ratios does not involve assets? a) AR turnover b) Current ratio c) Return on sales d) Inventory turnover
c) Return on sales
Which of the following is a potential qualitative factor to consider when accepting a special order? a) The company will lose $10,000 by accepting the special order b) The special order requires a purchase of a special engraving machine c) The perceived quality of the regular product is negatively impacted by the special order d) All of the above
c) The perceived quality of the regular product is negatively impacted by the special order
Which of the following would be considered a direct cost for a unit of production? a) Depreciation on production facilities b) Salary paid to factory general supervisor c) Wages paid to assembly line workers d) Indirect materials used in the production process e) None of the above
c) Wages paid to assembly line workers
When calculating the predetermined overhead rate, which of the following is typically used? a) Daily budgeted overhead b) Yearly actual overhead incurred c) Yearly budgeted overhead d) Monthly actual overhead incurred e) All of the above
c) Yearly budgeted overhead
Which of the following costs would be considered sunk costs a) CEO salary, not based on performance b) Direct labor wages c) Yearly depreciation on factory equipment d) Utilities expense e) None of the above
c) Yearly depreciation on factory equipment
Green t-shirt processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. Green t-shirt processing incurs only fixed and variable costs in its operations. When 10,000 t-shirts are produced, the company's managerial accountant noted a fixed cost per shirt of $1.00 and a variable cost per pot of $6.00. If production is expected to increase, which of the following statements is true? a) The fixed cost per t-shirt will not change; the variable cost per t-shirt will decrease b) Total fixed costs will decrease; the variable cost per t-shirt will not change c) total fixed costs will remain unchanged; total variable costs will increase.
c) total fixed costs will remain unchanged; total variable costs will increase.
When should managers accept special orders? a) After examining qualitative and quantitative factors b) If incremental revenues exceed incremental costs c) If there is a net advantage in accepting the special order d) All of the above
d) All of the above
Which of the following describes the contribution margin a) Sales price minus variable cost b) Will generate a profit after all fixed costs are covered c) At break-even, it will equal fixed costs d) All of the above
d) All of the above
Which of the following statements is true regarding current manufacturing companies? a) Most production labor time is spent running production equipment rather than actually physically working on a product b) Production processes are highly automated and complex c) Manufacturing overhead constitutes a significant portion of per-unit costs d) All of the above
d) All of the above
Which of the following would be considered a cost object? a) A service provided by an architecture firm b) A product produced by a manufacturer c) A tax return prepared by a local CPA dirm d) All of the above
d) All of the above
Which of the following are not included in WIP inventory? a) Direct materials that have been put into production b) Direct labor incurred in production c) Manufacturing overhead allocated to units of production d) All of the above are included in Work in Process inventory
d) All of the above are included in Work in Process inventory
Which of the following is not included in the master budget? a) Sales budget b) Cash budget c) Budgeted income statement d) All of the above are included in the master budget
d) All of the above are included in the master budget
What is true regarding continuous budgets? a) The oldest month or quarter is not removed from the budget b) The oldest month or quarter is removed from the budget c) Regardless of the time of year, it always covers 12 months or 4 quarters d) Answers b and c
d) Answers b and c
Which of the following statements most accurately describes activity based costing? a) Costs are accumulated in departments and allocated based on a single driver for each department b) Costs are accumulated in departments and allocated based on a variety of factors for each department c) Costs are accumulated in cost pools and allocated based on a variety of drivers for each pool d) Costs are accumulated in cost pools and allocated based on a single driver for each pool
d) Costs are accumulated in cost pools and allocated based on a single driver for each pool
Which of the following best describes the concept of "sunk" costs? a) Costs that will be incurred regardless of what decision is made b) Costs that are the same between competing alternatives c) Costs that are relevant to the decision process d) Costs that have already been incurred and cannot be avoided
d) Costs that have already been incurred and cannot be avoided
Which of the following is not an example of manufacturing overhead? a) Factory supervisor salary b) Production facility rent expense c) Cleaning supplies for factory floor d) Electricity bill for administration building e) Manufacturing equipment depreciation
d) Electricity bill for administration building
Which of the following factors would lead a company to make a component rather than buy it? a) Other, more profitable uses for production equipment b) Concerns that the company is too highly invested in fixed assets c) Attractive deals offered by suppliers d) Greater control over production quality e) All of the above
d) Greater control over production quality
Which of the following is a cash equivalent for the purposes of preparing a statement of cash flows: a) Accounts recievable b) Investment in subsidiary company common stock c) Inventory d) Investment in a money market fund
d) Investment in a money market fund
Which of the following would be considered a direct cost of a manufacturing plant? a) Sales manager's salary b) General liability insurance premium c) Auditing fee d) Production line depreciation
d) Production line depreciation
Which of the following transactions has an effect on the statement of cash flows? a) A two for one stock split b) A 10 percent stock dividend c) The declaration of a cash dividend d) The issuance of a preferred sock
d) The issuance of a preferred stock
Which of the following costs would be considered relevant when deciding between two products to produce? a) Level of direct materials required b) Additional investment in factory equipment for one product c) Amount of additional direct and indirect labor d) The opportunity cost associated with one or the other product e) All of the above
e) All of the above
The schedule of Cost of Goods manufactured includes all of the following except: a) Total manufacturing costs for the period b) Beginning work in process inventory c) Cost of goods manufactured d) Manufacturing overhead for the period e) All of these are included in the Schedule of Cost of Goods manufactured
e) All of these are included in the Schedule of Cost of Goods manufactured
Which of the following types of production would most likely use job-order costing? a) Construction of custom homes b) Farming c) Manufacturing of heavy-duty machinery d) Electrical power generation e) Both a and c
e) Both a and c
When packaging is a part of the production process, which of the following accounts will not be affected by the entries to record packing? Assume that all packaging materials are purchased on account and held in materials inventory prior to use. a) WIP inventory b) Manufacturing overhead c) Wages payable d) Materials inventory e) Cost of goods sold
e) Cost of goods sold
Which of the following are reasons to discontinue an unprofitable business segment? a) Effect of downsizing on employee morale b) Lack of alternative source of part needed in production c) Fixed cost application to the segment that exceeds the level of accounting loss d) All of the above e) None of the above
e) None of the above
