Accounting 1 exam 1+ exam 2
The direct labor price variance is calculated as:
(Actual Price - Standard Price) x Actual Quantity
The Pacioli Manufacturing Company has kept track of the number of units they have produced each month and the cost to produce those units for the past 6 months. Using regression, determine the R2 for the equation. Month Number of Units Cost of Units Produced July 10,000 $60,000 August 11,000 66,000 September 20,000 110,000 October 16,000 90,000 November 12,000 70,000 December 18,000 102,000
.9992
A linear regression analysis indicated a constant of 6,025.50, an X coefficient of 24.75, and an R-squared of 0.65. The estimated cost when the independent variable is 350 is:
14,688
Which of the following is a feature of a JIT inventory system?
Amount of production based on pull of consumer demand.
ratio for calculating the current ratio
Current Assets / Current Liabilities
For the revenue process which of the following document sequences is correct?
Customer order, sales order, packing slip, bill of lading
Which of the following is a short-term operating decision?
Decision to reduce the normal price to get large order from one customer
Which of the following is not a factor when using "Target Pricing"?
Determining the price of competitors so our price will be lower
Which of the following could not be net pay?
Gross pay less FICA, income tax withheld, federal unemployment taxe
The balanced scorecard approach is successful in reducing budgetary slack because:
It uses several different measures to assess how successful a department performed.
Which of the following would not be collected from the customer when an order is received?
Name of common carrier that will deliver the goods
Which of the following is not part of the conversion process?
Paying for the raw material used in production.
A) Revenue process planning B) Conversion process planning C) Expenditure process planning
Production Budget-B Sales Budget-A Cash Disbursements Schedule-C Marketing and Distribution Budget-A Accounts Receivable Schedule-A Direct Labor and Overhead Budget-C Direct Materials Purchases Budget-C Cash Receipts Budget-A Accounts Payable Schedule-C Administrative Budget-C
In a perpetual inventory system that uses the gross method which of the following is true?
The Inventory account is reduced when the discount is taken.
Which of the following is not an accounting event?
a customer places an order for goods
Which of the following budgets is completed last?
cash payments
All of the following are external stakeholders except:
employees
A company that has exclusive control over a product, service, or geographic
monopoly
When deciding to purchase new equipment the cost of equipment being replaced is a(n):
sunk cost
If a company uses the perpetual inventory method and it purchases inventory on account worth $2,000 with terms 2/10 n/30 what will be the cost of the inventory when the inventory is purchased if it is using the net method?
$1960
The standard cost for direct labor is $190,000 if the company produces 15,200 units of product. Actual direct labor cost to produce 15,800 units of product totaled $213,300. What is the standard cost for direct labor at the actual level of production:
$197,500
The standard cost for direct labor is $190,000 if the company produces 15,200 units of product. Actual direct labor cost to produce 15,800 units of product totaled $213,300. What is price variance and is it favorable or unfavorable?
$23,300 Unfavorable
Hoxie Inc is an advertising agency and has the following data for the most recent year. Using this data determine Hoxie's net income. Revenues from Fees $855,000 Cash $25,000 Utilities Expense $52,000 Building $900,000 Notes Payable $300,000 Salaries Expense $125,000 Office Supplies $10,000 Interest Expense $30,000 Office Equipment $200,000 Administrative Expense $75,000
$573,000
The direct materials price variance is calculated as:
(Actual Price - Standard Price) x Actual Quantity Purchased
A) Assets increase; Assets decrease B) Assets increase; Liabilities increase C) Assets increase; Owner's equity increase D) Assets decrease; Liabilities decrease E) Assets decrease; Owner's equity decrease F) Liabilities increase; Liabilities decrease G) Liabilities increase; Owners' equity decreases H) Liabilities decrease; Owners' equity increases I) Owners' equity increases; Owners' equity decreases J) Not recorded in accounting system
>Borrowed cash-B >Purchased a truck by paying cash-A >Major client goes out of business -J >Paid dividend to owners-E >Creditor takes stock in the company in exchange for >retiring debt-H >Paid note that came due-D >Customer pays bill in cash-A >Owner made contribution to firm-C
Which of the following is not a key feature of a JIT inventory system?
Adequate safety stock
The cash held by a company at the end of the year is found on which of the following two statements?
Balance Sheet and Statement of Cash Flows
In times of rising prices, ______ generally result(s) in the ______ cost of goods sold.
FIFO, lower
Which of the following statements about LIFO is false?
Firms that use LIFO run the risk of inventory obsolescence because they are keeping old goods on hand.
Which of the following strategies focuses mainly on developing new products to meet rapidly changing consumer demand?
Flexible strategy
Which of the following is not one of the four business processes?
Internal Control Process
In times of rising prices, ______ generally result(s) in the ______ ending inventory.
LIFO, lower
Which of the following business organizations has general partner(s) and limited partners that have limited liability?
Limited Partnership
Onaga Corporation has the production budget described below. Each unit requires 4 hours of direct labor time at $15 per hour. Unit-related overhead is $20 per machine hour and each unit requires one-quarter of an hour. Batch-related overhead is $2,000 per batch with a batch-size of 500 units. Facility overhead, including depreciation of $150,000 is $820,000 per month.
Manufacturing OH: $14,620,000
The following adjusted trial balance was taken from the accounting records of Shipley Corporation as of December 31, 2010. Required: (A) Calculation Net Income (B) Calculate Total Assets, Total Liabilities, and Total Equity Shipley Corporation Adjusted Trial Balance December 31, 2010
Net Income: $5,100; Total Assets: $79,500; Total Liabilities: $27,300; Total Equity $52,200
During the current year, cost of goods sold was higher under the LIFO method than under the FIFO method. Which of the following statements about price changes is true?
Prices were increasing.
Which of the following is the entry used to determine cost of goods sold when the periodic inventory system is used?
Purchases discount inventory (ending) COGS inventory beginning purchases
Which of the following measures the liquidity of a company?
Quick Ratio
Which of the following is not part of the expenditure process?
Receive cash from sales during the period
The profitability generated by the net assets (assets-liability) of a corporation would be best measured by the:
Return on Owners' Equity
Delivery of goods is associated with which of the following process?
Revenue process
A) Variable Cost B) Fixed Cost C) Contribution Margin D) Sales price
Soda served to customer A Disposable cup that holds beverage A Tables in restaurant B Cost to lauder uniforms of waiters B Food served to customers A Price of food less cost of food C Cost of soap to wash dishes A Price of food served D Percent of tips remitted to owners of restaurant D Correct!Salary of store accountant. B
The Report of the Independent Auditor is the opinion of the CPA firm that examined the financial statements of a company and states which of the following?
The financial statements are presented fairly in accordance with GAAP.
Lead time in an inventory system is:
The time between placing an order for inventory and the when the inventory is received
Which of the following is not part of the expenditure process?
Using equipment to manufacture products
The formula for a mixed cost is:
Y = m(X) + b
Net income would decrease as a result of which of the following adjustments:
accuring an expense
Net income would decrease as a result of which of the following adjustments?
accuring an expense
In a perpetual inventory system, the journal entry to record the purchase of merchandise on account includes a:
debit to inventory
Which of the following is not a special journal?
depreciation journal
Which of the following is an internal stakeholder?
management
In linear regression analysis, the dependent variable is:
The total cost
If only the fixed cost increase the breakeven point
increases
The desired ending finished goods inventory would most likely be shown on the:
production budget
Which of the following entries reflects the use of a perpetual inventory system?
A/P. xxx inventory. xxx
Which of the following entries reflects the use of a periodic inventory system?
A/P. xxx purchases returns/ allowances
Which of the following entries reflects the use of a perpetual inventory system?
COGS. xxx Inventory xxx
Which of the following is NOT true about the relationship between the financial statements?
D) The cash generated by operations on the Statement of Cash Flows is reported as an increase in Retained Earnings on the Statement of Changes in Shareholders' Equity
If only the selling price increase the breakeven point
Decreases
The Balanced Scorecard Approach is part of which of the following processes?
Performance Measurement and Management Process
All of the following are categories of adjusting entries except:
estimated payments
An increase in prepaid insurance indicates that
insurance paid during the period exceeded insurance expense
Which of the following entries is made when a discount is taken and the periodic system uses the gross method?
purchase returns purchases inventory (ending) COGS inventory (beginning) purchases discount
Information from the 2010 financial statements of Bravura Corporation is shown below. Calculate the cash paid for merchandise inventory. Sales $800,000 Cost of goods sold 600,000 Ending inventory 60,000 Beginning inventory 70,000 Accounts payable, beginning balance 6,000
$588,000
Carolina Corporation reported the following account balances at the beginning and end of 2010: 1/1/10 12/31/10 Accounts Receivable $15,500 $ 19,200 Office Supplies 3,800 2,600 Inventory 85,700 72,300 Accounts Payable 32,300 36,100 Salaries Payable 26,200 23,400
(a) $3,700; (b) $240,600; (c) $532,300
A database system differs from manual and computer-based transactions system in that-
A database system contains information about business events and accounting events
The function of business responsible for providing the information used by other functional areas to perform their jobs is referred to as:
Accounting and Information Systems
If only the variable cost decreases the breakeven point
Decreases
Safety stock is kept in order to:
Prevent losses created by a stockout
(A.) Direct material cost (B.) Direct labor cost (C.) Manufacturing overhead cost (D.) Selling and administrative cost
Salary of production supervisor. C Aluminum tubing using for chair frames A Depreciation on the machinery on shop floor. C Commission on sale of chairs D Boxes used to ship chairs D Webbing used in the chairs A Wages of workers who assemble chairs B Depreciation on finished goods warehouse D Cost of utilities used to run the manufacturing plant C Polish used to shine the aluminum before chairs are assembled C
Which of the following would not be collected from the customer when an order is received?
Sellers cost of the product
Which of the following is the formula for the contribution margin ratio?
Selling price per unit - variable cost per unit
The Debt to Equity Ratio is measure with which of the following?
Total Liabilities / Total Stockholders' Equity
The rule for making sound economic decisions is that one should choose the alternative with the
highest contribution margin
A system used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties is referred to as a(n):
Accounting System
Which of the following is not an advantage of the computer-based transaction system?
Computer can determine which events are most significant for analysis
Which of the following is not an advantage of LIFO over FIFO?
better inventory figure on balance sheet
The following journal entry affected the accounting equation by: depreciation expense xxx accumulated depreciation equipment xxx
decreasing assets and decreasing owners' equity
An environment in which there are many companies whose product/services
monopolistic competition
Which of the following drives all other operating budgets?
sales budget
All of the following accounts are decreased by debits except:
assets
Short-term operating decisions:
assume current capacity is fixed
Which of the following does not affect the cost of preparing a budget?
budget activities of competitors
The four primary influences on selling price are:
customers, competition, legal and social issues, and costs
The following journal entry affected the accounting equation by: Cash. xxx Notes payable xxx
increasing assets and increasing liabilities
If an adjustment for expense that has been incurred but not paid was not recorded.
net income and assets would be understated
An environment where a large number of sellers produce and distribute
pure competition
Which of the following must be estimated before a production budget can be completed?
unit sales
A) Administrative budget B) Direct labor and manufacturing overhead budget C) Direct materials purchases budget D) Marketing and distribution budget E) Master budget F) Production budget G) Sales budget
>This budget plans for the firm's advertising and shipping expenditures.-D >A budget that shows the expected sales for the period in both physical and- G >A budget contains the cost of the accounting and financing functions of the-A >A budget that reflects the expected cost of the conversion process-B >A budget that reflects the expected cost of the materials used in the production -C >The compilation of all the budgets prepared in planning the revenue-E >A budget that plans the company's desired ending inventory and units to be-F
If your current ratio is 2 and your current assets are $600,000 what is the amount of your current liabilities? If your debt to equity ratio is 1.5 and your total liabilities are $200,000 what is your total stockholders' equity? If your return on sales is 8% and your net income is $2,000,000, how much sales did you generate during the year?
CL: $300,000; SE: $133,333: SALES:$30,000,000
A) Service Firm B) Manufacturing C) Merchandising
Deloitte-A Xerox-B Macy's-C Southwest Airline-A Pepsi Cola-B Wendy's -B Union Pacific Railroad-A British Petroleum-B
Which of the following cases would not require an adjusting entry?
capital stock has been issued for cash but not yet paid for
For information to be useful, it must be relevant. Information is relevant when it
causes users to reach a different decision.
An environment where a few firms control the types of products and services
oligopoly
Which of the following is not part of expenditure process planning?
production budget
Which of the following payroll-related items is paid only by the employee?
union dues
A) Breakeven Point B) Contribution Margin C) Cost-volume-profit analysis D) Sensitivity Analysis E) Incremental Cost F) Sunk Cost G) Relevant Variable H) Sales Mix
-Total sales less total variable cost at a given point of activity. B -A past cost that is not relevant in short-term decisions. F -The relative proportions of units of products sold in a multiple-product H -The point where the total cost line intersects the total revenue line. A -A cost or revenue that will occur in the future and that differs among the G -The study of how costs and profits change in response to changes in the volume C -The process of changing key variables to determine how a prior outcome is D -The additional cost associated with an alternative. E
If a firm uses LIFO for income tax purposes, what method must be used for financial accounting purposes?
LIFO
Short-term decision making differs from long-term decision making because:
Short-term decision making assumes capacity is fixed.
All of the following accounts are increased by credits except:
assets
Life-cycle pricing:
attempts to establish a price that can be maintained throughout the life of the product
The point where the total revenue line intersects the total cost line is called the:
breakeven point
All of the following are steps in incremental analysis except:
choose the alternative that produces the highest revenue
Which of the following best describes the competitive environment for Microsoft Windows?
oligopoly
The seller of a product is a price taker in which of the following environment?
pure competition
A) Corporation B) Limited Liability Company C) Limited Liability Partnership D) Limited Partnership E) Mutual Agency F) Limited Liability G) Partnership H) S Corporation I) Sole Proprietorship
-A partnership composed of one or more general partners and one or more- D -A small business corporation owned by no more that 75 individuals; is profits-H -A business entity that is legally separate and distinct from its owners.-A -The business entity eliminates the impact of unlimited liability for all the-B -A situation whereby each partner has the power to act for all and legally-E -A partnership in which the individual partners are liable only for their own-C -A business entity owned by one person whose personal possessions are at risk- I -A situation in which the money invested in a corporation is at risk but investors'-F -A business owned by two or more individuals whose personal possessions are-G
A) Fixed Cost B) Mixed Cost C) Fixed Revenue D) Mixed Revenue E) Cost F) Variable Revenue G) Revenue Behavior H) Cost Behavior I) Activity Driver j) Relevant Range
-A revenue that changes in direct proportion to the change in activity. F -Basis that reflect the consumption or provision of resources. I -How a cost reacts to change in the level of operating activity H -A cost that does not change in total as the amount of activity changes A -A cost that varies, but not proportionately, to a change in activity. B -The span of operating activity that is considered normal for a company. J -How a revenue reacts to a change in the level of operating activity. G -A cost that changes in direct proportion to the change in activity. E -A revenue that changes, but not proportionately, to a change in activity. D -A revenue that does not change in total as activity changes. C
A.Assets B.Liability C.Net Assets D.Owners' Equity E.Revenue F.Expense G.Net Income
-Assets minus liabilities-C -The obligation to transfer economic resources to suppliers of goods and-B -A company's total revenues less its total expenses for a period of time.-G -An amount incurred from using resources or services in an effort to generate- F -The rights to use resources that have expected future economic benefit. -A -An amount earned from rendering services or transferring resources to-E -Represents the claims on the business to transfer the residual interest (net assets)-D
A) Independent Variable B) Dependent Variable C) Standard Error D) T Statistic E) R Square F) Relevant Range
-Measures the amount of correlation between the independent and dependent-E -Measures the variability around the mean. C -Creates the change in the cost of an activity. A -A span of activity that is normal for a company. F -The total cost that is the result of some activity. B -Measures the significance of the regression slope. D
Fit for Fun, Inc. sells fitness equipment. The company has 75 stores located in malls throughout the country. The company recently engaged in the following activities. Identify each activity as part of the (B) Business Organization and Strategy Process (O) operating process, (CR) capital resources process (P) Performance Measurement and Management
-Purchased 300 treadmills for resale. O -Borrowed $50,000 from the bank. CR Sold 45 stepping machines. O -Purchased 10 new cash registers. CR -Made a $4,000 payment on the mortgage. CR -Purchased office supplies for cash. CR -Paid employees' salaries. O -Developed operating budget. B -Calculated ratio analysis. P -The owners invested an additional $100,000 into the business.
Bollinger Industries manufactures back-packs. Selected data regarding standard costs follow: Direct materials per unit 0.6 yards at $4.20 per yard Direct labor per unit 4.5 hours at $8.75 per hour Unit-related overhead $7.30 per machine hour; 1.5 machine hours required per unit Actual selected results for the month of January are shown below: Units produced 33,800
(a) $22,762.50U; (b) $3,062.50F; (c) $2,880U; (d) $2,226F; (e) $2,310F
Reeves Company maintains a perpetual inventory system inventory costing. Reeves reported the following events during the month of June: Date Event Number of Units Unit Cost June 1 Beginning Inv. 500 $120 4 Purchase 600 126 7 Sale 450 11 Purchase 900 128
(a) $67,640; (b) $72,800
Promotion Industries manufacturers license plates for automobiles. The license plates sell for $10.50 each. During 2008, Miller sold 750,000 plates incurring total variable costs of $1,462,500 and fixed costs of $3,268,720. (a) Determine the contribution margin per unit. (b) Determine the breakeven point in units for 2008.
(a) $8.55; (b) 382,306 units
The direct labor usage variance is calculated as:
(Actual Quantity - Standard Quantity Allowed) x Standard Price
The entry to record a purchase of supplies on account would include a:
credit to accounts payable
A) Account B) Accounting cycle C) Contra account D) General journal E) General ledger F) Master file G) Permanent account H) Post-closing trial balance I) Posting J) Transaction files K) Trial balance L) Journal Entry
>A journal in a computer-based transaction system.-J >An account with an opposite balance to the normal balance of its associated-C >A time period between financial statements.-B >The journal used to record both the account(s) to be debited and the-D >A ledger in a computer-based transaction system.-F >A trial balance prepared after the closing entries have been posted.-H >A place where the results of events affecting that item are recorded.-A >A listing of all general ledger accounts and their respective balances to ensure-K >The process of recording the appropriate part of a journal entry to the affected-I >A collection of specific asset, liability, and owners' equity accounts.-E >The recorded effect of an accounting event.-L >An asset, liability, or owners' equity account whose balance is carried over-G
(A.) Inventory (B.) Net price method (C.) Periodic inventory system (D.) Perpetual inventory system (E.) Purchases (F.) Purchased discount (G.) Purchase returns and allowance (H.) Raw materials inventory (I.) Special Journal (J.) Subsidiary ledger
>The account used by the periodic inventory system to account for the purchase-E >A journal used to record transactions that occur frequently and in the same I >When the cost of inventory is recorded assuming the discount available will B >This inventory system keeps track of the amount of inventory and cost of D >This account keeps track of the discounts taken under the periodic inventory F >This ledger describes the details of a specific general ledger account. J >This inventory system determines the amount of inventory by physical count C >Account used by the periodic system to record the cost of goods purchased G >Account used to keep track of inventory used in a manufacturing process. H >Account used by both the period and perpetual inventory system to show the A
From the information below create a two-column bank reconciliation for the month of November 2008 for the Purinton Corporation. (a.) Nov 30, 2008 cash balance per book is $35,152.22 (b.) Bank statement balance at Nov 30, 2008 is $32,450.78 (c.) The following checks are outstanding. Checks 2156 $528.34 2175 $378.00 2199 $185.22 (d.) A memo included in the bank statement indicates that Dan Short had a NSF check for $933. (e.) The bank service charge for the month is $38. (f.) Cash receipts of $2,300 deposited Nov 30, 2008 were not included in the bank statement. (g.) A check for $483 was deposited and correctly recorded by the bank but the company incorrectly recorded the deposit for $438 on their books. A check for $567 written by another company was incorrectly deducted from the Purinton checking account. Correct Answer
Adjusted Bank Balance: $34,226.22; Adjusted Book Balance: $34,226.22
Which of the following is not a factor in the EOQ inventory model? Annual demand for the inventory in units Cost to place one additional order All of the following are factors in the EOQ model. Cost to carry one additional unit in inventory
All of the following are factors in the EOQ model.
Which of the following is not considered manufacturing overhead?
Depreciation on warehouse that stores finished goods
Ideal standards used in the budgeting process -
Do not factor in operating inefficiencies in the budgeting process
Short-term decision making differs from normal operating decision in two ways, which of the following are the two ways?
Short-term operating decisions are unique and can not be planned
Malsom Corp's monthly payroll is $100,000. If the FICA rate is 7.65% , income tax is withheld at a 15% rate, the State Unemployment (SUTA) rate is 2.8% and the Federal Unemployment (FUTA) tax rate is .8%, how much is withheld from the workers' wages and how much does Malsom have to pay in payroll taxes?
Withheld: $22,650; Payroll Taxes: $11,250
The costing system that reflects the amount of raw materials purchased, direct labor used, and manufacturing overhead applied in the Cost of Goods Sold account is the:
backflush costing system
The accounting concept requiring that an accounting system reflect information relating only to those economic events pertaining to a particular entity is the:
business entity concept
Which of the following is not a factor in the EOQ inventory model?
cost of inventory item
The entry to record collections from credit customers would include a:
credit to accounts receivable
In a perpetual inventory system, if the terms of sale are FOB shipping point the journal entry to record the payment of freight charges on purchased merchandise includes a:
debit to inventory
The adjusting entry to record depreciation of a building would be:
depreciation expense xxx accumulated depreciation building xxx
Which of the following describes the practice of selling a product in other countries for a price less than the company's cost?
dumping
The owners of a pizzeria invest $90,000 into the business for expansion purposes. This is an example of a(n):
financing activity
The accounting concept which assumes that, absent any information to the contrary, the business will continue into the foreseeable future is the:
going concern concept
The following journal entry affected the accounting equation by: Cash. xxxx Notes payable xxxxx
increasing assets and increasing liabilities
The following journal entry affected the accounting equation by: Cash xxxx Capital stock. xxxx
increasing assets and increasing owners' equity
Which of the following best describes the competitive environment for Sony high definition TVs?
monopolistic competition
Which of the following appears on both the income statement and the statement of stockholders' equity?
net income
If an adjustment for revenue that has been earned but not recorded was not made
net income and assets would be understated
In a periodic inventory system, the journal entry to record the sale of merchandise on account would include a:
no entry involving Inventory or Cost of Goods Sold
The profit making activities of an enterprise are referred to as:
operating activities
The salary of an executive who decides to quit her job and return to school full time is a(n):
opportunity cost
The pricing strategy where a company initially sets the price of its product low and then raises it later on in the product's life cycle is called:
penetration pricing
Which of the following describes the practice of setting the price of a product at less than cost to take over a market and then to raise the price?
predatory pricing
Which of the following is not part of revenue process planning?
production budget
Which of the following is part of conversion process planning?
production budget
Conversion cycle planning consists of all the following except:
purchasing merchandise
A data storage device listing each customer, along with all the credit sales made to, as well as payments received on account from that customer is called a(n):
subsidiary accounts receivable ledger
Which of the following is an external stakeholder in a supermarket?
the company which supplies the baked goods for the bakery
Investors read the Independent Auditors' Opinion because?
they want some assurance that the financial statements are fairly presented
The breakeven point is the point at which:
total contribution margin equals total fixed costs