Accounting 202 Midterm
Which of the following sections from the statement of cash flows include the cash paid for the purchase of Treasury Stock? A.the financing section B.the investing section C.the non-cash investing and financing section D.the operating section
A
Which of the following sections of the statement of cash flows include purchases and sales of long-term assets? A.the investing section B.the operating section C.the non-cash investing and financing section D.the financing section
A
the assemble department of smart computers incurred 250,000 in direct materials and 75,000 in conversion costs. the equivalent units of production for direct materials and conversion costs are 1,000 and 800, respectively. The cost per equivalent unit of production for direct materials is:
250,000 per EUP
Chemical company spent 480,000 to produce 144,000 gallons of chemical, which can be sold for 4.32 per gallon. the chemical can be further processed into weed killer which can be sold for 6.40 per gallon; it will cost 256320 to further process the chemical into weed killer. What is the change in the Chemical Company's operating income if the chemical is processed into weed killer?
43,200 increase
Brooke Industries has 6000 outstanding shares of 3% $50 par value preferred stock. The annual preferred dividend amount would be: 180 6000 9000 300000
9000
A _________ ownership in the investee's voting stock can significantly influence the investee's decisions A. 20% to 50% B. 15% to 20% C. 5% to 10% D. 10%
A
A subsidiary company is a company that: A.is controlled by another corporation. B.owns a controlling interest in another company. C.that has a trading investment in another company. D.is the first to begin operations in an industry.
A
Realized gains or losses on available-for-sale investments represent the difference between: A.the cash received at time of disposal and the carrying amount of the investment. B.the historical cost and the current market value of the investment. C.the historical cost and the average market value of the investment. D.the cash received at time of disposal and the fair value of the investment.
A
The Long-term Investments account is credited for the receipt of a cash dividend on an equity-method investment because: A.the dividend decreases the investee's equity. B.the dividend increases the total assets. C.there is an increase in dividend liability. D.it increases the investor's investment.
A
The retained earnings of a corporation is the: A.internally generated capital that is raised from profitable operations. B.internally generated capital that from the direct investment of employees. C.externally generated capital that is raised from banks and other creditors. D.externally generated capital that is contributed by shareholders.
A
Treasury stock is a: A.contra equity account. B.contra liability account. C.contra asset account. D.liability account.
A
Which of the following concepts represents time value of money? A.the concept that money earns income over time B.the concept that money becomes obsolete over time C.the concept that money loses its purchasing power over time D.the concept that money can be converted into other currencies over time
A
Which of the following describes a debenture? A.a bond that is not backed by specific assets B.a bond that repays principal in installments C.a bond that gives the bondholder a claim for specific assets if the issuer fails to pay principal or interest D.a bond that matures at one specified time
A
Which of the following statements is true? A.Appropriations of retained earnings require journal entries, but restrictions on retained earnings do not. B.Both appropriations and restrictions of retained earnings require journal entries. C. No journal entries are needed to either appropriate or restrict retained earnings. D.Restrictions on retained earnings must be journalized, but appropriations do not need to be journalized.
A
if the sales price per unity decreases and variable costs remain the same, what will be the effect on the contribution margin? A. it will decrease B. it will increase C. it will remain the same D. it is impossible to determine with the given information
A
which of the following is an example of a period cost? A. sales and salaries B. depreciation on factory equipment C. indirect materials D. utilities on plant
A
which of the following is the format of the income statement that is most useful in decision making? A. contribution margin format B. multiple step format C. absorption costing format D. Single step format
A
which of the following statements describe variable costs? A. they are constant in a per unit basis but vary in total as production changes B. they decrease on a per unit basis as production volume increases C. they vary on a per unit basis but do not vary in total as production changes D. they are fixed in total throughout the relevant range of activity
A
A service company: A. expenses are all product costs B. expenses are all period costs C. income statement includes gross profit D. balance sheet includes finished goods inventory
B
An equity security: A.is a standardized contract between two parties to buy oil at a set price. B.represents stock ownership in another company and sometimes pays dividends. C.is a financial instrument which entitles the holder to receive periodic interest. D.represents a credit relationship with another company or governmental entity.
B
Companies invest in trading investments with the intent of: A.gaining the controlling rights of the investee. B.generating a profit on a quick sale. C.increasing the amount of long-term assets. D.holding the investment till maturity.
B
Jazzy Tunes. Inc. borrowed $36,000, issued common stock of $15,000, and paid dividends of $30,000. What was Jazzy Tune's net cash provided (used) by financing activities? A. ($9,000) B. $21,000 C. $51,000 D. $81,000
B
The gain on disposal of trading securities is reported in the: A. stockholders' equity section of the income statement B. other revenues and expenses section of the income statement C. current assets section of the balance sheet D. fixed asset section of the balance sheet
B
Unrealized gains or losses on available-for-sale securities occur when a company: A.adjusts an asset to average value but has not yet disposed of the asset. B.adjusts an asset to fair value but has not yet disposed of the asset. C.adjusts an asset to average value when an asset is disposed. D.adjusts an asset to fair value when an asset is disposed.
B
Which of the following characteristics is an advantage of the corporate form of business? A.separation of ownership and management B.limited liability of stockholders C.less degree of government regulation D.low start-up costs
B
goods are partially completed by a manufacturer are referred to as: A. materials inventory B. WIP inventory C. merchandise Inventory D. finished good inventory
B
paying cash dividends would be: A. a cash outflow from operating B. a cash outflow from financing C. a cash outflow from investing D. none of the above
B
the benefit forgone by not choosing an alternative course of action is referred to as a(n): A. sunk cost B. opportunity cost C. Variable cost D. incremental cost
B
which of the following describes the products and services of companies that are price-setters? A. they are priced by managers using target-pricing emphasis B. they tend to be unique C. they tend to have a lot of competitors D. they tend to be commodities
B
which of the following statements is incorrect? A. the primary users of management accounting are the company's managers B. management accounting's financial reports are restricted by generally accepted accounting principles C. Management accounting information does not require an external audit D. management accounting information is used to help managers plan and control their operations
B
Best Appliances owns 90% of the voting stock of Wratchet, Inc. Which of the following is true? A.The financial statements of Best would be consolidated into Wratchet. B.Wratchet would be considered the parent entity. C.Best would be considered the parent entity. D.Both a and c are correct.
C
Held-to-maturity investments applies only to debt securities because: A.these securities earn periodic interest. B.these are long-term investments. C.equity securities do not mature on a specific date. D.equity securities are held for a very short period.
C
On the ________, cash dividends become a liability of a corporation. A.date of record B.end of the fiscal year C.declaration date D.payment date
C
The Gain on Disposal of Trading Investments is reported in the: A.owners' capital section of the income statement. B.fixed assets section of the balance sheet. C.other revenues and expenses section of the income statement. D.current assets section of the balance sheet.
C
The interest rate on which cash payments to bondholders are based is the: A.discount rate. B.market rate. C.stated rate. D.amortization rate.
C
Which of the following is the typical order of the sections on a statement of cash flows? A.operating, financing, investing B.financing, investing, operating C.operating, investing, financing D.investing, operating, financing
C
Which of the following is true of the statement of cash flows? A.It reports on the qualitative behavior of the company's performance. B.It indicates when long-term debt will mature. C.It covers a specific span of time the same as the income statement. D.It shows how the profits or losses of the company were generated.
C
Which of the following occurs when a bond's stated interest rate is lower than the market interest rate? A. issued at a premium B. issued at maturity date C. issued at a discount D. issued at face value
C
Which of the following statements accurately describes the statement of cash flows? A.It shows the relative proportion of debt and assets. B.It indicates when long-term debt will mature. C.It shows the link between accrual based income and the cash reported on the balance sheet. D.It shows the link between book income and earnings per share.
C
responsibility reports for a profit center include A. revenues only B. invested capital C. both revenues and costs D. returns on investments
C
which of the following statements is correct with respect to fixed costs per unit? A. they will remain the same as production level change B. they will decrease as production decreases C. they will increase as production decreases D. they will increase as production increases
C
A parent company is a company that: A.is the first to begin operations in an industry. B.has a trading investment in another company. C.is controlled by another corporation. D.owns a controlling interest in another company.
D
The purchase of treasury stock: A.increases assets and decreases stockholders' equity. B.increases both assets and stockholders' equity. C.decreases assets and increases stockholders' equity. D.decreases both assets and stockholders' equity.
D
The two basic sources of corporate capital are A.assets and equity. B.preferred and common. C.retained earnings and dividends. D.paid-in capital and retained earnings.
D
Which of the following is true of a Discount on Bonds Payable account? A.It is subtracted from the Bonds Payable balance and shown with the current liabilities on the balance sheet. B.It is added to the Bonds Payable balance and shown with owner's equity on the balance sheet. C.It is added to the Bonds Payable balance and shown with long-term liabilities on the balance sheet. D.It is subtracted from the Bonds Payable balance and shown with long-term liabilities on the balance sheet.
D
Which of the following is true of a corporation shows a net loss on its income statement? A. the company still have an increase in retained earnings B. the company will not be able to sell stock C.the company will not be able to pay dividends D. the company may still have a net increase in cash
D
Which of the following sections from the statement of cash flows would include the acquisition of equipment in exchange for shares of the company's stock? A. financing section B. operating section C. investing section D. non-cash investing and financing activity
D
which of the following is a disadvantage of decentralization? A. increase the customers response time B. only the top management is allowed to make decisions C. demotivates employees as the decision making powers are not delegated D. problems in achieving goal congruence
D
which of the following is irrelevant when making a decision? A. the expected increase in contribution margin of one product line as a result of a decision to drop a separate unprofitable product line B. the fixed overhead costs that differ among decision alternatives C. the cost of further processing a product that could be sold as is D. the original cost of an asset that the company is considering replacing
D
which of the following is not a product cost? A. indirect labor B. manufacturing overhead C. indirect material D. depreciation of corporate headquaters
D
________ are equity securities in which the investor owns 20% or more, but less than 50%, of the investee's voting stock. A.Held-to-maturity investments B.Controlling interest investments C.Available-for-sale investments D.Significant interest investments
D
Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage. a. Ownership and management are separated. b. Entity has continuous life. c.Transfer of ownership is easy. d. Stockholders' liability is limited. e. Exposure to double taxation is evident. f. Entity can raise more money than a partnership or sole proprietorship. g. Government regulation is expensive.
Disadvantage Advantage Advantage Advantage Disadvantage Advantage Disadvantage
what investing and financing activities do not affect cash
acquired building by issuing stock acquired land by issuing note payable paid note payable by issuing common stock
On November 1, 2012, EZ Products borrowed $48,000 on 5%, 10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year. Which of the following describes the first installment payment made on November 1, 2013? A. $2,400 principle plus $2,400 interest B. $4,800 principle plus $400 interest C. $4,800 principle plus $2,400 interest D. $2,000 interest only
c
Which of the following are the activities that are included in the operating activities section of the statement of cash flows? A.activities that increase or decrease long-term assets B.activities that obtain the cash needed to launch and sustain the business C.activities that pertain to construction of new facilities D.activities that create revenue or expenses
d
true or false Investors and management use the statement of cash flows to evaluate a firm's profitability.
false
true or false The amount of net cash flow from operating activities will be different in the direct and indirect methods when preparing the statement of cash flows.
false
true or false The issue price of a bond-whether it is sold at par, premium, or discount-has a considerable effect on the required principal repayment at maturity.
false
true or false The unrealized holding gains and losses on available-for-sale investments are reported on the income statement.
false
true or false Transnational Company is looking for additional capital in order to purchase a property to build their headquarters. They found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company. This transaction would be shown in the financing activities section of the statement of cash flows.
false
true or false a method used to separate mixed costs into fixed and variable components is called the high-low method
false
true or false for bond accounting, both the straight-line method and effective-interest method of amortization are allowed bu GAAP, but the straight-line method is preferred by GAAP
false
true or false manufacturing overhead includes all manufacturing costs such as direct labor and direct materials
false
true or false stock sold for amounts in excess of par value results in a gain reported on the income statement
false
where do the long term liabilities go on the statement of cash flows?
financing
where does the owners equity go on the statement of cash flows?
financing
where does the long-term assets go on the statement of cash flows?
investing
what are short term investments?
investments in debt and equity securities that are highly liquid and that the investor intends to sell in one year or less.
where do the current liabilities go on the statement of cash flows?
operating
where does current assets go on the statement of cash flows?
operating
Assume Intervale Railway is considering investing in Pale, Co. stock for three months. The investment will represent 5% of the voting stock of Pale, Co. How would the investment be classified?
trading investment
in process costing, transferred-in costs are those cots incurred in a previous process and brought into a later process as part of the products cost true or false
true
true or false A mortgage payable is a long-term debt that is backed with a security interest in specific property.
true
true or false A company cannot report a gain or loss when buying or selling its own stock.
true
true or false At the end of each period, trading investments must be adjusted and reported at fair value.
true
true or false Consolidation accounting is the way to combine the financial statements of two or more companies that have the same owners.
true
true or false Stock dividends have no impact on the total amount of stockholders' equity.
true
true or false The financing activities section of the statement of cash flows includes paying dividends and paying off loans.
true
true or false Treasury stock is recorded at cost without reference to par value.
true
true or false at the end of an accounting period, the costs assigned to a production department can be split into 1. the cost of unity fully competed and transferred, AND the costs of units completed and remaining in the WIP of that department
true
true or false key performance indicators are summary performance measures that help managers assess whether the company is achieving its goal
true
true or false the issue price of a bond - whether it is sold at face value, premium, or discount - has no effect on the required principle repayment at maturity
true
