Accounting II Review- Multiple Choice

What is the total amount of current liabilities of ABC Company?

$419

Decatron, Inc. purchased $76,500 of parts from a vendor who offered credit terms of 3/15, n/45. If Decatron takes advantage of the discount, the amount paid to the vendor (rounded to the nearest dollar) will be:

$74,205

ABC Company produces and sells Product A. The selling price is $15 per unit. It costs $4 per unit to make Product A and $2 per unit to sell it. Fixed manufacturing costs are $600,000 per year and fixed selling and administrative costs are $300,000 per year. ABC Company's tax rate is 25%. Round all answers to the nearest whole number.

100,000

What is the return on sales ratio for ABC Company?

9.4%

FOB shipping point indicates that goods in transit belong to the:

Buyer

Manufacturing products is associated with which of the following processes?

Conversion process

Short-term decision making differs from long-term decision making because:

Short-term decision making assumes capacity is fixed.

The "I Can't Believe It's Yogurt" shop sells only yogurt and only in cups. Which of the following would be a variable cost if number of customers is the cost driver?

Spoons

Which of the following is not part of the expenditure process?

Using equipment to manufacture products

Which of the following is a balanced scorecard perspective?

all of the above are balanced scorecard perspectives

The auditor's report indicates the auditors' opinion concerning whether the company

followed generally accepted accounting principles

A company must rework some products because mistakes were made. The costs associated with this rework are _____________ quality costs.

internal failure

Metal Fabricators, Inc. manufactures file cabinets. A new customer purchases 3,000 file cabinets. Is this activity planning, performing, or evaluating.

performing

A company deposits checks from customers every night and backs up its computer systems daily. What internal control procedure is being practiced?

physically controlling assets and documents

Which of the following should be monitored as part of the learning and growth perspective of the balanced scorecard?

research and development

The financial statement item, "sales" is a(n):

revenue

Using the accrual basis of accounting, income is measured as:

revenues earned less expenses incurred

Which of the following is a short-term operating decision?

Decision to discontinue a product line

If only the selling price increase the breakeven point.

Decrease

When a company operates in a more certain environment it tends to focus inward and have a

Efficiency strategy

Selecting suppliers for a company's goods and services is part of the

Expenditure process

A company operates in a relatively certain environment; it is more likely to use a _________ structure and a _________ strategy.

mechanistic structure; efficiency strategy

Metal Fabricators, Inc. manufactures file cabinets. Some of the company's activities are listed below. Management sets a goal of obtaining a 22% share of the total market. Is this activity planning, performing, or evaluating.

planning

A company trains its employees so that mistakes happen less frequently. The costs associated with this training are __________ quality costs.

prevention

Veta Corporation purchased $14,650 in supplies from a vendor offering credit terms of 2/10, n/30. If Veta takes advantage of the discount, the amount paid to the vendor (rounded to the nearest dollar) will be:

$14,357

A company has assets of $500,000 and liabilities of $300,000, what is its total owners' equity?

$200,000

The Capital Resources Process features which of the following pairs of activities?

Financing and Investing Activities

Tri-State Corporation ordered materials from Down-State Manufacturing on October 1, 2006. Down-State shipped the materials by rail on October 5 and the railroad notified Tri-State on October 12, that the goods had arrived. Tri-State picked up the materials on October 13. The terms of the sale are FOB shipping point. On what date should Tri-State consider this a purchase?

October 5

Which of the following is not part of the revenue process?

Receive goods and services

Delivery of goods is associated with which of the following process?

Revenue process

Which of the following is an asset for ABC Company?

amounts ABC's customers owe it

What is the current ratio of ABC Company?

2.77

ABC Company is organized to buy and sell Widgets. What type of organization is ABC Company?

Merchandising firm

The point where the total revenue line intersects the total cost line is called the:

breakeven point

Housekeeping Costs Number of Room Rentals May $19,970 1,300 June 21,500 1,560 July 23,240 1,740 August 24,760 1,890 September 18,380 1,180 October 16,930 1,020 The variable housekeeping cost per room rental is:

$ 9.00

What is the total amount of current assets of ABC Company?

$1,161

What is the breakeven point in dollars for ABC Company Product A?

$1,500,000

A company made sales of $50,000 but received only $48,000 in cash from customers. During the same time period, it incurred operating expenses of $39,000 of which it paid for $18,000 in cash. What is the company's accrual-based income?

$11,000

A company used the high/low method and determined that the variable revenue per order was $3.00. At the lowest level of activity, 100 orders, the total revenue was $800. What is the fixed revenue per order?

$500

A company has $28,000 in total owners' equity and $86,000 of total assets. What are the company's total liabilities?

$58,000

If the ABC Company has total owner's equity of $625 what is the debt-to-equity ratio?:

.6704

When a company operates in an uncertain environment that has rapidly changing products it is more likely to have an

Organic organizational structure with a flexible strategy

Determining the credit and payment policies for customers is part of the:

Revenue process

Which financial statement is designed to show the amounts of assets, liabilities, and owners' equity at the end of the period?

balance sheet

Fit for Fun, Inc. sells fitness equipment. The company has 75 stores located in malls throughout the country. The company recently borrowed $50,000 from the bank. This transaction is part of which process?

capital resources process

Selling price less variable costs equals:

contribution margin

The current ratio shows the relationship between

current assets and current liabilities

Which financial statement is designed to show the net income for a period of time?

income statement

The profit making activities of an enterprise are referred to as

operating activities

Fit for Fun, Inc. sells fitness equipment. The company has 75 stores located in malls throughout the country. The company recently purchased 300 treadmills for resale. This transaction is part of which process?

operating process,

The bookkeeper who records cash receipts also deposits daily cash receipts at the bank on his way home from work. This is a violation of which of the following characteristics of good internal control:

separating incompatible duties

A company has one person who is responsible for receiving checks from customers and another person who is responsible for recording the receipts. What internal control procedure is being practiced?

separation of duties

A company used the high/low method and determined that the variable cost per unit was $6 while the fixed cost per month was $10,000. What is the estimated total cost if 200 units are produced?

$11,200

A company used the high/low method and determined that the change in cost was $10,000 when the change in activity was 5,000 orders. What is the variable cost per order?

$2.00

A company ships $20,000 of merchandise with terms 1/10, n/30, FOB destination. What is the amount of the discount available to the purchaser?

$200

A company purchases $25,000 of merchandise with terms 3/10, n/60; FOB shipping point on December 30 and is invoices on Dec. 30th. The merchandise arrives on January 3 and the company pays its bill on January 13. How much does the company owe?

$25,000

A company made sales of $50,000 but received only $48,000 in cash from customers. During the same time period, it incurred operating expenses of $39,000 of which it paid for $18,000 in cash. What is the company's cash-based income?

$30,000

At May 31, Allegro Company had a general ledger cash balance of $7,400. At the end of May, the bank statement had a balance of $7,500. Deposits in transit amounted to $1,000 and there was a service charge of $10. Outstanding checks totaled $1,110. What is the correct amount of cash?

$7,390

Use the following information to answer the next 6 questions. The following data is available for ABC Company. Cash $339 Sales $828 Accounts receivable 766 Cost of goods sold 620 Inventory 56 Operating expenses 94 Accounts payable 115 Provision for income taxes 36 Other current liabilities 304 Given the information above, what is the net income for ABC Company?

$78

Norton Corporation has purchased raw materials from a vendor and was offered credit terms of 2/10, n/30. Which of the following reflects these terms?

2% discount if paid within 10 days

Abel Corp. ordered $50,000 of energy drinks from Moster Energy Incorated and were given terms of 2/15 net/60. Which of the following describes how soon the payment must be made in order to receive a discount and the amount of the discount available. Payment Made Within Amount of Discount A Between 2 and 15 Days 20,000 B 60 Days $7,500 C Between 2 and 15 $1,000 D Between 2 and 15 $1,000

D

Goods shipped from a seller's warehouse on June 10, 2010, arrived at the buyer's warehouse on June 16, 2010. The invoice for the goods arrived at the buyer's accounting department on June 13, 2010 and was paid on June 20, 2010. If the goods were sold FOB destination, the buyer took legal title on:

June 16, 2008

Beta Company currently makes 350,000 units of product Gamma along with its other products. Its production costs per unit are: direct materials, $5; direct labor, $4; unit-related overhead, $2. Facility-sustaining overhead is $700,000 per year. A company has made Beta an offer to supply all the units of Gamma it needs for $12 per unit. Should Beta Company buy Gamma from the supplier?

No, it will lose $1 per unit.

The Balanced Scorecard Approach is part of which of the following processes?

Performance Measurement and Management Process

Which of the following is part of the revenue process?

Provide customer support

A document sent by the purchasing department to order a specific quantity of goods or services is called a:

Purchase order

A sales invoice originates with the:

Sales Department

As part of its internal perspective, a company calculates an inventory turnover ratio and the days in the selling cycle. These results should be compared to:

The inventory shelf life.

Largo Company's highest and lowest monthly costs during the past year were $108,000 and $72,000, respectively. Activity levels were 5,000 hours and 3,000 hours, respectively. Determine Largo's cost formula.

Y=18(X) + 18,000

Fit for Fun, Inc. sells fitness equipment. The company has 75 stores located in malls throughout the country. The company recently made a $4,000 payment on the mortgage. Identify this activity as part of the (B) Business Organization and Strategy Process (O) operating process, (CR) capital resources process (P) Performance Measurement and Management

capital resources process

ABC Company has one owner with limited liability. ABC Company is organized as a:

corporation

Activities involving the purchase and sale of long-term assets as well as other major items used in a business's operation are referred to as:

investing activities

Which financial statement is designed to show the cash flows from operating, investing, and financing activities for a period of time?

statement of cash flows