Principles of Accounting 2

Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is

$118,000

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 per share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

$19,200

Nebraska Inc. issues 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The entry to journalize the stock issuance would include a credit to Common Stock for

$30,000

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?

$30,000

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000, and depreciation expense of $8,000 was recorded. Net cash flows from operating activities for the year is

$33,000

A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

150,000 shares

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

21,000 units

If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, the break-even sales (units) if the variable costs are decreased by $2 is

2340 units

the date is used to determine the owners of stock who will receive the current dividend is the

date of record

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be

deducted from net income in converting the net income reported on the income statement to the net cash flows from operating activities

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as

direct labor cost

a product cost is

expensed in the period the product is sold

which of the following is an example of a factory overhead cost?

factory heating and lighting cost

cash received from the issuance of a mortgage note payable would be classified as a(n)

financing activity

A $300,000 bond was redeemed at 104 when the carrying amount of the bond was $316,000. The entry to journalize the redemption would include a

gain on bond redemption of $4,000

the document that formally creates a corporation is the

charter or articles of incorporation

Alma Corp. issues 1,000 shares of $10 par common stock at $14 per share. When the transaction is journalized, credit(s) are made to

common stock for $10,000 and paid-in capital in excess of par-common stock for $4,000

Which of the following should be deducted from net income in determining the net cash flows from operating activities using the indirect method?

gain on sale of land

If bonds are issued at a premium, the stated interest rate is

higher than the market rate of interest

Flying Cloud Co. has the following operating data for its manufacturing operations: Line Item DescriptionAmountUnit selling price$250Unit variable cost100Total fixed costs840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be

increased by 640 units

the two main sources of stockholders' equity are

investments by stockholders and net income retained in the business

Accounting designed to meet the needs of decision makers inside the business is

managerial accounting

the primary goal of managerial accounting is to provide information to

managers

When a new partner is admitted to a partnership, a bonus

may be attributable to the existing partners

the order of presentation of activities of the statement of cash flows is

operating, investing, financing

The purchase of stock of another company as an investment would appear on the statement of cash flows as an

outflow of cash in the investing activities section

Which of the following should be shown on a statement of cash flows in the financing activities section?

payment of cash to retire a long-term note

On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Lisbon does not record amortization with the semiannual interest payments. The adjusting entry at year-end to journalize the amortization of the premium (by the straight-line method) includes a debit to

premium on bonds payable for $5,000

a business owned by a single individual is called a

proprietorship

Which of the following transactions would be reported as an investing activity on the statement of cash flows?

purchased long-term assets

When a new partner is admitted to a partnership, there should be a(n)

revaluation of assets

Paid-In Capital from Sale of Treasury Stock would be reported on the financial statements as a(n)

stockholders' equity item on the balance sheet

cash paid for equipment would be reported on the statement of cash flows in

the investing activities section

if there is no written agreement as to the way income will be divided among partners,

they will share income and losses equally

which of the following conditions would cause the break-even point to increase?

unit variable cost increases

In cost-volume-profit analysis, all costs are classified into which of the following two categories?

variable costs and fixed costs

a cake factory would classify which of the following as both a prime cost and a conversion cost?

wages of the baker

which of the following is the appropriate entry to journalize the declaration of cash dividends?

cash dividends cash dividends payable

Darwin Company reports the following information: Line Item DescriptionAmountSales$76,500Direct materials used7,300Depreciation on factory equipment4,700Indirect labor5,900Direct labor10,500Factory rent4,200Factory utilities1,200Sales salaries expense15,600Office salaries expense8,900Indirect materials1,200 Period costs are

$24,500

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: YearAmountYear 1:$10,000Year 2:45,000Year 3:90,000 Determine the dividends in arrears for preferred stock at the end of the second year.

$25,000

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: Line Item DescriptionEndBeginningCash$50,000$60,000Accounts receivable112,000108,000Inventories105,00093,000Prepaid expenses4,5006,500Accounts payable (merchandise creditors)75,00089,000 What is the amount of net cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

$296,000

Darwin Company reports the following information: Line Item DescriptionAmountSales$76,500Direct materials used7,300Depreciation on factory equipment4,700Indirect labor5,900Direct labor10,500Factory rent4,200Factory utilities1,200Sales salaries expense15,600Office salaries expense8,900Indirect materials1,200 Product costs are

$35,000

The current period statement of cash flows includes the following: Line Item DescriptionAmountCash balance at the beginning of the period$310,000Net cash flows from operating activities185,000Net cash flows used for investing activities43,000Net cash flows used for financing activities97,000 The cash balance at the end of the period is

$355,000

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of capital balances.

$37,500 and $112,500

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash paid for dividends during the year is

$40,000

Sandra and Kelsey are forming a partnership. Sandra will invest a piece of equipment with a book value of $7,500 and a fair market value of $18,000. Kelsey will invest a building with a book value of $40,000 and a fair market value of $44,000. What amount will be recorded to Kelsey's capital account?

$44,000

Sandra and Kelsey are forming a partnership. Sandra will invest a piece of equipment with a book value of $7,500 and a fair market value of $18,000. Kelsey will invest a building with a book value of $40,000 and a fair market value of $44,000. What amount will be recorded to the building account?

$44,000

Bonds Payable has a balance of $834,000 and Discount on Bonds Payable has a balance of $10,008. If the issuing company redeems the bonds at 98, what is the amount of gain or loss on redemption?

$6,672 gain

Land costing $46,720 was sold for $78,503 cash. The gain on the sale was reported on the income statement as "Other revenue." On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

$78,503

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, the break-even sales in units (rounded to the nearest whole unit) i

4,808 units

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

4000 units

Seth and Rachel have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investments at 15%; salary allowances of $24,000 and $20,000, respectively; and the remainder to be divided equally. How much of the net income of $90,000 is allocated to Seth?

43,250

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, the contribution margin ratio is

45%

Sadie and Sam share income equally. For the current year, the partnership net income is $40,000. Sadie made withdrawals of $14,000 and Sam made withdrawals of $15,000. At the beginning of the year, the capital account balances were: Sadie, Capital, $42,000; Sam, Capital, $58,000. Sam's capital account balance at the end of the year is

63,000

Kaiser Air is considering a new flight between Atlanta and Tampa. The average fare per seat is $400. The fixed costs for the flight, which include crew salaries, operating costs, and aircraft depreciation, total $32,000. Variable costs per passenger total $75. The break-even number of passengers per flight (rounded to the nearest whole number) is

98

Managers use management accounting information for which of the following purposes?

all of these choices

how is a treasury stock shown on the balance sheet?

as a decrease in stockholders' equity

the state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called

authorized stock

the entry to journalize the issuance of common stock at a price above par includes a debt to

cash

bonds with a face amount of $1,000,000 are sold at 106. the entry to journalize the issuance is

cash premium on bonds payable bonds payable