ACC 310F Final Exam: (Exam 3)

The Ewing Company recently sold 800 units for $20 each; reported total fixed costs of $4,600 and net income of $200. If the company's unit variable costs increased by $2 and its volume increased by 150 units, what would be the company's net income?

-800

Wages for assembly line workers would be classified as a(n) ___ cost as well as a ___ cost.

1. direct labor 2. variable

Rent for production equipment would be classified as a(n) ___cost as well as a ___ cost.

1. overhead 2. fixed

The Williams Corporation had the following transactions in November: 1. Services previously sold in advance of $9,000 were performed. 4. Received $3,000 from customers on account. 15. Performed $5,000 of services on account 22. Customers paid for $500 of services in advance. 28. Received utility bill for $700; will pay next month. 29. Paid $3,000 to employees for their services What is the company's net income for the month?

10,300

What are the types of business activities?

operating (OPR), investing (INT), financing (FIN)

statement of cash flows

operating (OPR), investing (INT), financing (FIN) = change in cash attracts cash into company and out of company by the types of activities

The Badger Company developed the following standards for the manufacture of its product: Each unit should have 2 pounds of direct materials purchased at $4.60 per pound. Each unit should be produced in 1½ hours at a direct labor cost of $18 per hour. Actual production was 4,000 units using 8,200 pounds of direct materials at a total cost of $36,200 and required 5,800 direct labor hours at a total cost of $106,000. What was the direct materials "cost" variance for the company? Use a positive number to indicate a favorable variance or a negative number to indicate an unfavorable variance.

1520

The Jocasta Corporation had the following account information available: Revenue: $85,000 Cash: $3,000 Payroll expense: 60,000 Retained earnings: 140,000 Rent expense: 12,000 Equipment: 70,000 Dividends: 500 Accounts payable: 8,000 Cost of goods sold: 10,500 What is the company's net income?

2,500

The HJ Chang Company produces soup, which it sells for $4.50 per unit. The company recently had the following costs to manufacture 30,000 units: (a) rent on the factory $28,000, (b) salaries for management $102,000, (c) wages to factory workers $52,800, (d) utilities for factory of $8,500 and (e) product ingredients $38,000. What was the company's variable cost per unit? Round your final answer to the nearest penny.

3.31

The Charles Corporation purchased equipment on October 1, 2018 for $7,280 and expects to use it for 4 years at which time it can be sold for an estimated $2,000. How much depreciation expense would be reported in the company's 2018 year-end financial statements?

330

Frobisher, Inc. reported the following information at the end of the year: Accounts receivable $4,000, Cash $6,000, Equipment $32,000, Inventory $14,000 and Owner's equity $18,000. What are the company's total liabilities?

38,000

If you deposited $2,800 into a savings account that paid 6% interest how much would be in the account in 8 years, if you never made any additional deposits or withdrawals? Round your final answer to the nearest whole dollar.

4463

The Sachs Corporation buys lawn mowers for $215 and sells them for $380; the company has the following sales forecast: June 1,200 units, July 2,400 units and August 3,200 units. Ending inventory for each month should be 10% of the next month's sales. The company had 180 units on hand on June 1st. What total dollar amount would appear on the company's income statement budget for cost of goods sold for July?

516,000

Right now you are 20 years old and want to retire at 65; if you want to have $1,500,000 in the bank when you retire, how much must you deposit each year to reach your goal if your account pays interest of 6 percent? Round your final answer to the nearest whole dollar.

7051

The Cavendish Company had the following account information available: Accounts payable: $3,000 Unearned revenue: $3,200 Supplies: 450 Accumulated depreciation: (62,000) Common stock: 25,000 Notes payable: 94,000 Inventory: 12,500 Equipment: 110,000 Accounts receivable: 6,000 Cash: 18,000 What amount of total assets does the company have?

84,950

Practice problem 1 (a) Identify each of the following transactions as an operating (OPR), investing (INT), or financing (FIN) activity A. Owner's invest $3,000 in the company B. Purchased $500 of inventory C. Purchased $1,000 of equipment D. Borrowed $300 from a bank

A. FIN (money needed to continue business) B. OPR (day-to-day activity) C. INT (long-term resource) D. FIN (needed sometimes to start; anything from bank)

How do businesses make money? What are the basic levels of each type of company? Apple Target Netflix

Apple: (manufacturer); buy parts, buy people to put items together Target: (merchandiser); buy phones from Apple, puts on shelf to sell Netflix: (service provider); provide a service, don't sell anything, have to pay costs for licensing

balance sheet

Assets = Liabilities + Owners' Equity what is owed, owned, and net worth of a company

Practice Exam 3-A

Practice Exam 3-A

income statement

Revenues - Expenses = Net Income revenue (value of products you sell), expenses (cost of food, etc.), net income, operation performance (i.e. profits)

Practice problem 1 (c) Using your results from part (b), prepare a statement of cash flows and a balance sheet

Statement of cash flows for month of x month OPR activities: (500) INT activities: (1,000) FIN activities: 3,300 Change in cash: 1,800 Balance sheet at end of x month Assets Cash: 1,800 Invt: 500 Equip: 1,000 Total assets: 3,300 Liabilities + Equity Notes payable: 300 Common stock: 3,000 Total liab + eq: 3,300

The Role of Accounting in Business (Chapter 1: Obj. 1-5) Basic Accounting Systems: Cash Basis (Chapter 2: Obj. 1-5)

The Role of Accounting in Business (Chapter 1: Obj. 1-5) Basic Accounting Systems: Cash Basis (Chapter 2: Obj. 1-5)

Practice problem 1 (b) Create an accounting framework and record the transactions from part (a)

Total: Cash: 1,800 Inventory: 500 Equipment: 1,000 Liabilities: 300 Common stock: 3,000

The Clarkson Company had the following financial information available: Year 3: Revenues: $184,764 Expenses: 67,420 Net income: 117,334 Total assets: 148,448 Total liabilities: 70,906 Owner's equity: 77,542 Year 2: Revenues: $179,410 Expenses: 66,098 Net income: 113,312 Total assets: 140,768 Total liabilities: 68,178 Owner's equity: 72,590 Year 1: Revenues: $174,184 Expenses: 63,554 Net income: 110,630 Total assets: 131,904 Total liabilities: 64,930 Owner's equity: 66,974 Based on this information, the company's solvency is: a. getting better b. getting worse c. cannot be determined

a. getting better

things to remember**

every time owner puts money into company = common stock assets: things a company owns liabilities: someone has a claim on things the company owns the accounting framework can balance itself on one side () negative # = total liabilities are positive when you owe money to the bank unless they are paid off than they are negative

financing (FIN)

funds needed to start and operate a business from owners or banks ex. student loans

What types of financial statements are there?

income statement, balance sheet, statement of cash flows, statement of equity

investing (INT)

purchase (or sale) of long-term resources such as land, a building, or equipment ex. buying/selling a laptop, art

Demo problem Sarah Vasquez recently started a clothing company called UTees which sells college-themed T-shirts. After two months of operations she's unsure of how well (or poorly) the company performed, but has several documents that relate to the company's operations. Make an accounting framework and financial statements for August. Aug. 1: Pay to the order of UTees: $2,000 for common stock in UTees Aug. 5: Threadz, Inc. Acct name: UTees for 25 V neck T-shirts @ $5 each amount paid: $125 Aug. 15: Pay to the order of UTees: $800 for small business loan Aug. 17: Fox Equipment Customer: UTees silk screen printing press: $500 drying rack: 50 total paid: $550 Aug. 25: Fox Equipment Customer: UTees item returned: drying rack refund issued: $50

accounting framework total: cash: $2,175 inventory: $125 equipment: $500 liabilities: $800 equity: $2,000 financial statements UTees statement of cash flows for month of August operating activities: (125) investing activities: (500) financing activities: 2,800 total change in cash: 2,175 calculate what is shown in each category to get the total change in cash (like if you see a negative number, calculate the negative number in the order of the statement; instead of combining the negative number and subtracting by the positive, calculate by the order of the category) UTees balance sheet at the end of August assets -cash: 2,175 -inventory: 125 -equipment: 500 total assets: 2,800 (total amount company owns) liabilities and equity -notes payable: 800 -common stock: 2,000 total liab and equity: 2,800 assets = liabilities + equity (balance sheet = stuff has to balance) what you own = money that has to balance

How many of the following ratios are used to evaluate a companies profitability? Current ratio Gross profit margin ratio Debt ratio Days sales in inventory a. 0 b. 1 c. 2 d. 3 e. 4

b. 1

Which department is most likely responsible for a direct materials variance related to quantity? a. Budgeting department b. Production department c. Accounting department d. Purchasing department e. Sales department

b. Production department

Which financial statement would report the amount of dividends paid for the year? a. Balance sheet b. Statement of equity c. Income statement d. Statement of payments e. None of the above

b. Statement of equity

The value of inventory reported on a company's balance sheet would not include which of the following? a. direct material costs b. period costs c. overhead costs d. two of the above

b. period costs

Adjustments like as accruals and deferrals are necessary to adjust for things such as the timing differences between when a. product is made and when it is sold b. an employee is hired and when they start to work c. an expense happened and when it is paid for d. owners invest in a company and when the related cash is collected e. equipment is purchased and when it is paid for

c. an expense happened and when it is paid for

Which budget is prepared last? a. sales budget b. cash budget c. balance sheet budget d. income statement budget e.budgets can be prepared in any order

c. balance sheet budget

For a supplier deciding whether or not to sell products on account to a company, which of the company's ratios would the supplier most likely evaluate? a. gross profit ratio b. debt ratio c. days sales in inventory d. return on investment

c. days sales in inventory

The Ethel Company recently performed consulting services for a customer and agreed to send them a bill; the transaction used to record the sale would include a. +Cash and +Revenue b. +Cash and +Common Stock c. +Cash and (Inventory) d. +Accounts Receivable and +Revenue e. +Cash and (Accounts Receivable)

d. +Accounts Receivable and +Revenue

Big Bus Transportation operates regional bus routes. In a recent budget performance report, there was a favorable "quantity" variance related to fuel. Which of the following is the most likely explanation? a. The cost of fuel unexpectedly decreased. b. Poor weather caused the cancellation of more routes than usual. c. Labor union contract disputes led to increased wages for all bus drivers. d. More fuel-efficient engines were recently put in to service on company buses. e. Workers agreed to a reduction in their holiday pay.

d. More fuel-efficient engines were recently put in to service on company buses.

f you were borrowing money to buy a house and wanted to calculate your annual payment, which time value of money should you use? a. Future value of $1 b. Present value of $1 c. Future value of an annuity of $1 d. Present value of an annuity of $1

d. Present value of an annuity of $1

Owner's equity a. equals the amount of cash owned by a company. b. equals the amount of assets owned by a company. c. equals the amount invested by owners minus retained earnings. d. equals the amount invested by owners plus retained earnings. e. equals the amount invested by owners.

d. equals the amount invested by owners plus retained earnings.

operating (OPR)

day to day operations including things like sales, payroll, or utilities

Which of the following statements is true? a. Net profit margin ratio is generally higher than the gross profit margin ratio. b. Fixed costs change in total as volume increases. c. Total variable costs decrease as volume increases. d. Variable costs per unit increase as volume increases. e. None of the above

e. None of the above

Which of the following would be an example of a deferral? a. Recording the receipt of a utility bill that will be paid next month. b. Collecting amounts owed from a customer. c. Selling services to a customer who will pay later. d. Paying a utility bill that was received last month. e. None of the above

e. None of the above

Which of the following would be considered an operating activity cash receipt? a. Increase in production b. Increase in advertising c. Increase in bank loan d. Decrease in bank loan e. None of the above

e. None of the above

Which of the following pieces of information is necessary for preparing a purchases budget? a. desired ending inventory b. estimated sales c. beginning inventory d. two of the above e. all of the above

e. all of the above

In basic terms, an expense is the value of a resource ________ by a company. a. owed b. owned c. sold d. invested e. consumed

e. consumed

accounting

is an information system that provides reports to stakeholders about the economic activities and condition of a business to help make informed decisions

What are some aspects of the accounting system?

rules (i.e. GAAP: Generally Accepted Accounting Principles) and controls accounting framework -transactions (details) Apple ⇌ Supplier (cash) ⇌ (memory chip) (monies) ⇌ (inventory) exchange: one thing for another ANY transaction is an exchange of some sort -financial statements (summary statements) income statement balance sheet statement of cash flows statement of equity in any given transaction, assets, liability, owner's equity, revenue, expenses → assets, liability, owner's equity, revenue, expenses will be returned or exchanged to each other