Accounting 2 final exam review
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 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
Basis that reflect the consumption or provision of resources.
Activity Driver
The cost incurred to detect mistakes as early in the process as possible.
Appraisal cost
Shipping document that describes agreement between business and common carrier.
Bill of Lading
The point where the total cost line intersects the total revenue line.
Breakeven Point
A collection of activities that takes one or more kinds of input and creates an output that is valued by customers.
Business process
FOB shipping point indicates that goods in transit belong to the:
Buyer
A series of interrelated activities designed to produce goods a company sells.
Conversion process
Manufacturing products is associated with which of the following processes?
Conversion process
How a cost reacts to change in the level of operating activity
Cost Behavior
The study of how costs and profits change in response to changes in the volume of goods and services provided to consumers.
Cost-volume-profit analysis
Wages of employees who put the equipment together
DL
Which of the following is a short-term operating decision?
Decision to discontinue a product line
The Capital Resources Process features which of the following pairs of activities?
Financing and Investing Activities
A revenue that does not change in total as activity changes.
Fixed Revenue
A ratio used to monitor the profitability of the company's products
Gross Margin Ratio
The additional cost associated with an alternative.
Incremental Cost
The difference between the incremental revenues and incremental cost of a particular alternative.
Incremental profit
Activities that involve the purchase and sale of long-term assets and other major items to achieve the business's strategy.
Investing activities
Cost of the oil used to cut metal tubing
MOH
Insurance on factory equipment
MOH
Salary of the quality control inspector
MOH
Cost of shipping equipment to customers
NP
Research cost incurred to develop new types of equipment
NP
. A measure of the company's ability to meet its current obligations as they come due.
Quick Ratio
How a revenue reacts to a change in the level of operating activity.
Revenue Behavior
Delivery of goods is associated with which of the following process?
Revenue process
Discounts given to unhappy customers by seller (seller books).
Sales Allowances
A sales invoice originates with the:
Sales Department
The process of changing key variables to determine how a prior outcome is impacted by the change in the variable.
Sensitivity Analysis
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
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
Which of the following is a balanced scorecard perspective?
all of the above are balanced scorecard perspectives
Salary of the quality control inspector
b
Insurance on factory equipment
f
A company must rework some products because mistakes were made. The costs associated with this rework are _____________ quality costs.
internal failure
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
Cost of office supplies
np
Depreciation on salespersons' cars
np
The president of the corporation's salary
np
The profit making activities of an enterprise are referred to as:
operating activities
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 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
Cost of the cables used in the equipment
u
Cost of the oil used to cut metal tubing
u
Total sales less total variable cost at a given point of activity.
Contribution Margin
Total sales less total variable costs at a given level of activity.
Contribution margin
The contribution margin per unit divided by the selling price per unit.
Contribution margin ratio
The amount of time from when a customer places an order until the order is received.
Customer response time
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.
D
The cost of materials that are directly traceable to the product and that are costly enough to warrant tracing them.
Direct material
When a company operates in a more certain environment it tends to focus inward and have a
Efficiency strategy
Which of the following is part of the revenue process?
Provide customer support
What is the total amount of current liabilities of ABC Company?
a. $419
A company has $28,000 in total owners' equity and $86,000 of total assets. What are the company's total liabilities?
a. $58,000
A company has assets of $500,000 and liabilities of $300,000, what is its total owners' equity?
d. $200,000
What is the return on sales ratio for ABC Company?
d. 9.4%
Which of the following is an asset for ABC Company?
d. amounts ABC's customers owe it
A company operates in a relatively certain environment; it is more likely to use a _________ structure and a _________ strategy.
mechanistic structure; efficiency strategy
Cost of the fabric used on the recliners.
p
Cost of the glue used to assemble the chairs
p
Cost of the utilities incurred to run the manufacturing plant.
p
Cost of the wood used in the chairs.
p
Research cost incurred to develop new types of equipment
p
The salary of the foreman who oversees the raw materials warehouse
p
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
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. What is the breakeven point in units?
100,000
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
1. Activities that involve obtaining the cash or other resources as means to pay for long-term assets, to repay borrowed funds, and provide a return to owners.
Financing Activities
A cost that does not change in total as the amount of activity changes
Fixed Cost
The set of policies and procedures that promotes operational efficiency, accurate accounting information, and compliance with laws and regulation.
Internal control system
A cost incurred to fix mistakes before the mistakes become known to the Customer.
Internal failure cost
A measure of the speed at which the company sells its inventory.
Inventory Turnover
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
The profit-making activities of a business enterprise.
Operating process
A benefit forgone when choosing one alternative over another.
Opportunity cost
A structure in which activities and people are arrange in cross-functional teams.
Organic organizational structure
The span of operating activity that is considered normal for a company.
Relevant Range
A cost or revenue that will occur in the future and that differs among the alternatives considered.
Relevant Variable
A cost or revenue that will occur in the future and that differs among the alternatives considered.
Relevant variable
The return generated per dollar of total investment.
Return on Investment Ratio
A series of interrelated activities designed to generate revenue.
Revenue process
Time spent on activities that add worth to the company's products, services, or processes.
Value-added time
A cost that changes in direct proportion to the change in activity.
Variable Cost
A revenue that changes in direct proportion to the change in activity.
Variable Revenue
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?
a. $30,000
The variable housekeeping cost per room rental is:
$ 9.00
What is the breakeven point in dollars for ABC Company Product A?
$1,500,000
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
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 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 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
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
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
Cost of the cables used in the equipment
DM
Legal title transfers when goods leave the seller's place of business.
FOB Shipping Point
A cost that varies, but not proportionately, to a change in activity.
Mixed Cost
A cost that is related to selling the products and services or administering the company.
Nonproduct cost
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
A company's long-term plan for using its resources both physical and human.
Organizational strategy
The Balanced Scorecard Approach is part of which of the following processes?
Performance Measurement and Management Process
A cost incurred to prevent mistakes from occurring.
Prevention cost
Reduction in price of goods purchased as a result of dissatisfaction by customer (buyers books).
Purchase Allowances
Discount given buyer for paying amount due early.
Purchase Discounts
Goods return by buyer on buyer's books.
Purchase Returns
A document sent by the purchasing department to order a specific quantity of goods or services is called a:
Purchase order
Which of the following is not part of the revenue process?
Receive goods and services
Determining the credit and payment policies for customers is part of the:
Revenue process
The relative proportions of units of products sold in a multiple-product company.
Sales Mix
A past cost that is not relevant in short-term decisions.
Sunk Cost
A cost that varies with the number of units.
Unit related cost
Which of the following is not part of the expenditure process?
Using equipment to manufacture products
Given the information above, what is the net income for ABC Company?
a. $78
Which financial statement is designed to show the amounts of assets, liabilities, and owners' equity at the end of the period?
a. balance sheet
ABC Company has one owner with limited liability. ABC Company is organized as a:
a. corporation
What is the total amount of current assets of ABC Company?
c. $1,161
What is the current ratio of ABC Company?
c. 2.77
Using the accrual basis of accounting, income is measured as:
c. revenues earned less expenses incurredThis
Selling price less variable costs equals:
contribution margin
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,
Wages paid to employees who assemble the chairs
p
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
Selecting suppliers for a company's goods and services is part of the:
Expenditure process
A cost incurred to fix mistakes after the mistakes become know by the customer.
External failure cost
Legal title transfers to customer when goods are received.
FOB Destination
The cost of production employees who do not physically manufacture the product.
Indirect Labor
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
Salary of warehouse foreman where raw material is stored
MOH
Set up cost to change from one piece of equipment to another
MOH
All cost other than direct materials and direct labor that are incurred in the manufacture of products.
Manufactoring Overhead
Manufacturing cost not directly associated with the production of a product.
Manufacturing overhead
A structure in which activities and people are arrange by functions.
Mechanistic organizational structure
A revenue that changes, but not proportionately, to a change in activity.
Mixed Revenue
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.
Set up cost to change from one piece of equipment to another
b
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?
b. $11,000
If the ABC Company has total owner's equity of $625 what is the debt-to-equity ratio?:
b. .6704
If only the selling price increase the breakeven point.
b. Decrease
The current ratio shows the relationship between
b. current assets and current liabilities
The auditor's report indicates the auditors' opinion concerning whether the company
b. followed generally accepted accounting principles
Which financial statement is designed to show the net income for a period of time?
b. income statement
ABC Company is organized to buy and sell Widgets. What type of organization is ABC Company?
b. merchandising firm
The financial statement item, "sales" is a(n):
b. revenue.
Which financial statement is designed to show the cash flows from operating, investing, and financing activities for a period of time?
b. statement of cash flows
The point where the total revenue line intersects the total cost line is called the:
breakeven point
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
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
