Accy 202 Chapters 13-16

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Laramie Technologies had the following data: Cost of materials used $50,000 Direct labor costs 56,000 Factory overhead 28,000 Work in process inventory, beginning 45,000 Work in process inventory, ending 32,000 Calculate the cost of goods manufactured.

$147,000 Cost of goods manufactured = $50,000 + $56,000 + $28,000 + ($45,000 - $32,000) = $147,000

Based on the following data, what is the inventory turnover? Sales on account during year $400,000 Cost of goods sold during year 255,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 80,000 a. 3.0 b. 2.8 c. 10.0 d. 1.6

Calculator Which of the following is most associated with managerial accounting? a. may rely on estimates and forecasts b. must follow GAAP c. always reports on the entire entity d. is prepared for users outside the organization

Cost savings from replacing lighting fixtures in a production facility is an example of the measure of a. energy efficiency. b. material use efficiency. c. waste efficiency. d. fuel efficiency.

Direct labor and direct materials are a. product costs and expensed when the goods are sold b. period costs and expensed when the goods are sold c. product costs and expensed when incurred d. period costs and expensed when incurred

Factory overhead includes a. indirect labor and indirect materials b. direct materials and direct labor c. factory rent and direct labor d. indirect materials and direct materials

Free cash flow is flow cash from operations less cash used for a. investments in PP&E needed to maintain current operations. b. investments in PP&E needed to achieve desired future operations. c. dividends and cash to redeem bonds payable. d. fixed assets needed to maintain current operations and cash to redeem bonds payable.

If the free cash flow changed from $60,000 to $80,000, the change a. is indicative of a favorable trend. b. is indicative of an unfavorable trend. c. is not indicative. d. could be considered favorable or unfavorable depending on other surrounding circumstances.

In most business organizations, the chief management accountant is called the a. controller b. chairman of the board c. chief executive officer d. chief accounting officer

Leverage implies that a company a. contains debt financing. b. has a high earnings per share. c. has a high current ratio. d. contains equity financing.

Managerial accounting information uses a. historical and estimated data. b. historical data only. c. financial statements only. d. estimated data only.

On the statement of cash flows, the cash flows from operating activities section would include a. payment for interest on short-term notes payable. b. payments for the purchase of investments. c. receipts from the issuance of capital stock. d. payments for cash dividends.

Period costs are a. not involved in the production process b. found on the job order cost sheets c. found on the balance sheet d. classified as direct labor, direct material, or factory overhead

Ralph's Cafe Company has the following information for June. Cost of materials placed in production $45,000 Direct labor 20,000 Factory overhead 14,000 Work in process inventory, June 1 2,900 Work in process inventory, June 30 3,500 What is the cost of goods manufactured? a. $78,400 b. $79,000 c. $81,900 d. $75,500

Sometimes called the coverage ratio, this ratio measures the risk that interest payments will not be made if earnings decrease. a. Times interest earned ratio b. Ratio of fixed assets to long-term liabilities c. Number of days' sales in inventory d. Ratio of liabilities to stockholders' equity

Step 4 of preparing a spreadsheet for the statement of cash flows is to a. analyze the change during the year in each noncash account and classify the change. b. enter the balance of each balance sheet account. c. list the title of each balance sheet account in the Accounts column. d. add the column totals.

The balance sheets at the end of each of the first two years of operations indicate the following: Year 2 Year 1 Total current assets $530,000 $460,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 150,000 80,000 Total long-term liabilities 350,000 250,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—common stock 60,000 60,000 Retained earnings 330,000 210,000 If net income is $158,100 and interest expense is $30,000 for Year 2, what is the return on stockholders' equity for Year 2? a. 17.0% b. 24.0% c. 20.2% d. 16.0%

The balance sheets at the end of each of the first two years of operations indicate the following: Year 2 Year 1 Total current assets $600,000 $560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 150,000 80,000 Total long-term liabilities 350,000 250,000 Preferred 9% stock, $100 par 100,000 100,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—common stock 60,000 60,000 Retained earnings 325,000 210,000 If net income is $125,000 and preferred dividends are $9,000 for Year 2, what is the earnings per share on common stock for Year 2? a. $1.93 b. $0.19 c. $1.75 d. $2.08

The direct labor and overhead costs of providing services to clients are accumulated in a. overhead b. administrative salaries expense c. work in process d. finished services expense

The finished goods account is the controlling account for the a. stock ledger b. work in process ledger c. cost ledger d. materials ledger

The independent auditor's report a. gives the auditor's opinion regarding the fairness of the financial statements. b. states that the financial statements were presented on time. c. summarizes what the auditor did. d. describes which financial statements are covered by the audit.

The job order cost system for a service business includes all of the following except a. materials inventory. b. overhead. c. work in process. d. cost of services.

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports a. cash at the end of the year. b. net cash flow from investing activities. c. net cash flow from financing activities. d. the change in cash.

The numerator in the calculation of the ratio of fixed assets to long-term liabilities is a. Fixed Assets at Year-End. b. Fixed Assets + Inventory. c. Total Liabilities. d. Average Fixed Assets.

The numerator of the return on total assets is a. net income plus interest expense. b. net income minus preferred dividends. c. net income. d. net income plus tax expense.

The purpose of a cost accounting system is to a. measure, record, and report product costs. b. determine the accuracy of the financial statements. c. determine taxes to be paid. d. determine how much each customer will be billed for shipping on purchases.

Which of the following are the two main types of cost accounting systems for manufacturing operations? a. job order cost and process cost systems b. process cost and general accounting systems c. process cost and replacement cost systems d. job order and general accounting systems

Which of the following is not one of the five phases in the management process? a. Analyzing b. Planning c. Decision making d. Improving

Which of the following is the flow of manufacturing costs? a. Materials, work in process, finished goods, cost of goods sold b. Finished goods, work in process, cost of goods sold c. Materials, work in process, cost of goods sold, finished goods d. Work in process, materials, finished goods, cost of goods sold

Which of the following positions would have salaries or wages that are classified as a direct labor cost by a baking company? a. Baker b. President of the company c. Salesman d. Factory supervisor

Which of the following would be classified as a factory overhead cost by a baking company? a. Depreciation of factory equipment b. Freight in c. Strawberries d. Depreciation of office equipment

Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in common stock account b. Decrease in dividends payable account c. Decrease in retained earnings account d. Increase in treasury stock account

blem #3 - Incorrect Sanchez Inc. reported the following on the company's cash flow statement: Net cash flow from operating activities $ 500,000 Net cash flow used for investing activities (200,000) Net cash flow used for financing activities 150,000 Thirty percent of the net cash flow used for investing activities was to maintain existing productive capacity. What is the company's free cash flow? a. $440,000 b. $500,000 c. $300,000 d. $650,000

A __________ is prepared when materials that have been ordered are received and inspected. a. job cost sheet b. receiving report c. materials requisition d. time ticket

A company with low earnings per share but a high price-earnings ratio likely indicates a company a. for which none of these choices apply. b. for which investors have high expectations for the future. c. that is focused on liquidating assets for distribution to shareholders. d. for which investors have low expectations for the future.

A company's ability to generate earnings is called a. solvency. b. profitability. c. liquidity. d. None of these choices are correct.

A company's times interest earned ratio is 12.1. This means that a. bondholders are at risk of not receiving their interest payments. b. the company has more than enough earnings to make its interest payments. c. the company has 12 times more debt than equity. d. None of these choices are correct.

An example of a period cost is a. depreciation on factory equipment b. advertising expense c. property taxes on plant facilities d. indirect materials

Assume the following sales data for a company: Year 2 $684,000 Year 1 $600,000 What is the percentage increase in sales from Year 1 to Year 2 (to the nearest whole percent)? a. 114% b. 14% c. 12% d. 88%

Bondholders and other long-term creditors are most interested in which dimension of company analysis? a. Accessibility b. Solvency c. Liquidity d. Profitability

Corporate annual reports typically do not contain which of the following? a. Auditor's report b. Next year's budget c. Management discussion and analysis d. Accompanying footnotes

For which of the following businesses would the process cost system be appropriate? a. a landscaper b. a paper mill c. a catering firm d. a custom cabinet maker

Given the following information, determine the price-earnings ratio. Market price of common stock at year-end $55.00 Earnings per share 8.00 Dividends per share 4.00 a. 14.5% b. 6.9 c. 6.9% d. 13.75

Given the following information, in which company do stock market participants seem to have the least confidence regarding future prospects? Company W Company X Company Y Company Z Earnings per share $4.35 $4.75 $4.20 $5.25 Price-earnings ratio 25.1 17.2 18.3 22.0 Dividend yield 3.0% 3.2% 0.0% 2.8% a. Company Z b. Company X c. Company W d. Company Y

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is a. added to net income. b. deducted from net income. c. reported supplementally as a noncash investing and financing activity. d. ignored because it does not affect cash.

In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account is analyzed for changes? a. Current assets b. Long-term assets c. Stockholders' equity d. Current liabilities

In service companies, _________ is supported by a cost ledger with a job cost sheet for each client. a. Cost of Services b. Work in Process c. cash received for a service d. None of these choices are correct.

Indirect labor and indirect materials are classified as a. factory overhead and period costs b. factory overhead and product costs c. operating costs and period costs d. operating costs and product costs

Insurance expense incurred on a factory building would be treated as a a. period cost b. product cost c. selling cost d. direct cost

On the statement of cash flows, the cash flows from investing activities section would include a. payments for retirement of bonds payable. b. receipts from the sale of investments. c. payments for dividends. d. receipts from the issuance of capital stock.

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from financing activities? a. Ending cash balance b. Change in cash c. Cash flows from investing activities d. Beginning cash balance

Smith Company reports the following information: Cost of goods manufactured $68,250 Direct materials used 27,000 Direct labor incurred 25,000 Work in process inventory, January 1 11,000 Factory overhead is 75% of the cost of direct labor. Work in process inventory on December 31 is a. $18,750 b. $13,500 c. $8,500 d. $16,250

Stockholders are most interested in which dimension of company analysis? a. Accessibility b. Profitability c. Solvency d. Liquidity

The controller's staff often consists of several management accountants. All of the following would most likely be on the controller's staff except a. general accountants b. investments and shareholder relations managers c. cost accountants d. budgets and budget analysts

The formula for the dividend yield is a. Market Price per Share of Common Stock ÷ Dividends per Share of Common Stock. b. Dividends per Share of Common Stock ÷ Market Price per Share of Common Stock. c. Dividends on Common Stock ÷ Shares of Common Stock Outstanding. d. None of these choices are correct.

The formula used to calculate the accounts receivable turnover is a. Accounts Receivable at the Beginning of the Period ÷ Sales. b. Sales ÷ Average Accounts Receivable. c. Average Accounts Receivable ÷ Sales. d. Average Accounts Receivable ÷ Average Daily Sales.

The managerial process that monitors operations and compares actual results to expected results is the __________ phase. a. planning b. controlling c. directing d. improving

Times interest earned is computed as a. net income divided by interest expense. b. income before income tax plus interest expense, divided by interest expense. c. income before income tax divided by interest expense. d. net income plus interest expense, divided by interest expense.

What type of analysis is indicated by the following? Increase (Decrease) Year 2 Year 1 Amount Percent Current assets $ 380,000 $ 400,000 $(20,000) (5%) Fixed assets 1,680,000 1,500,000 180,000 12% a. Common-size analysis b. Horizontal analysis c. Vertical analysis d. Liquidity analysis

When using the spreadsheet (work sheet) for the statement of cash flows, indirect method, entries made on the spreadsheet are a. not recorded in to the journal but are posted to the ledger. b. not recorded in the journal or posted to the ledger. c. recorded in the journal but not posted to the ledger. d. recorded in the journal and posted to the ledger.

Which of the following clarifies information presented in the financial statements, as well as expands upon it where additional detail is needed? a. Report on fairness of financial statements b. Management discussion and analysis section c. President's state of the company report d. Report on adequacy of internal control

Which of the following is not included in the Financing Activities section of the statement of cash flows? a. The purchase of treasury stock b. A stock split c. The payment of dividends d. The retirement of bonds

Which of the following products/services would most likely be accounted for using a job order cost system? a. Gasoline b. Audit c. Ice cream d. Bottled water

Which of the following represents the factory overhead applied to a product? a. predetermined factory overhead rate times estimated activity base b. predetermined factory overhead rate times actual activity base c. actual factory overhead rate times actual activity base d. actual factory overhead rate times estimated activity base

Which one of the following is the correct formula for determining cost of goods manufactured? a. Beginning work in process inventory - Total manufacturing costs + Ending work in process inventory b. Beginning work in process inventory + Total manufacturing costs - Ending work in process inventory c. Ending work in process inventory + Total manufacturing costs + Beginning work in process inventory d. Ending work in process inventory - Total manufacturing costs - Beginning work in process inventory

Which two reports on internal control are sometimes combined into a single report on internal control? a. The unqualified audit opinion report and the qualified audit opinion report b. One report by management and one report by a public accounting firm regarding the adequacy of internal controls c. The income statement and the balance sheet d. The MD&A and the Report of Independent Registered Public Accounting Firm

tem 2 - Score: 0% (0 of 1) In the annual report, where would a financial statement reader find out if the company's financial statements give a fair depiction of its financial position and operating results? a. Notes to the financial statements b.Report of Independent Registered Accounting Firm c. Balance sheet d. Management discussion and analysis section

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in accounts receivable b. A gain on a sale of a building c. An increase in accounts payable d. A loss on a sale of equipment a. An increase in accounts payable b. Depreciation expense for the period c. An increase in income taxes payable d. An increase in accounts receivable

b. d.

In a job order cost accounting system, the entry to record the flow of direct materials into production is to a. debit Factory Overhead, credit Materials b. debit Materials, credit Work in Process c. debit Work in Process, credit Materials d. debit Work in Process, credit Supplies

Job cost sheets can be used to determine a. period costs. b. ending materials inventory. c. product costs. d. only factory overhead costs. Feedback: Correct. The job cost sheet can b

On the statement of cash flows, the cash flows from financing activities section would include a. receipts from the sale of investments. b. payments for the acquisition of investments. c. receipts from the issuance of capital stock. d. receipts from a note receivable.

Period costs are classified as either a. administrative expense or production expenses b. general expenses or selling expenses c. selling expenses or administrative expenses d. selling expenses or production expenses

Step 1 of preparing a spreadsheet for the statement of cash flows is to a. analyze the change during the year in each noncash account and classify the change. b. add the column totals. c. list the title of each balance sheet account in the Accounts column. d. enter the balance of each balance sheet account.

The controlling account for the cost ledger is a. Cost of Goods Sold b. Materials c. Work in Process d. Finished Goods

The formula to calculate the asset turnover is a. Average Total Assets ÷ Sales. b. Total Assets at the Beginning of the Year ÷ Sales. c. Sales ÷ Average Total Assets. d. (Total Assets at the Beginning of the Year + Total Assets at the End of the Year) ÷ Sales.

Sanders Inc. has applied $567,988 of overhead to jobs in the cost ledger. Actual overhead at the end of the year is $575,000. The adjustment for over or underapplied overhead is a. $7,012 underapplied, decrease Cost of Goods Sold b. $7,012 overapplied, increase Cost of Goods Sold c. $7,012 underapplied, increase Cost of Goods Sold d. $7,012 overapplied, decrease Cost of Goods Sold

c. Amount of underapplied overhead = Actual overhead - Applied overhead = $575,000 - $567,988 = $7,012 This will increase the Cost of Goods Sold.

Given the following information, determine the price-earnings ratio. Market price of common stock at year-end $64.00 Earnings per share 4.00 Dividends per share 2.00 a. 0.6 b. 2.0 c. 16.0 d. 32.0

c. $64.00 ÷ $4.00 = 16.0

The estimated budget for factory overhead is $90,000 and the estimated direct labor hours are 9,000. Actual factory overhead is $99,000. What is the predetermined overhead rate? a. $0.10 b. $11 c. $10 d. $0.11

c. $90,000/9,000 = $10. The formula for the predetermined factory overhead rate is: Estimated total factory overhead costs/Estimated activity base

c. Company X has the lowest price-earnings ratio, indicating low market confidence.

A balance sheet that displays only component percentages is a a. condensed balance sheet. b. comparative balance sheet. c. trend balance sheet. d. common-sized balance sheet.

A company with low earnings per share but a high price-earnings ratio likely indicates a company a. that is focused on liquidating assets for distribution to shareholders. b. for which none of these choices apply. c. for which investors have low expectations for the future. d. for which investors have high expectations for the future.

A hotel will use a job order cost system for which of the following expenses? a. soap and shampoo expenses b. maid services c. pool expenses d. room service

A process cost system will be used by all of the following manufacturing companies except a. an ice cream factory. b. a pencil factory. c. an oil refinery. d. a custom sailboat factory.

An annual report includes all of the following except a. an auditor's report. b. management discussion and analysis section. c. notes to the financial statements. d. résumés of all key executives.

Based on the following data, what is the amount of quick assets? Accounts payable $ 30,000 Accounts receivable 45,000 Accrued liabilities 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Notes payable (short-term) 20,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Temporary investments 36,000 a. $65,000 b. $175,000 c. $173,000 d. $101,000

Corporate annual reports typically do not contain which of the following? a. Management discussion and analysis b. Auditor's report c. Accompanying footnotes d. Next year's budget

Given the following information, what is the ratio of fixed assets to long-term liabilities? Fixed assets (net) at year-end $400,000 Average fixed assets 450,000 Total assets 500,000 Long-term liabilities 300,000 Total liabilities 350,000 Total stockholders' equity 250,000 Total liabilities and stockholders' equity 500,000 Interest expense 5,000 Income before income tax 150,000 Net income 100,000 a. 1.1 b. 1.5 c. 1.6 d. 1.3

Given the following information, what is the ratio of liabilities to stockholders' equity? Fixed assets (net) at year-end $400,000 Average fixed assets 450,000 Total assets 500,000 Long-term liabilities 300,000 Total liabilities 350,000 Total stockholders' equity 250,000 Total liabilities and stockholders' equity 500,000 Interest expense 5,000 Income before income tax 150,000 Net income 100,000 a. 0.6 b. 1.2 c. 0.7 d. 1.4

If a company abandons a segment of its operation, the loss would be reported on the a. balance sheet in the current assets section. b. income statement immediately after cost of goods sold. c. income statement just before income from continuing operations. d. income statement immediately after income from continuing operations.

In a common-sized income statement, which of the following is given a percentage of 100%? a. Property, plant, and equipment b. Net income c. Total liabilities d. Sales

Job cost sheets can be used for a. determining the accuracy of job quotes. b. determining quality issues. c. determining profits. d. All of these choices are correct.

Management develops the company's objectives (goals) in the __________ phase. a. controlling b. decision making c. improving d. planning

Managerial reports will include all of the following except a. cost of goods sold. b. ending inventory. c. product costs. d. income tax expense.

Ralph's Cafe Company has the following information for June. Cost of materials placed in production $45,000 Direct labor 20,000 Factory overhead 14,000 Work in process inventory, June 1 2,900 Work in process inventory, June 30 3,500 Finished goods inventory, June 1 $5,000 Finished goods inventory, June 30 $4,700 What is the cost of goods sold? a. $83,400 b. $79,000 c. $78,400 d. $78,700

The cost of goods manufactured is determined using all of the following except a. manufacturing costs incurred. b. work in process inventory at the beginning of the period. c. work in process inventory at the end of the period. d. administrative expenses.

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to a. debit Factory Overhead, credit Wages Payable b. debit Factory Overhead, credit Work in Process c. debit Finished Goods, credit Wages Payable d. debit Work in Process, credit Wages Payable

The formula used to calculate inventory turnover is a. Cost of Goods Sold ÷ Inventory at Year-End. b. Total Sales ÷ Average Inventory. c. Sales ÷ Inventory at Year-End. d. Cost of Goods Sold ÷ Average Inventory.

The particular analytical measures chosen to analyze a company may be influenced by all of the following except a. general economic environment. b. diversity of business operations. c. industry type. d. product quality or service effectiveness.

The primary goal of managerial accounting is to provide information to a. investors b. external auditors c. creditors d. management

The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because of a. yield. b. quick assets. c. solvency. d. leverage.

Waste minimization is a sustainable business activity a. involving biofuel-powered vehicles. b. that generates energy with little or no pollution. c. involving recycled building materials, high-efficiency heating and cooling systems, and renewable energy generation. d. involving recycling and reuse practices that reduce the amount of waste disposed in landfills.

Which of the following does not fall under the category of current position analysis? a. Inventory turnover b. Number of days' sales in inventory c. Accounts receivable turnover d. All of these choices are correct.

Which of the following is not a quick asset? a. Temporary investments b. Cash c. Accounts receivable d. Inventories

Which of the following is not one of the five phases in the management process? a. Improving b. Planning c. Decision making d. Analyzing

Which of the following manufacturing costs is an indirect cost of producing a product? a. hourly wages of an assembly worker b. memory chips for a microcomputer manufacturer c. commissions for sales personnel d. oil lubricants used for factory machinery

Which of the following statements is true regarding free cash flow? a. Free cash flow measures the operating cash flow of a company after the purchase of inventory. b. Free cash flow ignores productive capacity. c. Free cash flow is a valuable tool for evaluating net income. d. None of these choices are correct.

Which of the following will not be found on the balance sheet of a manufacturing company? a. work in process b. materials c. finished goods d. cost of goods sold

Which of the following would record the labor costs to an individual job? a. clock cards b. in-and-out cards c. a payroll register d. time tickets

Which one of the following positions would have salaries or wages that are classified as a factory overhead cost by a baking company? a. Baker b. President of the company c. Salesman d. Factory supervisor

Which type of stakeholder is most interested in the liquidity of a company? a. Bondholders and other long-term creditors b. Customers c. Stockholders d. Banks and other short-term creditors

The following information is available from the land account Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. cash paid for purchase of land, $(120,000). b. loss from land transactions, $(50,000). c. increase in notes payable, $20,000. d. cash paid for purchase of land, $(100,000). a. cash received from sale of land, $170,000. b. loss from land transactions, $(50,000). c. cash received from sale of land, $200,000. d. gain on sale of land, $30,000.

d. c.

Assume the following sales data for a company: Year 2 $562,500 Year 1 $450,000 What is the percentage increase in sales from Year 1 to Year 2 (to the nearest whole percent)? a. 80% b. 139% c. 20% d. 25%

d. ($562,500 − $450,000) ÷ $450,000 = 25%

Cost of goods manufactured during the year is $240,000 work in process inventory on December 31 is $50,000. Work in process inventory during the year decreased by 60%. Total manufacturing costs incurred are a. $290,000 b. $190,000 c. $315,000 d. $165,000

d. Total manufacturing costs = Cost of goods manufactured - Beginning work in process inventory + Ending work in process inventory = $240,000 - ($50,000 / 0.4) + $50,000 = $240,000 - $125,000 + $50,000 = $165,000

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? gain on sale of land a loss on the sale of equipment dividends declared and paid depreciation expense

gain on sale of land

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under a. financing activities. b. investing activities. c. operating activities. d. noncash investing and financing activities

investing activities

Which of the following is a noncash investing and financing activity? payment of a cash dividend issuance of common stock to acquire land payment of a six-month note payable purchase of inventory on account

issuance of common stock to acquire land.

Accumulated other comprehensive income is presented in the financial statements: on the income statement only. in a separate statement only. on the balance sheet as part of stockholders' equity. either on the income statement or in a separate statement of comprehensive income.

on the balance sheet as part of stockholders' equity

Which of the following should be shown on a statement of cash flows under the financing activities section? the proceeds from the sale of a building the purchase of a long-term investment in the common stock of another company the payment of cash to retire a long-term note the issuance of a long-term note to acquire land

the payment of cash to retire a long-term note

(Use O for operating, I for investing, or F for financing). Issued common stock Redeemed bonds Issued preferred stock Purchased patents Net Income Paid cash divdends Purchased treasury stock Sold long-term investment Sold equipment Purchased buildings Issued Bond

F F F I O F F I I I F

Rho, Sigma, and Tau Companies have the following data for the current year: Rho Company Sigma Company Tau Company Price-earnings ratio 23.7 16.9 30.1 Which company would be expected to have the best potential for future common stock price appreciation?

Tau company

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a decrease in inventory preferred dividends declared and paid a decrease in accounts receivable a decrease in accounts payable

a decrease in accounts payable

A company's ratio of liabilities to stockholders' equity decreased from 0.6 to 0.4 during the year. This is a. an improvement in the margin of safety for creditors. b. an indication that the company's level of debt is increasing. c. a negative change in the company's financial position. d. None of these choices are correct.

A cost accounting system that accumulates costs for each manufacturing department or process is called a a. process cost system. b. department cost system. c. client cost system. d. job order cost system.

A plant manager's salary is a. an indirect cost b. a direct cost c. a period cost d. a direct cost and an indirect cost Feedback

All of the following employees hold line positions in Facebook except a. vice president of finance b. vice president of production c. vice president of sales d. manager of the web design

Analysts often use free cash flow, rather than cash flows from _________ activities, to measure the financial strength of a business. a. operating b. financing c. investing d. noncash investing and financing

Analysts often use free cash flow, rather than cash flows from _________ activities, to measure the financial strength of a business. a. operating b. financing c. noncash investing and financing d. investing

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance 100,000 What was the beginning cash balance? a. $25,000 b. $75,000 c. $(25,000) d. $65,000

The formula to calculate the asset turnover is a. Sales ÷ Average Total Assets. b. Average Total Assets ÷ Sales. c. (Total Assets at the Beginning of the Year + Total Assets at the End of the Year) ÷ Sales. d. Total Assets at the Beginning of the Year ÷ Sales.

Waste minimization is a sustainable business activity a. involving recycling and reuse practices that reduce the amount of waste disposed in landfills. b. that generates energy with little or no pollution. c. involving recycled building materials, high-efficiency heating and cooling systems, and renewable energy generation. d. involving biofuel-powered vehicles.

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry in the Transactions columns involving a a. debit to Operating Activities—Net Income. b. debit to Retained Earnings. c. debit to Financing Activities—Net Income. d. credit to Operating Activities—Net Income.

Which of the following is reported on the statement of cash flows? a. Cash flows from investing activities b. Changes in retained earnings c. Total assets d. Total changes in stockholders' equity

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A loss on the sale of land b. Dividends paid on common stock c. A decrease in accrued liabilities d. A decrease in accounts payable

Which of the following would not appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Cash paid to retire bonds, $2,000 b. Purchase of building for $20,000 cash and a $160,000 note payable c. Purchase of land for $70,000 cash d. Sale of fully depreciated equipment with $5,000 salvage value for $5,000 cash

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in inventory b. An increase in accounts receivable c. A decrease in accounts payable d. Common stock dividends declared and paid a. A decrease in accrued liabilities b. Dividends paid on common stock c. A decrease in accounts payable d. A loss on the sale of land

a. d.

Based on the following data, what is the quick ratio? Accounts payable $ 20,000 Accounts receivable 45,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Notes payable (short-term) 10,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Temporary investments 36,000 a. 5.0 b. 3.0 c. 4.9 d. 3.1

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? a. Dividends declared, $(54,000) b. Cash paid for dividends, $(62,000) c. Change in dividends payable, $(8,000) d. Cash paid for dividends, $(46,000)

Given the following framework for the statement of cash flows, what is missing? Cash flows from operating activities $XXX Cash flows from investing activities XXX Change in cash $XXX Beginning cash balance XXX Ending cash balance $XXX a. Beginning retained earnings balance b. Cash flows from financing activities c. Free cash flow d. Total stockholders' equity

In a job order costing system, ____________ make up the work in process ledger. a. receiving reports b. job cost sheets c. materials requisitions d. None of these choices are correct.

Sometimes called the coverage ratio, this ratio measures the risk that interest payments will not be made if earnings decrease. a. Number of days' sales in inventory b. Times interest earned ratio c. Ratio of liabilities to stockholders' equity d. Ratio of fixed assets to long-term liabilities

The ending figure on the statement of cash flows should match what figure on the balance sheet? a. Retained earnings balance b. Cash balance c. Total assets d. Total stockholders' equity

The net income reported on the income statement for the current year was $255,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventory 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $289,000 b. $261,000 c. $317,000 d. $251,000

Which of the following is not included in the Financing Activities section of the statement of cash flows? a. The purchase of treasury stock b. A stock split c. The retirement of bonds d. The payment of dividends

Which of the following is used in calculating cash received from customers using the direct method? a. An increase in inventory b. A decrease in accounts receivable c. An increase in accounts payable d. A decrease in inventory

Which of the following would not be considered a conversion cost by a baking company? a. Electric costs b. Flour c. Depreciation on oven d. Baker

Which one of the following is the correct formula for determining cost of goods manufactured? a. Ending work in process inventory - Total manufacturing costs - Beginning work in process inventory b. Beginning work in process inventory + Total manufacturing costs - Ending work in process inventory c. Ending work in process inventory + Total manufacturing costs + Beginning work in process inventory d. Beginning work in process inventory - Total manufacturing costs + Ending work in process inventory

A __________ is prepared when materials that have been ordered are received and inspected. a. job cost sheet b. time ticket c. materials requisition d. receiving report

Bondholders and other long-term creditors are most interested in which dimension of company analysis? a. Liquidity b. Accessibility c. Profitability d. Solvency

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. cash inflow in the Operating Activities section. b. separate schedule. c. cash inflow in the Financing Activities section. d. cash inflow in the Investing Activities section.

Cost savings from replacing lighting fixtures in a production facility is an example of the measure of a. fuel efficiency. b. material use efficiency. c. waste efficiency. d. energy efficiency.

Davis Co. reported the following items for the year ending December 31: Net income $139,500 Preferred dividends $39,500 Common dividends $20,000 Shares of common stock outstanding 60,000 Shares of preferred stock outstanding 10,000 What is the earnings per share on common stock? a. $2.33 b. $1.43 c. $1.33 d. $1.67

Given the following information, determine the price-earnings ratio. Market price of common stock at year-end $55.00 Earnings per share 8.00 Dividends per share 4.00 a. 6.9% b. 14.5% c. 13.75 d. 6.9

Given the following information, which company's stockholders received the highest return in the form of dividends? Company W Company X Company Y Company Z Earnings per share $4.35 $4.75 $4.20 $5.25 Price-earnings ratio 25.1 17.2 18.3 22.0 Dividend yield 3.0% 3.2% 0.0% 2.8% a. Company W b. Company Z c. Company Y d. Company X

The following information is available from the land account: Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. cash received from sale of land, $170,000. b. loss from land transactions, $(50,000). c. gain on sale of land, $30,000. d. cash received from sale of land, $200,000.

The formula used to calculate the accounts receivable turnover is a. Average Accounts Receivable ÷ Sales. b. Accounts Receivable at the Beginning of the Period ÷ Sales. c. Average Accounts Receivable ÷ Average Daily Sales. d. Sales ÷ Average Accounts Receivable.

The net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $5,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $302,000 b. $208,000 c. $368,000 d. $312,000

The times interest earned ratio is computed as a. (Net Income + Interest Expense) ÷ Interest Expense. b. Income before Income Tax ÷ Interest Expense. c. Net Income ÷ Interest Expense. d. (Income before Income Tax + Interest Expense) ÷ Interest Expense.

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Beginning cash balance b. Ending cash balance c. Cash flows from financing activities d. Cash flows from operating activities

Which of the following does not fall under the category of current position analysis? a. Number of days' sales in inventory b. Accounts receivable turnover c. Inventory turnover d. All of these choices are correct.

Which of the following is not included in the Investing Activities section of the statement of cash flows? a. The purchase of equipment for cash b. The purchase of land for cash c. The sale of a building for cash d. Depreciation on equipment

Which of the following products/services would most likely be accounted for using a job order cost system? a. Gasoline b. Bottled water c. Ice cream d. Audit

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Cash received from bonds payable b. Cash received from stock issued c. Depreciation expense on equipment d. Cash paid for equipment

Which of the following would be classified as an indirect cost by a baking company? a. Flour b. Frosting c. Salaries of bakers d. Salaries of production supervisors

Which of the following would be shown on a statement of cash flows under the Financing Activities section? a. Sale of a long-term investment in exchange for the common stock of another company b. Issuance of a long-term note to acquire land c. Purchase of a building d. The issuance of bonds

Which of the following would indicate a cash outflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in common stock account b. Increase in retained earnings account c. Increase in paid-in capital account d. Increase in treasury stock account

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in inventory b. An increase in accrued expenses payable c. A decrease in prepaid expenses d. An increase in inventory a. An increase in accounts payable b. Depreciation expense for the period c. An increase in income taxes payable d. An increase in accounts receivable

d. d.

The Cavy Company estimates that the factory overhead for the following year will be $2,780,800. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 35,200 hours. The machine hours for the month of April for all of the jobs were 5,180. If the actual factory overhead totaled $417,814, determine the over or underapplied amount for the month. Enter the amount as a positive number.

$2,780,800/35,200 = $79 $79 x 5,180 = 409,220 factory overhead applied $417,814 - $409,220 = $8,594 Underapplied

Sales reported on the income statement were $261,400. The accounts receivable balance declined $21,360 over the year. Determine the amount of cash received from customers.

$282,760

The cost of goods sold during the year was $45,000. Inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable (all owed to merchandise suppliers) were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total $44,000 $46,000 $40,000 $50,000

$44,000 Purchases during the year = Ending inventory + Cost of goods sold during the year - Beginning inventory = $10,500 + $45,000 - $13,500 = $42,000 Cash payments for merchandise = Beginning accounts payable + Purchases during the year - Ending accounts payable = $7,000 + $42,000 - $5,000 = $44,000

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $473,544 Net cash flow from operating activities 166,870 Net cash flow used for investing activities 56,057 Net cash flow used for financing activities 101,876 Find the cash balance at the end of the period. $482,481 $148,741 -$157,933 $798,347

$482,481

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, Year 2 Dec. 31, Year 1 Accounts receivable $7,226 $4,263 Inventory 10,011 15,678 Accounts payable 4,276 6,541 Dividends payable 4,583 3,497 Adjust Year 2 net income of $51,191 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

$51,630

Land costing $94,815 was sold for $77,489 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? Select the correct answer. $172,304 $17,326 $94,815 $77,489

$77,489

A company reports the following: Sales $2,520,000 Average total assets (excluding long-term investments) 1,400,000 Determine the asset turnover ratio. Round your answer to one decimal place.

1.8

A company reports the following: Sales $1,012,875 Average accounts receivable (net) 91,250 Determine the accounts receivable turnover. Determine the number of days' sales in receivables.

11.1 32.9

Robert Corporation had net income of $233,569 and paid dividends to common stockholders of $59,200. They had 54,700 shares of common stock outstanding during the entire year. Robert Corporation's common stock is selling for $62 per share on the New York Stock Exchange. Determine Robert Corporation's price-earnings ratio (Round to two decimal places). Select the correct answer. 19.00 times 1.00 times 4.27 times 14.52 times

14.52 times

Based on the following data for Privett Company, what is the quick ratio, rounded to one decimal point? Privett Company Accounts payable $31,052 Accounts receivable 74,476 Accrued liabilities 6,875 Cash 15,293 Intangible assets 38,524 Inventory 80,992 Long-term investments 94,772 Long-term liabilities 72,566 Marketable securities 31,718 Notes payable (short-term) 23,273 Property, plant, and equipment 620,952 Prepaid expenses 2,008 Select the correct answer. 2 0.8 3.3 15.7

The following items are reported on a company's balance sheet: Cash $400,000 Marketable securities 50,000 Accounts receivable 150,000 Inventory 200,000 Accounts payable 250,000 Determine the (a) current ratio, and (b) quick ratio.

3.2 2.4

A company reports the following: Net income $439,340 Preferred dividends $32,540 Shares of common stock outstanding 60,000 Market price per share of common stock $19.66 Calculate the company's earnings per share on common stock.

6.78

Assume the following sales data for a company: Current year $880,601 Preceding year $518,112 What is the percentage increase in sales from the preceding year to the current year? Select the correct answer. 69.96% 41.16% 58.84% 169.96%

69.96%

The Cash and Accounts Receivable end-of-year balances for a company are provided below: Current Year Prior Year Cash $60,102 $47,700 Accounts receivable (net) 31,521 55,300 Based on this information, what is the amount and percentage of increase or decrease that would be shown with horizontal analysis? Enter a decrease using a minus sign before the amount and the percentage.

Cash $12,402 26% Accounts rec. -$23,779 -43%

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a decrease in accounts payable dividends paid on common stock a gain on the sale of land an increase in accrued liabilities

an increase in accrued liabilities

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $330,700 and direct labor hours would be 46,500. Actual manufacturing overhead costs incurred were $304,300, and actual direct labor hours were 54,400. What is the predetermined overhead rate per direct labor hour? a. $8.53 b. $7.11 c. $10.67 d. $5.69

b. Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Activity Base = $330,700 / 46,500 direct labor hours = $7.11 per direct labor hour

Work in process inventory increased by $20,000 during the current year. Cost of goods manufactured was $180,000. Total manufacturing costs incurred are a. $160,000 b. $200,000 c. $189,000 d. $198,000

b. Total manufacturing costs = Cost of goods manufactured - Beginning work in process inventory + Ending work in process inventory = $180,000 - Beginning work in process inventory + (Beginning work in process inventory + $20,000) = $200,000

Job cost sheets can be used to determine a. period costs. b. only factory overhead costs. c. product costs. d. ending materials inventory.

A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the statement of cash flows in a. the cash flows from operating activities section. b. the cash flows from financing activities section. c. a separate schedule. d. the cash flows from investing activities section.

A company's ability to convert assets into cash is called a. None of these choices are correct. b. solvency. c. liquidity. d. profitability.

A job order cost system can be used by a hospital to a. evaluate a patient's progress. b. establish security policies. c. charge patients with services provided. d. evaluate quality care.

A job order cost system can be used by a hospital to a. evaluate a patient's progress. b. evaluate quality care. c. charge patients with services provided. d. establish security policies.

A job order costing system can be used to a. reconcile bank records with book records. b. determine period costs. c. control costs. d. estimate factory overhead costs.

All of the following are considered manufacturing costs except a. direct labor. b. direct materials. c. selling and administrative expenses. d. factory overhead.

An analysis in which all the components of a balance sheet are expressed as a percentage of total assets is called a. current ratio. b. horizontal analysis. c. vertical analysis. d. liquidity.

Calculator Which of the following is not a characteristic of a job order costing system? a. It is best suited for industries that manufacture custom goods. b. It uses only one work in process account. c. It accumulates cost for each department within the factory. d. It provides a separate record for the cost of each quantity of product that passes through the factory.

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 $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 102,000 108,000 Inventory 88,000 93,000 Prepaid expenses 8,500 6,500 Accounts payable (merchandise creditors) 95,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $306,000 b. $328,000 c. $324,000 d. $256,000

The numerator in the calculation of the ratio of liabilities to stockholders' equity is a. Total Liabilities - Total Stockholders' Equity. b. Total Assets. c. Total Liabilities. d. Total Stockholders' Equity.

Which of the following is most associated with financial accounting? a. can have both objective and subjective information b. can be prepared for the entity or segment c. prepared in accordance with GAAP d. can be prepared periodically, or as needed

Which of the following is not a solvency ratio? a. Times interest earned ratio b. Ratio of fixed assets to long-term liabilities c. Number of days' sales in inventory d. Ratio of liabilities to stockholders' equity

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory? a. replacement cost system b. process cost system c. job order cost system d. general cost system

Which of these best refers to sustainability in business? a. Reporting decision-useful information regarding eco-efficiency measures to external financial statement users b. Operating a business to minimize profits while attempting to preserve the environment, economy, and needs of future generations c. Operating a business to maximize profits while attempting to preserve the environment, economy, and needs of future generations d. Collecting information used in evaluating the savings generated by using fewer natural resources in a company's operations

A law firm, Morris & Morris, accumulates costs associated with individual cases using a job order cost system. On August 5, the firm charged 200 hours of professional (lawyer) time to the Micro Systems Co. breach of contract suit to prepare for the trial, at a rate of $340 per hour. What is the journal entry for this transaction? a. Debit Salaries Expense and credit Cost of Services for $68,000. b. Debit Work in Process and credit Firm Overhead for $68,000. c. Debit Work in Process and credit Salaries Payable for $68,000. d. Debit Salaries Payable and credit Work in Process for $68,000.

c. Correct. 200 hrs × $340 per hour = $68,000 Work in Process 68,000 Salaries Payable 68,000

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of overapplied or underapplied manufacturing overhead at the end of the year? a. $6,000 underapplied b. $6,000 overapplied c. $54,800 overapplied d. $54,800 underapplied

c. Predetermined Overhead Rate = Estimated Total Factory Overhead Costs / Estimated Activity Base = $360,000 / 30,000 direct labor hours = $12 per direct labor hour Applied factory overhead costs = Predetermined overhead rate × Actual direct labor hours = $12 × 36,000 direct labor hours = $432,000 Amount of overapplied overhead = Applied factory overhead costs - Actual factory overhead costs = $432,000 - $377,200 = $54,800

Margot's Deli Company has the following information for July. Cost of materials placed in production $30,000 Direct labor 25,000 Factory overhead 14,000 Work in process inventory, July 1 2,900 Work in process inventory, July 31 3,500 What is the cost of goods manufactured? a. $75,400 b. $69,000 c. $68,400 d. $71,900

c. Work in process inventory, July 1 $2,900 Cost of materials placed in production $30,000 Direct labor 25,000 Factory overhead 14,000 Total manufacturing costs incurred 69,000 Total manufacturing costs 71,900 Less: Work in process inventory July 31 3,500 Cost of goods manufactured $68,400 Cost of goods manufactured $68,400

The manager of a company is analyzing direct labor and has found that expenses are higher than expected. Which of the following could be the reason? a. New employees unfamiliar with the process b. Inefficient use of time c. Higher hourly rates are being paid d. All of these choices are correct.

Management develops the company's objectives (goals) in the __________ phase. a. planning b. controlling c. improving d. decision making

In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which types of accounts are analyzed for changes? a. Long-term liabilities and stockholders' equity b. Long-term assets c. Current liabilities and stockholders' equity d. All liabilities and stockholders' equity

A baking company has determined that direct material costs are increasing. All of the following are reasons why this may be true except a. cakes are being sold at a special rate during the month. b. the fruits used in baking are out of season. c. the oven is malfunctioning. d. a new baker has been hired who is not familiar with the ingredients.

A company's ability to convert assets into cash is called a. liquidity. b. None of these choices are correct. c. profitability. d. solvency. Feedback: Incorrect. P

A company's times interest earned ratio is 12.1. This means that a. the company has more than enough earnings to make its interest payments. b. the company has 12 times more debt than equity. c. bondholders are at risk of not receiving their interest payments. d. None of these choices are correct.

A job order will be used by which of the following manufacturing companies? a. custom limousine factory b. pencil factory c. candy factory d. paper towel factory

A service organization using a job order cost system will typically charge supplies and materials to a. the department using the supplies and include them in overhead costs. b. cost of services provided account. c. the client. d. nothing at all and write them off as uncollectible

An analysis in which all the components of a balance sheet are expressed as a percentage of total assets is called a. vertical analysis. b. current ratio. c. liquidity. d. horizontal analysis.

Given the following information, determine the dividend yield. Market price of common stock at year-end $64.00 Earnings per share 4.00 Dividends per share 2.00 a. 3.1% b. 50% c. 32.0% d. 6.3%

Given the following information, what is the times interest earned ratio? Fixed assets (net) at year-end $400,000 Average fixed assets 450,000 Total assets 500,000 Long-term liabilities 300,000 Total liabilities 350,000 Total stockholders' equity 250,000 Total liabilities and stockholders' equity 500,000 Interest expense 5,000 Income before income tax 150,000 Net income 100,000 a. 31 b. 20 c. 21 d. 30

In horizontal analysis, each item is expressed as a percentage of the a. earliest year figure. b. net income figure. c. total assets. d. latest year figure.

In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which types of accounts are analyzed for changes? a. Long-term liabilities and stockholders' equity b. Long-term assets c. All liabilities and stockholders' equity d. Current liabilities and stockholders' equity

In which analytical method are no dollar amounts shown? a. Common-sized statement b. Horizontal analysis c. Vertical analysis d. None of these choices are correct.

A law firm, Morris & Morris, accumulates costs associated with individual cases using a job order cost system. On August 5, the firm charged 200 hours of professional (lawyer) time to the Micro Systems Co. breach of contract suit to prepare for the trial, at a rate of $340 per hour. What is the journal entry for this transaction? a. Debit Salaries Expense and credit Cost of Services for $68,000. b. Debit Salaries Payable and credit Work in Process for $68,000. c. Debit Work in Process and credit Salaries Payable for $68,000. d. Debit Work in Process and credit Firm Overhead for $68,000.

A mortgage incurred in the purchase of an office building would be reported on the statement of cash flows in a. the Cash Flows from Financing Activities section. b. the Cash Flows from Operating Activities section. c. a separate section that appears at the bottom of the statement. d. the Cash Flows from Investing Activities section.

An annual report includes all of the following except a. notes to the financial statements. b. an auditor's report. c. résumés of all key executives. d. management discussion and analysis section.

Assume the following sales data for a company: Year 2 $562,500 Year 1 $450,000 What is the percentage increase in sales from Year 1 to Year 2 (to the nearest whole percent)? a. 20% b. 80% c. 25% d. 139%

Cash dividends paid would be shown on the statement of cash flows under __________ activities. a. investing b. operating c. financing d. directing

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. cash inflow in the Operating Activities section. b. separate schedule. c. cash inflow in the Investing Activities section. d. cash inflow in the Financing Activities section.

Managerial decisions will include all of the following except a. product costs. b. selling price. c. setting of capital stock prices. d. purchase of capital equipment.

Neon Lighting is comparing actual and applied overhead amounts at the end of the year and finds the factory overhead account has a credit balance. What does this mean? a. The balance should be carried over from year to year. b. The entire balance is charged back to work in process inventory. c. Applied costs are higher than actual costs. d. Actual costs are higher than applied costs.

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from operating activities? a. Beginning cash balance b. Ending cash balance c. Cash flows from investing activities d. Cash flows from financing activities

Operating expenses other than depreciation for the year were $300,000. Accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be a. $300,000. b. $30,000. c. $330,000. d. $270,000.

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance 50,000 What is the net change in cash for the period? a. $125,000 b. $115,000 c. $75,000 d. $(75,000)

The formula to calculate free cash flow is a. cash flows from operating activities + cash used to purchase property, plant, and equipment to maintain current production. b. cash flows from financing activities − cash used to purchase property, plant, and equipment to maintain current production. c. cash flows from operating activities − cash used to purchase property, plant, and equipment to maintain current production. d. cash flows from financing activities + cash used to purchase property, plant, and equipment to maintain current production.

The numerator in the current ratio calculation is a. Intangible Assets. b. Property, Plant, and Equipment. c. Current Assets. d. Current Liabilities.

The total manufacturing costs incurred is determined using all of the following except a. factory overhead. b. direct materials used in production. c. selling expenses. d. direct labor.

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Beginning cash balance b. Ending cash balance c. Cash flows from operating activities d. Cash flows from financing activities

Which of the following is not a cash flow element that would be found on the statement of cash flows? a. Net cash flow from operating activities b. Ending cash balance c. Free cash flow d. Change in cash

Which of the following is not included in the Investing Activities section of the statement of cash flows? a. The purchase of equipment for cash b. The purchase of land for cash c. Depreciation on equipment d. The sale of a building for cash

Which of the following is one of the five phases in the management process? a. Reconciling b. Budgeting c. Decision making d. Analyzing

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Cash received from bonds payable b. Cash received from stock issued c. Cash paid for equipment d. Depreciation expense on equipment

Which of the following would indicate a cash outflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in common stock account b. Increase in retained earnings account c. Increase in treasury stock account d. Increase in paid-in capital account

Which of these best refers to sustainability in business? a. Collecting information used in evaluating the savings generated by using fewer natural resources in a company's operations b. Operating a business to minimize profits while attempting to preserve the environment, economy, and needs of future generations c. Operating a business to maximize profits while attempting to preserve the environment, economy, and needs of future generations d. Reporting decision-useful information regarding eco-efficiency measures to external financial statement users

of the following statements are true regarding cost accounting systems except a. A company may use a job order cost system for some of its products and a process cost system for other products. b. Managers use product costs from cost accounting systems for setting product prices, controlling operations, and developing financial statements. c. A company must use either a job order cost system for all of its products/services or a process cost system for all of its products/services. d. A job order cost system provides product costs for each quantity of product that is manufactured.

Dora Inc. reported the following on the company's cash flow statement: Sales $3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales? a. 1.4% b. 12.0% c. 8.3% d. 10.0%

c. $290,000 ÷ $3,500,000 = 8.3%

Dividends declared during the year were $48,000. The dividends payable account increased by $4,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? a. Dividends declared, $(48,000) b. Cash paid for dividends, $(52,000) c. Cash paid for dividends, $(44,000) d. Change in dividends payable, $4,000

c. Actual dividends paid were $44,000 ($48,000 - $4,000)

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