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Accounting
Q:
The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:
A.Income statement equation.
B.Accounting equation.
C.Business equation.
D.Return on equity ratio.
E.Net income.
Q:
Decreases in equity that represent costs of assets or services used to earn revenues are called:
A.Liabilities.
B.Equity.
C.Withdrawals.
D.Expenses.
E.Owner's Investment.
Q:
Creditors' claims on the assets of a company are called:
A.Net losses.
B.Expenses.
C.Revenues.
D.Equity.
E.Liabilities.
Q:
The difference between a company's assets and its liabilities, or net assets is:
A.Net income.
B.Expense.
C.Equity.
D.Revenue.
E.Net loss.
Q:
Net income is:
A.Assets minus liabilities.
B.The excess of revenues over expenses.
C.An asset.
D.The same as revenue.
E.The excess of expenses over equity.
Q:
Gross increases in equity from a company's earnings activities are:
A.Assets.
B.Revenues.
C.Liabilities.
D.Owner's Equity.
E.Expenses.
Q:
Resources owned or controlled by a company that are expected to yield future benefits are:
A.Assets.
B.Revenues.
C.Liabilities.
D.Owner's Equity.
E.Expenses.
Q:
If equity is $300,000 and liabilities are $192,000, then assets equal:
A.$108,000.
B.$192,000.
C.$300,000.
D.$492,000.
E.$792,000.
Q:
Net Income:
A.Decreases equity.
B.Represents the amount of assets owners put into a business.
C.Equals assets minus liabilities.
D.Is the excess of revenues over expenses.
E.Represents owners' claims against assets.
Q:
An example of an investing activity is:
A.Paying wages of employees.
B.Withdrawals by the owner.
C.Purchase of land.
D.Selling inventory.
E.Contribution from owner.
Q:
The major activities of a business include:
A.Operating.
B.Financing.
C.Investing.
D.All of these.
Q:
Operating activities:
A.Are the means organizations use to pay for resources like land, buildings and equipment.
B.Involve using resources to research, develop, purchase, produce, distribute and market products and services.
C.Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
D.Are also called asset management.
E.Are also called strategic management.
Q:
Planning activities:
A.Are the means organizations use to pay for resources.
B.Involve the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.
C.Involve defining the ideas, goals, and actions of an organization.
D.Are the carrying out of an organization's plans.
E.Involve using resources to research, develop, purchase, produce, and market products and services.
Q:
An example of an operating activity is:
A.Paying wages.
B.Purchasing office equipment.
C.Borrowing money from a bank.
D.Selling stock.
E.Paying off a loan.
Q:
An example of a financing activity is:
A.Buying office supplies.
B.Obtaining a long-term loan.
C.Buying office equipment.
D.Selling inventory.
E.Buying land.
Q:
If a parcel of land that was originally purchased for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000. At the time of the sale, assume that the seller still owed $30,000 to TrustOne Bank on the land that was purchased for $85,000. Immediately after the sale, the seller paid off the loan to TrustOne Bank. What is the effect of the sale and the payoff of the loan on the accounting equation?
A.Assets increase $52,000; owner's equity increases $22,000; liabilities decrease $30,000
B.Assets increase $52,000; owner's equity increases $30,000; liabilities decrease $30,000
C.Assets increase $22,000; owner's equity increases $52,000; liabilities decrease $30,000
D.Assets decrease $30,000; owner's equity decreases $30,000; liabilities decrease $30,000
E.Assets decrease $55,000; owner's equity decreases $55,000; liabilities decrease $30,000
Q:
The future value of an ________________ annuity is the accumulated value of each annuity payment with interest as of the date of the final payment.
Q:
An _____________ is a series of equal payments occurring at equal intervals.
Q:
To calculate present value of an amount, two factors are required: __________________ and ___________________.
Q:
The interest rate is also called the __________________ rate.
Q:
_____________ is a borrower's payment to the owner of an asset for its use.
Q:
Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in 7 years. The fund will earn 7% interest, and the company intends to put away a series of equal year-end amounts for 7 years. What is the amount of the annual deposits that the company must make?
Q:
Explain the concept of the future value of an annuity.
Q:
Explain the concept of the present value of an annuity.
Q:
Explain the concept of the future value of a single amount.
Q:
Explain the concept of the present value of a single amount.
Q:
What is interest?
Q:
Chad is setting up a retirement fund, and he plans on depositing $5,000 per year in an investment that will pay 7% annual interest. How long will it take him to reach his retirement goal of $69,080?
A.13.816 years
B.0.072 years
C.10 years
D.20 years
E.5 years
Q:
Which interest rate column would you use from a present value table or a future value table for 8% compounded quarterly?
A.12%.
B.6%.
C.3%.
D.2%.
E.1%.
Q:
Interest is:
A.Time.
B.A borrower's payment to the owner of an asset for its use.
C.The same as a savings account.
D.Always a liability.
E.Always an asset.
Q:
The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.
Q:
An ordinary annuity refers to a series of equal payments made or received at the end of each period.
Q:
The present value of an annuity table can be used to determine the series of equal payments that are required by a loan agreement.
Q:
An annuity is a series of equal payments.
Q:
The number of periods in a future value calculation can only be expressed in years.
Q:
Future value can be found if the interest rate (i), the number of periods (n), and the present value (p) are known.
Q:
In a present value or future value table, the length of one time period may be interpreted as one year, one month, or any other length of time.
Q:
The Present Value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.
Q:
The number of periods in a present value calculation can only be expressed in years.
Q:
A company can use present and future value computations to estimate the interest component of holding assets over time.
Q:
An interest rate is also called a discount rate.
Q:
From the perspective of a depositor, a savings account is a liability with interest.
Q:
Interest is the payment to the owner of an asset for its use by a borrower.
Q:
Use this information for Timmer Corporation to answer the questions that follow.Timmer Corporation just started business in January. There were no beginning inventories. During the year, it manufactured 12,000 units of product and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000, and fixed selling and administrative costs were $6,000.What would Timmer's income from operations be for the year using absorption costing?a. $114,000b. $110,000c. $4,000d. $106,000
Q:
Cost-volume-profit analysis cannot be used if which of the following occurs?a. Costs cannot be properly classified into fixed and variable costs.b. The total fixed costs change.c. The per-unit variable costs change.d. Per-unit sales prices change.
Q:
When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point in sales units is
a. 16,000 units
b. 8,000 units
c. 6,000 units
d. 4,000 units
Q:
Use this information for Rusty Co. to answer the questions that follow.Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: Unit Selling PriceUnit VariableUnit ContributionProductPriceCostMarginX$110$70$40Y 70 50 20What is the unit selling price of Rusty's one overall enterprise product, E? Do not round interim computations.a. $180b. $75c. $100d. $110
Q:
In cost-volume-profit analysis, all costs are classified into which of the following two categories?a. mixed costs and variable costsb. sunk costs and fixed costsc. discretionary costs and sunk costsd. variable costs and fixed costs
Q:
If variable costs per unit decreased because of a decrease in utility rates, the break-even point woulda. decreaseb. increasec. remain the samed. increase or decrease, depending on the percentage increase in utility rates
Q:
Costs that vary in total in direct proportion to changes in an activity level are called
a. fixed costs
b. sunk costs
c. variable costs
d. differential costs
Q:
Which of the following statements regarding fixed and variable costs is true?
a. Both costs are constant when considered on a per-unit basis.
b. Both costs are constant when considered on a total basis.
c. Fixed costs are constant in total, and variable costs are constant per unit.
d. Variable costs are constant in total, and fixed costs vary in total.
Q:
The journal entry for the flow of costs into Department 1 during the period for applied overhead is a. Factory Overhead—Department 1 150,000 Work in Process—Department 1 150,000 b. Work in Process—Department 1 125,000 Factory Overhead—Department 1 125,000 c. Work in Process—Department 1 80,000 Factory Overhead—Department 1 80,000 d. Work in Process—Department 1 150,000 Factory Overhead—Department 1 150,000
Q:
Use this information about Mocha Company to answer the questions that follow.Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry for the flow of costs into Department 2 for applied overhead is a. Factory Overhead—Department 2 80,000 Work in Process—Department 2 80,000 b. Work in Process—Department 2 230,000 Factory Overhead—Department 2 230,000 c. Work in Process—Department 2 80,000 Factory Overhead—Department 2 80,000 d. Work in Process—Department 2 150,000 Factory Overhead—Department 2 150,000
Q:
Use this information about Penny, Inc. to answer the questions that follow.Penny, Inc., employs a process cost system and uses the FIFO cost flow method. Direct materials are added at the beginning of the process. Here is information about the July activities:On July 1: Beginning inventories 850 units, 60% complete Direct materials cost $5,000 Conversion costs $4,000 During July: Number of units started 15,000 Direct materials added $155,000 Conversion costs added $83,520 On July 31: Ending inventories 1,600 units, 40% completeThe number of units started and completed in July was a. 14,250 b. 15,000 c. 13,400 d. 15,740
Q:
The debits to Work in Process—Assembly Department for May, together with data concerning production, are as follows:May 1, work in process: Materials cost, 3,000 units $ 8,000 Conversion costs, 3,000 units, 66.7% completed 6,000Materials added during May, 10,000 units 30,000Conversion costs during May 31,000Goods finished during May, 11,500 units May 31 work in process, 1,500 units, 50% completed All direct materials are added at the beginning of the process, and the first-in, first-out cost flow method is used. The materials cost per equivalent unit for May is a. $3.00 b. $3.80 c. $2.92
Q:
Use this information about Carmelita Inc. to answer the questions that follow.Carmelita Inc. has the following information available: Costs from Beginning InventoryCosts from Current Period Direct materials$2,000$ 22,252 Conversion costs6,200150,536At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO cost flow method.The cost of completing a unit of product during the current period was a. $36.19 b. $34.88 c. $35.90 d. $35.89
Q:
Mocha Company manufactures a single product by a continuous process involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. Department 2 has transferred in costs of $390,000 for the current period. In addition, work in process at the beginning of the period for Department 2 totaled $75,000 and work in process at the end of the period totaled $90,000. The journal entry for the flow of costs into Department 3 during the period is a. Work in Process—Department 3 375,000 Work in Process—Department 2 375,000 b. Work in Process—Department 3 570,000 Work in Process—Department 2 570,000 c. Work in Process—Department 3 490,000 Work in Process—Department 2 490,000 d. Work in Process—Department 3 555,000 Work in Process—Department 2 555,000
Q:
Which of the following best describes the effect on direct labor when management adopts a lean production process? a. Workers typically perform one function. b. The environment becomes more labor intensive. c. Each employee runs a single machine. d. Workers are often cross-trained to perform more than one function.
Q:
A process cost system would be appropriate for a a. natural gas refinery b. jet airplane builder c. catering business d. custom cabinet builder
Q:
Use this information about Department G to answer the questions that follow.Department G had 3,600 units that were 40% completed at the beginning of the period, 12,000 units that were completed during the period, 2,000 units that were 20% completed at the end of the period, and the following manufacturing costs that were debited to the departmental work in process account during the period:Work in process, beginning of period $ 60,000Costs added during period: Direct materials (10,400 at $9.8365) 102,300 Direct labor 79,800 Factory overhead 25,200All direct materials are added at the beginning of the process, and the first-in, first-out cost flow method is used.. Determine the equivalent units for direct materials and conversion costs, respectively. a. 14,000 and 12,160 b. 10,400 and 10,960 c. 14,000 and 13,600 d. 10,400 and 10,240
Q:
Which of the following would use a process cost system? a. custom home builder b. custom helicopter manufacturer c. graduation photographer d. lumber mill
Q:
According to lean manufacturing, a. finished goods should always be available in case a customer wants something b. employees should be expert at one function rather than be cross-trained for multiple functions c. movement of the product and material is reduced d. the product moves from process to process until completion
Q:
Process and job order cost systems are similar in all of the following ways except a. both classify product costs as direct materials, direct labor, and factory overhead b. both allocate factory overhead costs to products c. both use perpetual inventory system for materials, work in process, and finished goods d. both use job cost sheets
Q:
The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of a. units started and completed b. equivalent units c. conversion costs d. ending work in process
Q:
Blue Lake Water Company has two departments: Purifying and Bottling. The Bottling Department received 76,000 liters from the Purifying Department. During the period, the Bottling Department completed 74,000 liters, including 3,000 liters of work in process at the beginning of the period. The ending work in process was 5,000 liters. How many liters were started and completed during the period? a. 71,000 b. 69,000 c. 73,000 d. 79,000
Q:
Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period? a. 7,300 units b. 5,640 units c. 6,700 units d. 5,850 units
Q:
Use this information about Department W to answer the questions that follow.Department W had 2,400 units, one-third completed at the beginning of the period. There were 16,000 units transferred to Department X from Department W during the period, and 1,800 units were one-half completed at the end of the period. Assume the completion ratios apply to both direct materials and conversion costs, and the company uses the FIFO cost flow method.What is the total number of units to be assigned costs on the cost of production report for Department W? a. 12,000 units b. 13,600 units c. 18,500 units d. 17,800 units
Q:
Use this information about Department E to answer the questions that follow.Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. There were 14,000 units of direct materials added during the period at a cost of $28,700. There were 15,000 units completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process, and the average cost method is used to cost inventories. Direct labor was $32,450, and factory overhead was $18,710.The number of equivalent units of production for the period is a. 15,650 b. 14,850 c. 18,000 d. 17,250
Q:
A report prepared periodically for each processing department summarizing the product costs incurred by the department and the allocation of those costs between completed and partially completed units is termed a a. factory overhead production report b. manufacturing cost report c. process cost report d. cost of production report
Q:
Use this information about Department B to answer the questions that follow.Department B had 3,000 units in work in process that were 25% completed at the beginning of the period at a cost of $12,500. There were 13,700 units of direct materials added during the period at a cost of $28,700, 15,000 units were completed during the period, and 1,700 units were 95% completed at the end of the period. All materials are added at the beginning of the process, and the first-in, first-out cost flow method is used. Direct labor was $32,450, and factory overhead was $18,710.The materials equivalent units of production for the period are a. 16,700 b. 12,000 c. 1,700 d. 13,700
Q:
In the manufacture of 10,000 units of a product, direct materials cost incurred was $165,000, direct labor cost incurred was $105,000, and applied factory overhead was $53,000. What is the total conversion cost? a. $218,000 b. $158,000 c. $323,000 d. $53,000
Q:
Which of the following costs incurred by a tool manufacturer would not be included in conversion costs? a. factory supervisor's salary b. machine operator's wages c. raw steel d. factory maintenance personnel supplies
Q:
The four steps necessary to complete a cost of production report in a process cost system are:1. Allocate costs to units transferred out and partially completed units.2. Determine the units to be assigned costs.3. Determine the cost per equivalent unit.4. Compute equivalent units of production.The correct ordering of the steps is a. 2, 4, 3, 1 b. 4, 2, 3, 1 c. 2, 3, 4, 1 d. 2, 3, 1, 4
Q:
If a company uses a process cost system to account for the costs in its five production departments, how many work in process accounts will it use? a. 6 b. 5 c. 4 d. 2
Q:
In a process cost system, the amount of work in process inventory is valued by a. finding the sum of all open job costs b. allocating departmental costs between completed and partially completed units c. multiplying units in ending inventory by the direct materials cost per unit d. finding the sum of all completed jobs
Q:
When preparing the cost of production report using the FIFO method, equivalent production units are generally determined for a. direct materials and conversion costs b. direct materials only c. conversion costs only d. direct materials and direct labor costs only
Q:
In process cost accounting, the costs of direct materials and direct labor are charged directly to a. service departments b. processing departments c. customer accounts receivable d. job orders
Q:
Which of the following is not a characteristic of a process cost system? a. Manufacturing costs are grouped by departments. b. The system may use several work in process accounts. c. The system measures costs for each completed job. d. The system allocates costs between completed and partially completed units within a department.
Q:
Which of the following is not a use of the cost of production report? a. to help managers control operations b. to help managers isolate problems c. to project production d. to help managers improve operations
Q:
The debits to Work in Process—Assembly Department for April, together with data concerning production, are as follows: April 1, work in process: Materials cost, 3,000 units $ 7,200 Conversion costs, 3,000 units, 40% completed 6,000Materials added during April, 10,000 units 25,000Conversion costs during April 30,800Goods finished during April, 12,000 units April 30 work in process, 1,000 units, 40% completed All direct materials are added at the beginning of the process, and the first-in, first-out cost flow method is used. The conversion cost per equivalent unit for April is a. $2.48 b. $2.75 c. $2.50 d. $5.25