On May 31, 2008, James Logan Company had a cash balance per books of $6,781.50.

On May 31, 2008, James Logan Company had a cash balance per books of $6,781.50.
The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A
comparison of the statement with the cash account revealed the following facts.
1. The statement included a debit memo of $40 for the printing of additional company checks.
2. Cash sales of $836.15 on May 12 were deposited in the bank.The cash receipts journal entry
and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company
for the correct amount.
3. Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.
4. On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account.The check,
which cleared the bank in May, was incorrectly journalized and posted by Logan Company for
$658.
5. A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80
interest.The bank charged a collection fee of $20. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak
for $800 that was incorrectly charged to Logan Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy
Grifton, a customer, to Logan Company on account.
Instructions
(a) Prepare the bank reconciliation at May 31, 2008.
(b) Prepare the necessary adjusting entries for Logan Company at May 31, 2008.

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conduct a nonparametric test following characteristic contingency table dummy indicator variable anova table value multiple regression equation

22) To conduct a nonparametric test the.
A. Population must follow the normal distribution.

B. The standard deviation must be known.

C. The data must be at least interval scale.

D. It is not necessary to make any assumption about the shape of the population.


23) Which of the following is not a characteristic of the X2
A. Its shape is based on the sample size.

B. It is not negative.

C. It approaches a normal distribution as the degrees of freedom increase.
D. It is positively skewed.



24) In a contingency table
A. The number of rows must be the same as the number of columns.
B. A variable is classified according to two criteria.

C. There must be at least 10 observations in each cell.

D. All of these




25) A dummy variable or indicator variable
A. May assume only a value of 0 or 1.

B. Is another term for the dependent variable.
C. Is equal to Y

D. Is found by (Y - Y).



26) In the ANOVA table the value of k is
A. The number of independent variables.

B. The total number of observations

C. The sum of squares total.

D. The number of degrees of freedom.



27) In a multiple regression equation
A. There is only one dependent variable.

B. The R2 term must be at least .50.

C. All the regression coefficient must be between -1.00 and 1.00.
D. None of these

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nominal scale variable is 2ratio scale measurement statements true regarding sample test proportions alternate hypothesis type error

16) A nominal scale variable is
A. Usually the result of counting something.
B. May assume negative values.

C. Cannot have more than two categories.

D. Has a meaningful zero point.



17) The ratio scale of measurement
A. Usually involves ranking.

B. Has a meaningful zero point.

C. Is usually based on counting.

D. Cannot assume negative values.



18) Which of the following statements is true regarding a sample?
A. It is a part of population.

B. It must contain at least five observations.
C. It refers to descriptive statistics

D. All of these are correct




19) Which of the following is a requirement for a two-sample test of proportions.
A. The population standard deviations are equal.
B. Both samples are at least 30.

C. nB and n(1-B) are both greater than 5.

D. Both populations are positively skewed.



20) The alternate hypothesis
A. Is accepted if the null hypothesis is rejected.
B. Tells the value of the sample mean.

C. None of these

D. Will always contain the equal sign.



21) A Type I error is
A. The correct decision

B. A value determined from the test statistic

C. Accepting the null hypothesis when it is false.
D. Rejecting the null hypothesis when it is true
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We wish to develop a confidence interval for the population mean. The shape of the population is not known, but we have a sample of 40 observations

11) We wish to develop a confidence interval for the population mean. The shape of the population is not known, but we have a sample of 40 observations. We decide to use the 92% level of confidence. The appropriate value of z is:
A. 1.96

B. 1.75

C. 1.65

D. 2.58



12) A point estimate is
A. Always an estimate of the population mean.
B. Always equal to the population value.

C. An estimate of the population parameter.

D. None of these





) Which of the following is a correct statement about a probability?
A. It may range from 0 to 1.

B. It cannot be reported to more than 1 decimal place.
C. It may assume negative values.

D. It may be greater than 1.



14) Which of the following is not a type of probability?
A. Subjective

B. Relative frequency
C. Classical

D. Independent



15) An experiment is a:
A. Collection of events

B. Always greater than 1.

C. The act of taking a measurement or the observation of some activity.
D. Collection of outcomes.

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In which of the following distributions is the probability of a success usually small difference between sample mean population called simple random

6) In which of the following distributions is the probability of a success usually small?
A. Binomial

B. All distribution

C. Poisson

D. Hypergeometric





7) The difference between the sample mean and the population mean is called the
A. Population mean.

B. Sampling error.

C. Population standard deviation.
D. Standard error of the mean.



8) In a simple random sample
A. Every Kth item is selected to be in the sample.

B. Every item has a chance to be in the sample.

C. Every item has the same chance to be in the sample.
D. All of these



9) Suppose a population consisted of 20 items. How many different samples of n = 3 are possible?
A. 6840

B. 120

C. 1140

D. 20



10) Which of the following statements is not a characteristic of the t distribution?
A. It is a continuous distribution.

B. Like z there is only one t distribution.
C. It has a mean of 0.

D. It is symmetrical.

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Which level of measurement is required for the median mode weighted mean special case not requirement of a probability distribution binomial

1) Which level of measurement is required for the median?
A. Nominal

B. Ratio

C. Ordinal

D. Interval



2) Which level of measurement is required for the mode?
A. Nominal

B. Ratio

C. Ordinal

D. Interval



3) The weighted mean is a special case of the:
A. Mean

B. Geometric mean

C. Median

D. Mode



4) Which of the following is not a requirement of a probability distribution?
A. Equally likely probability of a success.

B. The probability of each outcome is between 0 and 1.
C. Sum of the possible outcomes is 1.00.

D. The outcomes are mutually exclusive.



5) Which of the following is not a requirement of a binomial distribution?
A. A constant probability of success.
B. Equally likely outcomes.

C. Only two possible outcomes.

D. A fixed number of trails.

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ACC/422 Intermediate Financial Accounting II final Multiple choice quiz A+

ACC/422 Intermediate Financial Accounting
Intermediate Accounting, 12th Edition
Donald E. Kieso
acc 422 acc422 "intern acct" intern acct

1) Which of the following is NOT considered cash for financial reporting purposes?

A.Coin, currency, and available funds
B.Postdated checks and I.O.U.'s
C.Petty cash funds and change funds
D.Money orders, certified checks, and personal checks


2) Which of the following is considered cash?
A.Money market savings certificates
B.Postdated checks
C.Certificates of deposit (CDs)
D.Money market checking accounts


3) Which of the following items should NOT be included in the Cash caption on the balance sheet?
A.Amounts on deposit in checking account at the bank
B.Postage stamps on hand
C.Coins and currency in the cash register
D.Checks from other parties presently in the cash register


4) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?
A.A percentage of accounts receivable NOT adjusted for the balance in the allowance
B.An amount derived from aging accounts receivable and NOT adjusted for the balance in the allowance
C.A percentage of sales adjusted for the balance in the allowance
D.A percentage of sales NOT adjusted for the balance in the allowance


5) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as
A.a deduction from accounts receivable in determining the net realizable value of accounts receivable.
B.sales discounts forfeited in the cost of goods sold section of the income statement.
C.a deduction from sales in the income statement.
D.an item of "other expense" in the income statement.


6) Which of the following methods of determining annual bad debt expense best achieves the matching concept?
A.Percentage of average accounts receivable
B.Direct write-off
C.Percentage of sales
D.Percentage of ending accounts receivable


7) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inven¬tory results in
A.an overstatement of assets and net income.
B.an understatement of liabilities and an overstatement of owners' equity.
C.an understatement of cost of goods sold and liabilities and an overstatement of assets.
D.an understatement of assets and net income.


8) Valuation of inventories requires the deter¬mination of all of the following EXCEPT
A.the costs to be included in inventory.
B.the cost flow assumption to be adopted.
C.the cost of goods held on consign¬ment from other companies.
D.the physical goods to be included in inventory.


9) If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are
A.overstatement, understatement, overstatement.
B.understatement, overstatement, no effect.
C.understatement, overstatement, overstatement.
D.overstatement, understatement, no effect.


10) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
A.Average cost
B.Base stock
C.Last-in, first-out
D.First-in, first-out
ACC/422 Intermediate Financial Accounting



Intermediate Accounting II Final Quiz

Intermediate Accounting ii 

1) Which of the following is considered cash?

A. Certificates of deposit (CDs)
B. Money market checking accounts
C. Money market savings certificates
D. Postdated checks



2) Bank overdrafts, if material, should be

A. reported as a deduction from the current asset section.
B. reported as a deduction from cash.
C. netted against cash and a net cash amount reported.
D. reported as a current liability.



3) Which of the following is NOT considered cash for financial reporting purposes?

A. Petty cash funds and change funds
B. Money orders, certified checks, and personal checks
C. Coin, currency, and available funds
D. Postdated checks and I.O.U.'s



4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as

A. a deduction from sales in the income statement.
B. an item of "other expense" in the income statement.
C. a deduction from accounts receivable in determining the net realizable value of accounts receivable.
D. sales discounts forfeited in the cost of goods sold section of the income statement.



5) Which of the following methods of determining annual bad debt expense best achieves the matching concept?

A. Percentage of sales
B. Percentage of ending accounts receivable
C. Percentage of average accounts receivable
D. Direct write-off



6) The advantage of relating a company's bad debt expense to its outstanding accounts receivable is that this approach

A. gives a reasonably correct statement of receivables in the balance sheet.
B. best relates bad debt expense to the period of sale.
C. is the only generally accepted method for valuing accounts receivable.
D. makes estimates of uncollectible accounts unnecessary.



7) The failure to record a purchase of mer¬chandise on account even though the goods are properly included in the physical inven¬tory results in

A. an overstatement of assets and net income.
B. an understatement of assets and net income.
C. an understatement of cost of goods sold and liabilities and an overstatement of assets.
D. an understatement of liabilities and an overstatement of owners' equity.



8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be

A. no effect.
B. net income was correct and current assets and current liabilities were overstated.
C. net income, current assets, and current liabilities were overstated.
D. net income and current liabilities were overstated.



9) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be

A. net income, current assets, and retained earnings were overstated.
B. net income was correct and current assets were understated.
C. net income and current assets were overstated and current liabilities were understated.
D. net income, current assets, and retained earnings were understated.



10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its

A. invoice price.
B. invoice price less the purchase discount taken.
C. invoice price plus any purchase discount lost.
D. invoice price less the purchase discount allowable whether taken or not.



11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

A. Average cost
B. Last-in, first-out
C. First-in, first-out
D. Base stock



12) When using the periodic inventory system, which of the following generally would NOT be separately accounted for in the computation of cost of goods sold?

A. Trade discounts applicable to purchases during the period
B. Purchase returns and allowances of merchandise during the period
C. Cash (purchase) discounts taken during the period
D. Cost of transportation-in for merchandise purchased during the period

13) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?

A. The cost of sales of the following year will be understated.
B. The closing inventory of the current year is understated.
C. The current year's income is understated.
D. Income of the following year will be understated.



14) Designated market value

A. is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin.
B. may sometimes exceed net realizable value.
C. should always be equal to net realizable value.
D. should always be equal to net realizable value less a normal profit margin.



15) In no case can "market" in the lower-of-cost-or-market rule be more than

A. estimated selling price in the ordinary course of business.
B. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin.
C. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.
D. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.



16) A major advantage of the retail inventory method is that it

A. provides reliable results in cases where the distribution of items in the inventory is different from that of items sold during the period.
B. gives a more accurate statement of inventory costs than other methods.
C. hides costs from competitors and customers.
D. provides a method for inventory control and facilitates determination of the periodic inventory for certain types of companies.



17) The gross profit method of inventory valuation is invalid when

A. a portion of the inventory is destroyed.
B. there is no beginning inventory because it is the first year of operation.
C. there is a substantial increase in inventory during the year.
D. none of these.



18) The retail inventory method is based on the assumption that the

A. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.
B. ratio of cost to retail changes at a constant rate.
C. ratio of gross margin to sales is approximately the same each period.
D. proportions of markups and markdowns to selling price are the same.



19) Which of the following is NOT a major characteristic of a plant asset?

A. Possesses physical substance
B. Acquired for use
C. Acquired for resale
D. Yields services over a number of years



20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be

A. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.
B. capitalized as part of the cost of the land.
C. written off as an extraordinary loss in the year the hotel is torn down.
D. capitalized as part of the cost of the new hotel.



21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on

A. the significance of the cost allocated to the building in relation to the combined cost of the lot and building.
B. the contemplated future use of the parking lot.
C. the length of time for which the building was held prior to its demolition.
D. the intention of management for the property when the building was acquired.



22) The period of time during which interest must be capitalized ends when

A. the asset is substantially complete and ready for its intended use.
B. the activities that are necessary to get the asset ready for its intended use have begun.
C. the asset is abandoned, sold, or fully depreciated.
D. no further interest cost is being incurred.



23) To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be

A. allocated on the basis of lost production.
B. allocated on a pro rata basis between the asset and normal operations.
C. allocated on an opportunity cost basis.
D. eliminated completely from the cost of the asset.



24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

A. the total interest cost actually incurred.
B. that portion of average accumulated expenditures on which no interest cost was incurred.
C. that portion of total interest cost which would NOT have been incurred if expenditures for asset construction had NOT been made.
D. a cost of capital charge for stockholders' equity.



25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will

A. be reported in the Other Revenues and Gains section of the income statement.
B. be credited directly to the owner's capital account.
C. effectively increase the amount to be recorded as the cost of the new asset.
D. effectively reduce the amount to be recorded as the cost of the new asset.



26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be

A. offset against interest cost incurred during construction.
B. recognized as revenue of the period.
C. multiplied by an appropriate interest rate to determine the amount of interest to be capitalized.
D. used to reduce the cost of assets being constructed.



27) Which of the following is NOT a condition that must be satisfied before interest capitalization can begin on a qualifying asset?

A. Interest cost is being incurred.
B. Activities that are necessary to get the asset ready for its intended use are in progress.
C. The interest rate is equal to or greater than the company's cost of capital.
D. Expenditures for the assets have been made.
28) Which of the following most accurately reflects the concept of depreciation as used in accounting?

A. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
B. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.
C. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.
D. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.



29) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

A. Associating cause and effect
B. Partial recognition
C. Immediate recognition
D. Systematic and rational allocation



30) The major difference between the service life of an asset and its physical life is that

A. service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last.
B. service life refers to the length of time an asset is of use to its original owner, while physical life refers to how long the asset will be used by all owners.
C. physical life is always longer than service life.
D. physical life is the life of an asset without consideration of salvage value and service life requires the use of salvage value.




31) Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

A. $17,500
B. $37,500
C. $28,125
D. $26,250



32) Bigbie Company purchased a depreciable asset for $600,000. The estimated salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?

A. $57,000
B. $570,000
C. $66,000
D. $62,700



33) Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

A. $9,000
B. $100,000
C. $90,000
D. $10,000



34) Costs incurred internally to create intangibles are

A. capitalized.
B. expensed only if they have a limited life.
C. expensed as incurred.
D. capitalized if they have an indefinite life.



35) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

A. amortized over the legal life of the purchased patent.
B. charged off in the current period.
C. amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product.
D. added to factory overhead and allocated to production of the purchaser's product.



36) Riser Corporation was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser Corporation does NOT feel the competing patent can be used in producing a product. The cost of the competing patent should be

A. amortized over a maximum period of 16 years.
B. amortized over a maximum period of 20 years.
C. expensed in 2007.
D. amortized over a maximum period of 11 years.



37) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008?

A. $125,000
B. $ -0-
C. $300,000
D. $175,000



38) Fleming Corporation acquired Out-of-Sight Products on January 1, 2008 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2008, the Out-of-Sight Products Division had a fair value of $3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,900,000 at that time. What amount of loss on impairment of goodwill should Fleming record in 2008?

A. $250,000
B. $ -0-
C. $600,000
D. $350,000



39) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom’s market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?

A. $8,000,000
B. $10,000,000
C. $4,800,000
D. $6,400,000



40) Goodwill

A. is easily computed by assigning a value to the individual attributes that comprise its existence.
B. generated internally should NOT be capitalized unless it is measured by an individual independent of the enterprise involved.
C. exists in any company that has earnings that differ from those of a competitor.
D. represents a unique asset in that its value can be identified only with the business as a whole.



41) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as

A. part of current income in the year of combination.
B. an extraordinary gain.
C. paid-in capital.
D. a deferred credit and amortize it.



42) The reason goodwill is sometimes referred to as a master valuation account is because

A. it is the difference between the fair market value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business.
B. it represents the purchase price of a business that is about to be sold.
C. it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value.
D. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation.

43) Which of the following items is a current liability?

A. Bonds due in three years.
B. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months.
C. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue.
D. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months.



44) Which of the following statements is false?

A. Cash dividends should be recorded as a liability when they are declared by the board of directors.
B. A company may exclude a short-term obligation from current liabilities if the firm intends to refinance the obligation on a long-term basis and demonstrates an ability to complete the refinancing.
C. FICA taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority.
D. Under the cash basis method, warranty costs are charged to expense as they are paid.



45) Stock dividends distributable should be classified on the

A. balance sheet as an asset.
B. income statement as an expense.
C. balance sheet as an item of stockholders' equity.
D. balance sheet as a liability.



46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows:


Year Hourly Wages Vacation Days Earned by Each Employee Vacation Dayse Used by Each Employee
2006 $28.50 10 0
2007 $27.00 10 8
2008 $28.50 10 10



What is the amount of expense relative to compensated absences that should be reported on Simson’s income statement for 2006?

A. $68,880.
B. $0.
C. $72,240.
D. $75,600.



47) A company buys an oil rig for $1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events?

A. Depreciation expense of $100,000 and interest expense of $7,711
B. Depreciation expense of $100,000 and interest expense of $20,000
C. Depreciation expense of $107,710 and interest expense of $7,711
D. Depreciation expense of $120,000



48) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?

A. $600,000; $390,000
B. $390,000; $390,000
C. $210,000; $390,000
D. $600,000; $600,000



49) A contingency can be accrued when

A. an asset may have been impaired.
B. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability incurred.
C. it is probable that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated.
D. it is certain that funds are available to settle the disputed amount.



50) Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles?

A. Amount of loss is reasonably estimable and occurrence of event is probable.
B. Event is unusual in nature and occurrence of event is probable.
C. Event is unusual in nature and event occurs infrequently.
D. Amount of loss is reasonably estimable and event occurs infrequently.



51) Mark Ward is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident:

A. recognition of a loss only.
B. creation of a liability only.
C. disclosure in note form only.
D. recognition of a loss and creation of a liability for the value of the land.



52) An example of an item which is NOT a liability is

A. advances from customers on contracts.
B. accrued estimated warranty costs.
C. the portion of long-term debt due within one year.
D. dividends payable in stock.



53) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the

A. bond debenture.
B. registered bond.
C. bond coupon.
D. bond indenture.



54) Bonds for which the owners' names are NOT registered with the issuing corporation are called

A. term bonds.
B. debenture bonds.
C. secured bonds.
D. bearer bonds.
55) Minimum lease payments may include a

A. bargain purchase option.
B. guaranteed residual value.
C. any of these.
D. penalty for failure to renew.



56) What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee?

A. The lessee must increase the present value of the minimum lease payments by the present value of the option price.
B. The lessee must decrease the present value of the minimum lease payments by the present value of the option price.
C. The minimum lease payments would be increased by the present value of the option price if, at the time of the lease agreement, it appeared certain that the lessee would exercise the option at the end of the lease and purchase the asset at the option price.
D. No impact as the option does NOT enter into the transaction until the end of the lease term.



57) Which of the following is a correct statement of one of the capitalization criteria?

A. The lease contains a purchase option.
B. The lease term is equal to or more than 75% of the estimated economic life of the leased property.
C. The minimum lease payments (excluding executory costs) equal or exceed 90% of the fair value of the leased property.
D. The lease transfers ownership of the property to the lessor.



58) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as

A. the difference between the lease payments receivable and the fair market value of the leased property.
B. the present value of minimum lease payments.
C. the total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement.
D. the amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease.



59) In the earlier years of a lease, from the lessee's perspective, the use of the

A. capital method will cause debt to increase, compared to the operating method.
B. operating method will cause debt to increase, compared to the capital method.
C. operating method will cause income to decrease, compared to the capital method.
D. capital method will enable the lessee to report higher income, compared to the operating method.



60) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income

A. should be amortized over the period of the lease using the straight-line method.
B. should be recognized at the lease's expiration.
C. does NOT arise.
D. should be amortized over the period of the lease using the interest method.


Penn Foster 00780401Exam

1. The first woman in space was

A. Valentina Tershkova.

B. Sally Ride.

C. Christa McAuliffe.

D. Teresa Broz.

2. The Sandinistas are associated with the country of

A. Cuba.

C. Nicaragua.

B. Chile.

D. El Salvador.

3. The “industrial heart of Europe is located in the

A. Oder Plain.

C. Swiss Alps.

B. Rhine Basin.

D. Ruhr Valley.

4. What country is suspected to be behind the bombing of the World Trade Center in New York City?

A. Iraq

C. China

B. Korea

D. Israel

5. Fidel Castro took over control of Cuba when he deposed the dictator

A. Duvalier.

C. Batista.

B. Duarte.

D. Noriega.

6. The Peace Corps was started by President

A. Eisenhower.

C. Truman.

B. Kennedy.

D. Johnson.

7. United States relations with China were normalized through the actions of President

A. Kennedy.

C. Johnson.

B. Nixon.

D. Reagan.

8. The war over the Falkland Islands was between

A. Britain and Argentina.

C. Scotland and Ireland.

B. Chile and Cuba.

D. the United States and Grenada.

9. The first Secretary General of the United Nations was

A. Trygve Lie.

C. Kurt Waldheim.

B. U Thant.

D. Dag Hammarskjold.

10. The first atomic bomb used in warfare was dropped on the city of

A. Nanking.

C. Nagasaki.

B. Hiroshima.

D. Tokyo.

11. The forerunner of the United Nations was the

A. Atlantic Charter.

C. League of Nations.

B. Allied Forces.

D. NATO.

12. The first reusable winged space shuttle was the

A. Columbia.

C. Challenger.

B. Soyuz.

D. Apollo.

13. The military alliance founded by Western nations to counteract Communism in Europe was called

A. NATO.

C. SEATO.

B. ANZUS.

D. OAS.

14. The European Recovery Program was also known as the

A. Point Four Program.

C. American Plan.

B. Truman Plan.

D. Marshall Plan.

15. The labor union that had a major impact on Polish government is called

A. Comintern.

C. Solidarity.

B. Free Workers.

D. Knights of Labor.

16. Benito Mussolini was leader of the Fascist movement in

A. Germany.

C. Italy.

B. Russia.

D. Czechoslovakia.

17. The Red Terror is associated with the country of

A. France.

C. Germany.

B. Russia.

D. Austria.

18. The ruler who first tried to westernize Russia was

A. Peter the Great.

C. Catherine the Great.

B. Lenin.

D. Stalin.

19. The peace program known as the Fourteen Points was put forth by

A. Wilson.

C. Clemenceau.

B. George.

D. Orlando.

20. The assassination of Archduke Ferdinand was one of the major causes of

A. the Crimean War.

C. World War I.

B. World War II.

D. The Suez War.

21. The Good Friday Agreement was to improve relationships in the country of

A. Ireland.

C. Israel.

B. China.

D. Korea.

22. The monetary value of all goods and services of a country is known as its

A. NEP.

C. OPEC.

B. FLN.

D. GNP.

23. The word glasnostmeans

A. openness.

C. restructuring.

B. peaceful coexistence.

D. people’s movement.

24. The phrase Peace, Bread, and Land is associated with

A. the Bolsheviks.

C. Bismarck.

B. Marx.

D. the Whites.

25. Mein Kampfwas written by

A. Himmler.

C. Goebbels.

B. Goering.

D. Hitler.

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Evolution of Formal Organization

Review the following scenario: You work for a formal organization in the United States that has an open, flexible organizational structure as described in Figure 5-5 (attached). You have a relative, Micah, who works for a formal organization with a conventional, bureaucratic organizational structure. Micah is interested in working for your organization, but he does not have the education or skill set to work there. He says he wishes that his company would adopt a flexible organizational structure but doubts it is possible. You explain to Micah that you have been studying the evolution of formal organizations in your Sociology class and that you would like to conduct some research to determine how formal organizations, such as the one Micah works for, are likely to evolve in the future. Write a 1,050 to 1,750 word paper summarizing your research results and cite 3 to 5 sources

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The firm currently uses 50,000 workers to produce 200,000 units of output per day

The firm currently uses 50,000 workers to produce 200,000 units of output per day

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The firm currently uses 50,000 workers to produce 200,000 units of output per day.

The daily wage per worker is $80, and the price of the firm’s output is $25. The cost of other variable inputs is $400,000 per day. Although you do not know the firm’s fixed cost, you know that it is high enough that the firm’s total costs exceed its total revenue. Assume that total fixed cost equals $1,000,000.

Calculate the values for the following four formulas: •Total Variable Cost = (Number of Workers * Worker’s Daily Wage) + Other Variable Costs •Average Variable Cost = Total Variable Cost / Units of Output per Day •Average Total Cost = (Total Variable Cost +Total Fixed Cost) / Units of Output per Day •Worker Productivity = Units of Output per Day / Number of Workers Then, assume that total fixed cost equals $3,000,000, and recalculate the values of the four variables listed above. For both cases, calculate the firm’s profit or loss.

For both sets of calculations, compare the firm’s output price and the calculated average variable cost and average total cost. Should the firm shutdown immediately when the total fixed cost equals $1,000,000? Should the firm shut down immediately when the total fixed cost equals $3,000,000?

For one of the cases, if the firm can operate at a loss in the short-run, how many employees need to be laid off in order for the company to break even? To calculate the number of workers to be laid off, divide the loss for the two situations by the daily wage per worker.

Given a lower number of employees now working at the company, what is the change in worker productivity? Is the change in worker too large, and the firm should shut down immediately? Or in your opinion, can the workers increase their productivity, assuming that the units of output per day remain fixed at 200,000 units, so that the firm operates at a breakeven state? Provide a two to four page report to management of the firm that discusses what should be done. Be sure to show your work to support the decision you outline in your report.

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Explain the difference between Muslims and Arabs

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Explain the difference between Muslims and Arabs.

o According to current (within the past two years) research and news reports, what are
some of the changes the United States has made to policies concerning the
treatment of Muslim and Arabic members of society?
o List two to three characteristics of Orientalism. How may Orientalism and prejudice
contribute to hate crimes against these groups?
o What can individuals do to promote tolerance and reduce prejudice in their towns and
cities? For ideas, go to http://www.tolerance.org, http://www.splcenter.org,
http://www.villagevoice.com/2003-07-08/news/making-enemies

ETH 125 WEEK 5 CheckPoint: Characteristics of Orientalism, Prejudice, and Discrimination

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Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical company needs to borrow $500,000

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FIN 200

Introduction to Finance: Harvesting the Money Tree

Week Seven (Week 7) Solution

CheckPoint: Break-Even Analysis

  • Resource: Ch. 8 of Foundations of Financial Management
  • Due Date: Day 7 [post to the Individual forum]
  • Complete the Comprehensive Problem: Midland Chemical Co. on pp. 250-251.
  • Post the assignment as an attachment.

Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The
small chemical company needs to borrow $500,000.
The bank offers a rate of 8¼ percent with a 20 percent compensating balance
requirement, or as an alternative, 9¾ percent with additional fees of $5,500 to cover
services the bank is providing. In either case the rate on the loan is floating (changes as
the prime interest rate changes), and the loan would be for one year.

a. Which loan carries the lower effective rate? Consider fees to be the equivalent of
other interest.

b. If the loan with a 20 percent compensating balance requirement were to be paid
off in 12 monthly payments, what would the effective rate be? (Principal equals
amount borrowed minus the compensating balance.)

c. Assume the proceeds from the loan with the compensating balance requirement
will be used to take cash discounts. Disregard part b about installment payments
and use the loan cost from part a.
If the terms of the cash discount are 1.5/10, net 50, should the firm borrow the funds
to take the discount?

d. Assume the firm actually takes 80 days to pay its bills and would continue to
do so in the future if it did not take the cash discount. Should it take the cash
discount?

e. Because the interest rate on the loans is floating, it can go up as interest rates go
up. Assume that the prime rate goes up by 2 percent and the quoted rate on the
loan goes up the same amount. What would then be the effective rate on the loan
with compensating balances? Convert the interest to dollars as the first step in
your calculation.

f. In order to hedge against the possible rate increase described in part e, Midland
decides to hedge its position in the futures market. Assume it sells $500,000
worth of 12-month futures contracts on Treasury bonds. One year later, interest
rates go up 2 percent across the board and the Treasury bond futures have gone
down to $488,000. Has the firm effectively hedged the 2 percent increase in
interest rates on the bank loan as described in part e? Determine the answer in
dollar amounts
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Acct 281 Chapter 5 Accounting for Merchandising Operations

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Acct 281 Chapter 5 Accounting for Merchandising Operations
Journalize, post, and prepare trial balance and partial income statement using periodic approach.
(SO 7, 8)
*P5-7A At the beginning of the current season, the ledger of Village Tennis Shop showed Cash
$2,500; Merchandise Inventory $1,700; and Common Stock $4,200. The following transactions
were completed during April.
Apr. 4 Purchased racquets and balls from Denton Co. $740, terms 3/10, n/30.
6 Paid freight on Denton Co. purchase $60.
8 Sold merchandise to members $900, terms n/30.
10 Received credit of $40 from Denton Co. for a damaged racquet that was returned.
11 Purchased tennis shoes from Newbee Sports for cash $300.
13 Paid Denton Co. in full.
14 Purchased tennis shirts and shorts from Venus's Sportswear $600, terms 2/10, n/60.
15 Received cash refund of $50 from Newbee Sports for damaged merchandise that was
returned.
17 Paid freight on Venus's Sportswear purchase $30.
18 Sold merchandise to members $1,000, terms n/30.
20 Received $500 in cash from members in settlement of their accounts.
21 Paid Venus's Sportswear in full.
27 Granted an allowance of $30 to members for tennis clothing that did not fit properly.
30 Received cash payments on account from members $500.
The chart of accounts for the tennis shop includes Cash; Accounts Receivable; Merchandise
Inventory; Accounts Payable; Common Stock; Sales; Sales Returns and Allowances; Purchases;
Purchase Returns and Allowances; Purchase Discounts; and Freight-in.

Instructions

(a) Journalize the April transactions using a periodic inventory system.
(b) Using T accounts, enter the beginning balances in the ledger accounts and post the April
Transactions.
(c) Prepare a trial balance on April 30, 2008.
(d) Prepare an income statement through gross profit, assuming merchandise inventory on hand
at April 30 is $2,296.

Journalize perpetual inventory entries
E5-3 On September 1, Howe Office Supply had an inventory of 30 calculators at a cost of $18
each.The company uses a perpetual inventory system. During September, the following transactions
occurred.
Sept. 6 Purchased 80 calculators at $20 each from DeVito Co. for cash.
9 Paid freight of $80 on calculators purchased from DeVito Co.
10 Returned 2 calculators to DeVito Co. for $42 credit (including freight) because they
did not meet specifications.
12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store,
terms n/30.
14 Granted credit of $31 to Mega Book Store for the return of one calculator that was not
ordered.
20 Sold 30 calculators costing $21 for $31 each to Barbara's Card Shop, terms n/30.

Instructions
Journalize the September transactions

Journalize purchase transactions.
*E5-16 This information relates to Martinez Co.

1. On April 5 purchased merchandise from D. Norlan Company for $20,000, terms 2/10, net/30,
FOB shipping point.
2. On April 6 paid freight costs of $900 on merchandise purchased from D. Norlan Company.
3. On April 7 purchased equipment on account for $26,000.
4. On April 8 returned some of April 5 merchandise to D. Norlan Company which cost $2,800.
5. On April 15 paid the amount due to D. Norlan Company in full.
Instructions
(a) Prepare the journal entries to record these transactions on the books of Martinez Co. using a
periodic inventory system.
(b) Assume that Martinez Co. paid the balance due to D. Norlan Company on May 4 instead of
April 15. Prepare the journal entry to record this payment.
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CheckPoint: Accounting Information Systems and Special Journals

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CheckPoint: Accounting Information Systems and Special Journals
• Resource: Fundamental Accounting Principles, pp. 289, 290, and 291
• Due Date: Day 5 [Individual] forum
• Complete Quick Study questions QS 7-1 and QS 7-3 on p. 289, and Exercises 7-1, 7-4,
7-7, and 7-10 on pp. 290-291.
• Post your answers as an attachment.

Optional Information:
Subject: Accounting 225

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QS 7-1
Accounting information system principles

Place the letter of each system principle in the blank next to its best description.
A. Control principle D. Flexibility principle
B. Relevance principle E. Cost-benefit principle
C. Compatibility principle

1. The principle prescribes the accounting information system to change in response to technological advances and competitive pressures.

2. The principle prescribes the accounting information system to help monitor activities.

3. The principle prescribes the accounting information system to provide timely information for effective decision making.

4. The principle prescribes the accounting information system to adapt to the unique characteristics of the company.

5. The principle that affects all other accounting information system principles.

QS 7-3
Accounting information system components

Identify the most likely role in an accounting system played by each of the numbered items 1 through 12 by assigning a letter from the list A through E on the left:

A. Source documents
B. Input devices
C. Information processors
D. Information storage
E. Output devices


1. Bar code reader
2. Filing cabinet
3. Bank statement
4. Computer scanner
5. Computer keyboard
6. Zip drive
7. Computer monitor
8. Invoice from a supplier
9. Computer software
10. Computer printer
11. Digital camera

EXERCISES
Exercise 7-1 Sales journal—perpetual

Hutton Company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursement journal, and a general journal. The following transactions occur in the month of March:

Mar. 2 Sold merchandise costing $300 to B. Fager for $450 cash, invoice no. 5703.
5 Purchased $2,300 of merchandise on credit from Marsh Corp.
7 Sold merchandise costing $800 to J. Dryer for $1,150, terms 2_10, n_30, invoice no. 5704.
8 Borrowed $8,000 cash by signing a note payable to the bank.

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Hypothesis Testing on Multiple Populations The Course Manager for AMBA 610 wants to use a new tutorial to teach the students about business ethics

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Hypothesis Testing on Multiple Populations The Course Manager for AMBA 610 wants to use a new tutorial to teach the students about business ethics. As an experiment she randomly selected 15 students and randomly assigned them to one of three groups which include either a PowerPoint presentation created by the faculty, AuthorGen Presentation created by the faculty, or a well known tutorial by the ABC Company. After completing their assigned tutorial, the students are given a Business Ethics test. At the .05 significance level, can she conclude that there is a difference between how well the different tutorials work for the students? Below are figures for students grades on the Business Ethics Test following the Tutorial: PwerPt Tutorial: 98,85,91,87,98 AuthorGen Tutorial:79, 86, 72,82,91 ABC Tutorial: 65, 83, 78, 66, 81
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Costs that do not increase or decrease due to a special order are never considered incremental costs for the special order decision



1. Costs that do not increase or decrease due to a special order are never considered incremental costs for the special order decision. .....a.True** .....b.False .....
2. Manufacturing costs include direct material, direct labor, and manufacturing overhead. .....a.True .....b.False .....
3. One goal of just-in-time systems is to minimize inventory levels. .....a.True .....b.False .....
4. Marco Diner produced and sold 2,000 bagels last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?.....a.Total fixed costs will increase. .....b.Total fixed costs will decrease. .....c.Fixed cost per unit will increase. .....d.Fixed cost per unit will decrease. .....
5. Shula's 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and other fixed costs, $600. Each steak dinner sells for $14.00 each. How much is the budgeted variable cost per unit? (Points: 5) $5.80 $7.74 $6.68 $3.25
6. Breezes Curacao has 200 rooms. Each room rents at $130 per night and variable costs total $42 per room per night of occupancy. Fixed costs total $18,700 per month. If Breezes is able to increase occupancy from 70% to 80% by how much will total costs increase per day during the month of June? .....a.$840 .....b.$2,710 .....c.$1,870 .....d.$1,760 .....
7. Which of the following costs is part of manufacturing overhead? .....a.Indirect labor .....b.Direct labor .....c.Salaries for the accounting personnel .....d.Wages for the janitorial staff for the sales offices .....
8. A job-order costing system is likely to be used by a.....a.soft-drink bottler. .....b.breakfast cereal manufacturer. .....c.paint manufacturer. .....d.caterer. .....
9. Wingfield Company budgeted 121,000 direct labor hours and incurred 125,000 direct labor hours. It incurred $720,000 of overhead and estimated overhead was $726,000. What was the predetermined overhead rate? .....a.$5.80 .....b.$6.00 .....c.$5.60 .....d.$5.76 .....
10. If a company has zero beginning inventory and zero ending inventory (is completely just-in-time), then which of the following is true? .....a.Cost of goods sold will equal cost of goods manufactured .....b.Cost of goods sold will be zero .....c.Cost of goods manufactured will be zero .....d.All of the above .....
11. A significant disadvantage of a process costing system is that it requires the use of actual overhead costs rather than predetermined overhead rates. .....a.True .....b.False .....

12. Which of the following costs is not added to the Work in Process account in a process costing system? .....a.Manufacturing overhead .....b.Direct materials .....c.Direct labor .....d.Advertising .....
13. Department Alpha had no beginning inventory. The department added direct materials of $100,000 and conversion costs of $150,000 during the month of July. Materials are added at the beginning of the process and conversion costs are added evenly throughout the process in this department. During the period, 40,000 units were completed. At the end of the period 40,000 units remained which were 10% complete. What is the cost per equivalent unit of materials and conversion costs, respectively in July? .....a.$3.41 and 4.66 .....b.$1.25 and $3.41 .....c.$1.25 and $1.88 .....d.$1.88 and $3.41 .....
14. Ending inventory in the assembly department consists of 700 units which are 50% complete with respect to conversion costs. The beginning inventory consisted of 2,000 units. During the month, 6,000 units were started. How many equivalent units will be used in the cost per equivalent unit calculation for conversion costs? .....a.7,650 .....b.7,300 .....c.8,000 .....d.6,700 .....
15. In the cutting department, all the materials are added at the beginning of the process and conversion costs are added evenly during the processing. During the first month of operations, the cutting department transferred 50,000 units to the sewing department. Ending inventory consisted of 2,800 units which were 35% complete with respect to conversion costs. What are the equivalent units for materials and for conversion costs, respectively? .....a.50,000 and 50,980 .....b.52,800 and 50,980 .....c.52,800 and 52,800 .....d.50,000 and 52,800 .....
16. The account analysis method is subjective in that different managers viewing the same set of facts may reach different conclusions regarding which costs are fixed and which costs are variable. .....a.True .....b.False .....
17. If the contribution margin ratio is 40%, it means that every $1.00 of sales will contribute $0.40 to covering fixed costs and generating a profit. .....a.True .....b.False .....
18. Income statements of manufacturing firms prepared for external purposes use variable costing. .....a.True .....b.False .....
19. Step costs.....a.are the same amount per unit for each range of volume. .....b.are fixed for a range of volume but increase to a higher level when the upper bound of the range is exceeded. .....c.are a different total amount at every level of activity. .....d.contain both a variable cost element and a fixed cost element. .....
20. When considering a process that involves a resource constraint, the optimal decision .....a.minimizes the break-even point. .....b.maximizes the contribution margin per unit of the constraint. .....c.minimizes the contribution margin per unit of output. .....d.minimizes total fixed costs. .....
21. In full costing, when does fixed manufacturing overhead become an expense? .....a.In the period when other fixed costs are at the highest level. .....b.In the period when the product is sold. .....c.In the period when the expense is incurred. .....d.When the controller decides that the expense should be recognized......
22. Which is most consistent with cost-volume-profit analysis? .....a.variable costing......b.full costing. .....c.they are equally useful. .....d.neither is consistent with C-V-P. .....
23. Michael Vick has written a self improvement book that has the following cost characteristics: Assume that the current sales level is 30,000 units. What impact would a 30% increase in sales have on profit?
Selling price $16.00 per book
Variable cost per unit
Production $4.00
Selling & Administrative 2.00
Fixed costs:
Production $88,000 per year
Selling & administrative 18,000 per year

Assume that the current sales level is 30,000 units. What impact would a 30% increase in sales have on profit?

a. Profit would increase 30%.
b. Profit would increase 100%.
c. Profit would increase $90,000.
d. Profit would increase $44,000.

24. The Cider Company experienced the following costs in 2011:
Direct materials $2.65/unit
Direct labor $1.80/unit
Variable manufacturing overhead $3.25/unit
Variable selling $1.15/unit
Fixed manufacturing overhead $94,000
Fixed selling $35,000
Fixed administrative $10,000

During the year the company manufactured 47,000 units and sold 40,000 units. How much is the average unit product cost using full costing?

a. $7.70
b. $9.70
c. $8.85
d. $10.85

25. T-Shirt Man is a direct marketer of popular t-shirts. Following is information about its revenue and cost structure:
Selling Price: $15.00/t-shirt
Variable Costs:
Production (manufacturing costs) $3.00/t-shirt
Selling & Administrative (non-mfg costs) $1.00/t-shirt
Fixed Costs:
Production (mfg costs) $1,000,000/year
Selling & Administration (non-mfg costs) $2,000,000/year

Assume 400,000 t-shirts are produced and 350,000 are sold in 2011. What is income under full costing?

a. $975,000
b. $1,400,000
c. $850,000
d. $2,250,000

26. Allocating actual service department costs allows the service departments to pass on the costs of inefficiencies to the production departments. .....a.True .....b.False .....
27. A major problem with cost-plus contracts is that they .....a.are not acceptable under GAAP. .....b.cause the supplier to take significant financial risks. .....c.require the supplier to use variable costing. .....d.create an incentive to allocate as much cost as possible to the goods produced under the cost-plus contract......
28. A grouping of individual costs whose total is allocated using one allocation base is called a .....a.cost objective. .....b.cost pool. .....c.direct cost......d.sunk cost. .....
29. When activity based costing is implemented, the initial outcome is normally that: .....a.the cost of all products will be higher. .....b.The cost of all products will be lower .....c.The cost of low volume products will be higher and the cost of high volume products will be lower. .....d.The cost of low volume products will be lower and the cost of high volume products will be higher. .....
30. The traditional approach to cost allocation.....a.tends to over-cost high volume core products. .....b.usually requires more cost pools than ABC. .....c.attempts to identify the activities that cause costs. .....d.produces more accurate costs than any other method. .....
31. The proper way to analyze the decision to drop a product line is to compare sunk costs to incremental costs. .....a.True .....b.False .....
32. Opportunity costs represent the benefits foregone by selecting one alternative over another. .....a.True .....b.False .....
33. A company is trying to decide whether to sell partially completed goods in their current state or incur additional costs to finish the goods and sell them as complete units. Which of the following is not relevant to the decision? .....a.The selling price of the completed units. .....b.The costs incurred to process the units to this point. .....c.The selling price of the partially completed units. .....d.The costs that will be incurred to finish the units. .....
34. BigByte Company has 12 obsolete computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold "as is" for $9,000. What is the net advantage or disadvantage of reworking the computers?.....a.$6,300 advantage .....b.$1,200 disadvantage .....c.$5,400 disadvantage .....d.$3,000 advantage .....
35. In theory of constraints, to "break the binding constraint" means to.....a.improve the process that was the binding constraint so that some other process is now the binding constraint. .....b.improve all processes simultaneously. .....c.make sure that the items made in the constrained process yield the highest contribution margin. .....d.All of the above. .....
36. Depreciation itself is not a cash flow, but it reduces the amount of taxes that a company must pay. .....a.True .....b.False .....
37. Suppose you face the prospect of receiving $500 per year for the next five years plus an extra $800 payment at the end of six years. Determine how much this prospect is worth today if the required rate of return is 12 percent. .....a.$1,802 .....b.$2,208 .....c.$2,355 .....d.$2,602 .....
38. Using an interest rate of 14%, how much is the present value of $800,000 to be received in 15 years? .....a.$112,080 .....b.$58,481 .....c.$533,334 .....d.$746,666 .....
39. An investment of $100,000 promises returns of $40,000 per year for each of the next three years. If taxes are ignored and the required rate of return is 14%, what is the net present value of the project? .....a.$92,864 .....b.$20,000 .....c.($7,136) .....d.($19,000) .....
40. An investment of $700,000 is expected to generate the following cash flows:
Year 1 $200,000
Year 2 $200,000
Year 3 $100,000
Year4 $200,000
Year 5 $100,000
What is the investment's payback period?

a. 7 years
b. 5 years
c. 3 years
d. 4 years

41. If the number of units produced equals the number of units sold, the number of units in ending inventory will equal the number of units in beginning inventory. .....a.True .....b.False .....
42. Actual prices or quantities greater than standard are considered favorable. .....a.True .....b.False .....
43. The overhead volume variance is a signal that the actual quantity produced was not equal to the quantity anticipated when the standard overhead rate was set. .....a.True .....b.False .....
44. Realm Company's budget indicates that 16,000 units are to be sold during September. If the company has 4,000 units on hand at the beginning of the period and plan to have 6,000 units on hand at the end of the period at the end of the month, how many units should be produced during the month? .....a.22,000 .....b.18,000 .....c.14,000 .....d.16,000 .....
45. If budgeted profit is less than the company's goals, the company should try to .....a.increase revenues and decrease expenses. .....b.incur more fixed costs and less variable costs. .....c.slow down cash receipts. d.....d.eclare bankruptcy. .....
46. Which of the following does not appear on the budgeted income statement? .....a.Cost of goods sold. .....b.Sales. .....c.Selling and administrative expenses. .....d.Accounts receivable. .....
47. Which of the following is not used in deciding how many units to produce in a period? .....a.The desired number of units in ending inventory. .....b.The expected sales in units. .....c.The number of units in beginning inventory. .....d.The number of units of raw material in inventory. .....
48. The sales budget is based on assumptions about the .....a.number of units to be sold and selling price per unit. .....b.timing of cash receipts. .....c.contribution margin per unit and the number of units to be sold. .....d.costs of the units produced and the total fixed costs. .....
49. The total variance for manufacturing overhead is .....a.the difference between the overhead applied to inventory at standard and the actual overhead costs. .....b.the difference between fixed overhead and variable overhead. .....c.less than the labor efficiency variance. .....d.only calculated if it is exceptional. .....
50. When the manufacturing overhead variance is analyzed, it is usually decomposed into the .....a.overhead volume variance and controllable overhead variance. .....b.overhead rate variance and overhead efficiency variance. .....c.fixed overhead variance and variable overhead variance. .....d.controllable overhead variance and uncontrollable overhead variance. .....
51. The Clarkson Company's Cargo Division is currently operating at 100% of capacity (capacity is 100,000 units). Normal selling price is $20.00 per unit. At current operating levels, fixed costs are $6 per unit and variable costs are $9 per unit. Another division of Clarkson Company would like to buy from the Cargo Division. If this sale is made, $2 per unit in variable selling and administrative costs would be saved. What is the lowest transfer price the Cargo Division should accept? .....a.$13.00 .....b.$18.00 .....c.$15.00 .....d.$7.00 .....
52. A transfer price is the price that is used to value transfers of goods and services .....a.from one subunit of a company to another subunit in the company. .....b.from Work in Process Inventory to Finished Goods Inventory in a standard costing system. .....c.from a subunit of the company to a wholesaler or retailer. .....D. back to one of the company's suppliers. .....
53. If a manager is evaluated using the return on investment, the manager may be reluctant to invest in new equipment because the investment.....a.may increase net income. .....b.will decrease the level of investment. .....c.may decrease the return on investment. .....d.is likely to have a positive net present value. .....
54. Return on investment can be improved by
.....a.increasing the profit margin.
.....b.generating more sales for each dollar invested.
c.Both A and B are correct.
d.Neither A nor B is correct.
55. Kendrick Company reported the following results for August 2011:

Sales $7,000,000
Investment turnover 1.25
Return on investment 30%

Given this information, how much is the company's invested capital?
a. $2,100,000
b. $8,750,000
c. $2,333,333
d. $5,600,000

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