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Accounting
Q:
Period costs can be found on both the balance sheet and the income statement.
a. True
b. False
Q:
The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.
a. True
b. False
Q:
Product costs are not expensed until the product is sold.
a. True
b. False
Q:
A report analyzing how many products need to be sold to cover operating costs is not typically a managerial accounting report.
a. True
b. False
Q:
If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct materials cost.
a. True
b. False
Q:
The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead cost.
a. True
b. False
Q:
A diagram of the operating structure of an organization is called an organization chart.
a. True
b. False
Q:
Labor costs that are directly traceable to the product are part of factory overhead.
a. True
b. False
Q:
Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change.
a. True
b. False
Q:
Period costs are operating costs that are expensed in the period in which the goods are sold.
a. True
b. False
Q:
Costs other than direct materials and direct labor incurred in the manufacturing process are classified as factory overhead.
a. True
b. False
Q:
Managerial accounting provides useful information to managers on product costs.
a. True
b. False
Q:
In most business organizations, the chief management accountant is called the controller.
a. True
b. False
Q:
Factory overhead includes all manufacturing costs except direct materials and direct labor.
a. True
b. False
Q:
The payment of dividends is an example of a cost.
a. True
b. False
Q:
Direct costs are specifically traced to a cost object.
a. True
b. False
Q:
An example of an eco-efficiency measure would be cost savings generated by recycling.
a. True
b. False
Q:
Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
a. True
b. False
Q:
Product costs include direct labor and advertising expense.
a. True
b. False
Q:
Period (nonmanufacturing) costs are classified into two categories: selling and administrative.
a. True
b. False
Q:
A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial accounting report.
a. True
b. False
Q:
A cost is a payment of cash for the purpose of generating revenues.
a. True
b. False
Q:
If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead cost.
a. True
b. False
Q:
The cost of a material that is an integral part of the finished product is classified as factory overhead cost.
a. True
b. False
Q:
Period costs include direct materials and direct labor.
a. True
b. False
Q:
Conversion costs consist of product costs and period costs.
a. True
b. False
Q:
A cost object indicates how costs are related or identified.
a. True
b. False
Q:
Direct labor costs are included in the conversion costs of a product.
a. True
b. False
Q:
Managerial accounting reports must be prepared according to generally accepted accounting principles.
a. True
b. False
Q:
A staff department or unit is one that provides services, assistance, and advice to the departments with line or other staff responsibilities.
a. True
b. False
Q:
Controlling deals with choosing goals and deciding how to achieve them.
a. True
b. False
Q:
A performance report that identifies the amount of employee downtime is a financial accounting report.
a. True
b. False
Q:
Planning is the process of developing the companys objectives or goals and translating these objectives into courses of action.
a. True
b. False
Q:
Prime costs consist of direct materials, indirect materials, and direct labor.
a. True
b. False
Q:
Prime costs consist of factory overhead and direct labor.
a. True
b. False
Q:
Indirect labor would be included in factory overhead.
a. True
b. False
Q:
Zoe Corporation has the following information for the month of March:Purchases$ 92,000Materials inventory, March 16,000Materials inventory, March 318,000Direct labor25,000Factory overhead37,000Work in process inventory, March 122,000Work in process inventory, March 3123,500Finished goods inventory, March 121,000Finished goods inventory, March 3130,000Sales257,000Selling and administrative expenses79,000Prepare (a) a schedule of cost of goods manufactured, (b) an income statement for the month ended March 31, and (c) the Inventories section of the balance sheet.
Q:
Taylor Industries had a fire, and some of its accounting records were destroyed. Available information is as follows for the year ended December 31:Materials inventory, December 31$ 15,000Direct materials purchased 28,000Direct materials used 22,900Cost of goods manufactured135,000Additional information:Factory overhead is 150% of direct labor cost.Finished goods inventory decreased by $18,000 during the year.Work in process inventory increased by $12,000 during the year.Determine:a. Materials inventory, January 1b. Direct labor incurredc. Factory overhead incurredd. Cost of goods sold
Q:
Davis Manufacturing Company had the following data for a recent year: January 1December 31Accounts receivable$27,000$33,000Materials inventory 22,500 6,000Work in process inventory 70,200 48,000Finished goods inventory 3,000 15,000Collections on account were $625,000.Cost of goods sold was 68% of sales.Direct materials purchased amounted to $90,000.Factory overhead was 300% of the cost of direct labor.Compute:a. Sales revenue (all sales were on account)b. Cost of goods soldc. Cost of goods manufacturedd. Direct materials usede. Direct labor incurredf. Factory overhead incurred
Q:
Sienna Company has the following information for January:Cost of materials used in production$20,000Direct labor 15,000Factory overhead 24,000Work in process inventory, January 1 2,900Work in process inventory, January 31 3,500Determine the cost of goods manufactured.
Q:
Differentiate between financial and managerial accounting, addressing such issues as users, nature of information, guidelines for preparation, timeliness, and focus of reporting.
Q:
Allen Company used $71,000 of direct materials and incurred $37,000 of direct labor costs during the current year. Indirect labor amounted to $2,700, while indirect materials used totaled $1,600. Other operating costs pertaining to the factory included utilities of $3,100, maintenance of $4,500, supplies of $1,800, depreciation of $7,900, and property taxes of $2,600. There was no beginning or ending finished goods inventory, but work in process inventory began the year with a $5,500 balance and ended the year with a $7,500 balance.
Prepare a statement of cost of goods manufactured for Allen Company for the year ended December 31.
Q:
Magnus Industries has the following data:Beginning raw materials inventory$75,000Materials purchased40,000Ending raw materials inventory60,000Determine the cost of raw materials used.
Q:
Differentiate between a line department and a staff department.
Q:
Differentiate between period and product costs, including examples of each type of cost.
Q:
Putney Company reports the following information:Sales$76,500Cost of direct materials used in production 7,300Depreciation on factory equipment 4,700Indirect labor 5,900Direct labor 10,500Factory rent 4,200Factory utilities 1,200Sales salaries expense 15,600Office salaries expense 8,900Indirect materials 1,200Compute:a. Product costsb. Period costs
Q:
Watson Company has the following data:Work in process inventory, beginning$18,000Work in process inventory, ending25,000Direct labor costs5,000Cost of goods manufactured9,000Factory overhead7,000Determine the amount of direct materials used.
Q:
The following data (in thousands of dollars) have been taken from the accounting records of Rayburn Corporation for the current year:Sales$1,980Selling expenses280Factory overhead460Direct labor400Administrative expenses 300Direct materials purchased during year240Finished goods inventory, January 1240Finished goods inventory, December 31320Materials inventory, January 180Materials inventory, December 31140Work in process inventory, January 1140Work in process inventory, December 31100Determine:a. Cost of the direct materials used in production during the yearb. Cost of goods manufactured for the yearc. Cost of goods sold for the yeard. Net income for the yearPresent all computations and final answers in thousands of dollars.
Q:
Differentiate between:
a. Direct materials versus indirect materials
b. Direct labor versus indirect labor
Q:
The following information is available for Carter Corporation:
Materials inventory decreased $4,000.
Materials inventory on December 31 was 50% of materials inventory on January 1.
Beginning work in process inventory was $145,000.
Ending finished goods inventory was $65,000.
Purchases of direct materials were $154,700.
Direct materials used were 2.5 times the cost of direct labor.
Total manufacturing costs incurred were $246,400, 80% of cost of goods manufactured and $156,000 less
than cost of goods sold.
Compute:
a. Finished goods inventory on January 1
b. Work in process inventory on December 31
c. Direct labor incurred
d. Factory overhead incurred
e. Materials inventory on January 1
f. Direct materials used
Q:
What is decision making? Who is responsible for decision making in a managerial situation?
Q:
Zoe Corporation has the following information for the month of March:Cost of materials used in production$69,000Direct labor27,000Factory overhead34,000Work in process inventory, March 115,000Work in process inventory, March 3119,500Finished goods inventory, March 125,000Finished goods inventory, March 3123,000Determine the (a) cost of goods manufactured and (b) cost of goods sold.
Q:
Laramie Technologies has the following data:Work in process inventory, beginning$45,000Work in process inventory, ending32,000Direct labor costs56,000Cost of materials used50,000Factory overhead28,000Determine the cost of goods manufactured.
Q:
Keeton Company has the following data:Cost of materials used$60,000Direct labor costs58,000Factory overhead33,000Work in process inventory, beginning29,000Work in process inventory, ending18,000Finished goods inventory, beginning 32,000Finished goods inventory, ending 18,000Determine the cost of goods sold.
Q:
A loss on disposal of a segment would be reported on the income statement as a(n)
a. administrative expense
b. other expense
c. deduction from income from continuing operations
d. selling expense
Q:
The price-earnings ratio on common stock is computed as
a. market price per share of common stock divided by earnings per share on common stock
b. earnings per share of common stock divided by market price per share of common stock
c. market price per share of common stock divided by dividends per share of common stock
d. dividends per share of common stock divided by earnings per share on common stock
Q:
The percent of fixed assets to total assets is an example of
a. vertical analysis
b. solvency analysis
c. profitability analysis
d. horizontal analysis
Q:
Which of the following is not a characteristic evaluated in ratio analysis?
a. liquidity
b. profitability
c. solvency
d. marketability
Q:
The following income statement information is for Sadie Company:Sales$175,000Cost of merchandise sold 115,000Gross profit$ 60,000Using vertical analysis of the income statement for Sadie Company, determine the change in gross profit.a. 100.0%b. 66.5%c. 34.3%d. 29.4%
Q:
Horizontal analysis is a technique for evaluating financial statement data
a. for one period of time
b. over a period of time
c. on a certain date
d. as it may appear in the future
Q:
A balance sheet that displays only component percentages is a
a. trend balance sheet
b. comparative balance sheet
c. condensed balance sheet
d. common-sized balance sheet
Q:
The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Use this information to answer the questions that follow. Assets Cash and short-term investments$ 30,000Accounts receivable (net)20,000Merchandise inventory15,000Property, plant, and equipment 185,000Total assets$250,000 Liabilities and Stockholders’ Equity Current liabilities$ 45,000Long-term liabilities70,000Stockholders’ equity—common 135,000Total liabilities and stockholders’ equity$250,000 Income Statement Sales$ 85,000 Cost of merchandise sold 45,000 Gross profit$ 40,000 Operating expenses(15,000)Interest expense (5,000)Net income$ 20,000 Number of shares of common stock outstanding 6,000Market price per share of common stock $20Total dividends paid $9,000Net cash flows from operating activities $30,000Using the data provided for Diane Company, what is the return on common stockholders equity?a. 6.75%b. 14.8%c. 7.4%d. 13.5%
Q:
Based on the following data, what is the accounts receivable turnover?Sales on account during year$700,000Cost of merchandise sold during year270,000Accounts receivable, beginning of year45,000Accounts receivable, end of year35,000Merchandise inventory, beginning of year90,000Merchandise inventory, end of year110,000a. 17.5b. 2.6c. 20.0d. 15.5
Q:
The purpose of an audit is to
a. determine whether or not a company is a good investment
b. render an opinion on the fairness of the statements
c. determine whether or not a company complies with corporate social responsibility
d. determine whether or not a company is a good credit risk
Q:
On a common-sized balance sheet, 100% is assigned to
a. total property, plant, and equipment
b. total current assets
c. total liabilities
d. total assets
Q:
Use the information provided for Harding Company to answer the questions that follow. Harding Company Accounts payable$ 40,000Accounts receivable65,000Accrued liabilities7,000Cash30,000Intangible assets40,000Inventory72,000Long-term investments110,000Long-term liabilities75,000Notes payable (short-term)30,000Property, plant, and equipment625,000Prepaid expenses2,000Temporary investments36,000Based on the data for Harding Company, what is the quick ratio (rounded to one decimal place)?a. 2.7b. 2.6c. 1.7d. 0.9
Q:
The independent auditor's reporta. describes which financial statements are covered by the auditb. gives the auditor's opinion regarding the fairness of the financial statementsc. summarizes what the auditor didd. states that the financial statements were presented on time
Q:
Based on the following data for the current year, what is the inventory turnover?Sales on account during year$700,000Cost of merchandise sold during year270,000Accounts receivable, beginning of year45,000Accounts receivable, end of year35,000Merchandise inventory, beginning of year90,000Merchandise inventory, end of year110,000a. 2.7b. 9.7c. 2.5d. 3.0
Q:
Using the data provided for Diane Company, what is the price-earnings ratio?
a. 8.0
b. 2.5
c. 4.0
d. 6.0
Q:
The numerator for the return on common stockholders' equity computation isa. net incomeb. net income minus preferred dividendsc. income before income taxd. income from operations minus interest expenseThe following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Use this information to answer the questions that follow. Assets Cash and short-term investments$ 30,000Accounts receivable (net)20,000Merchandise inventory15,000Property, plant, and equipment 185,000Total assets$250,000 Liabilities and Stockholders’ Equity Current liabilities$ 45,000Long-term liabilities70,000Stockholders’ equity—common 135,000Total liabilities and stockholders’ equity$250,000 Income Statement Sales$ 85,000 Cost of merchandise sold 45,000 Gross profit$ 40,000 Operating expenses(15,000)Interest expense (5,000)Net income$ 20,000 Number of shares of common stock outstanding 6,000Market price per share of common stock $20Total dividends paid $9,000Net cash flows from operating activities $30,000
Q:
What type of analysis is indicated by the following? Increase (Decrease) Current YearPreceding YearAmountPercentCurrent assets $ 430,000 $ 500,000$ (70,000) (14%)Fixed assets 1,740,000 1,500,000 240,000 16 a. vertical analysisb. horizontal analysisc. liquidity analysisd. common-size analysis
Q:
Assume the following sales data for a company:
Current year $1,025,000
Preceding year 820,000
What is the percentage increase in sales from the preceding year to the current year?
a. 100%
b. 25%
c. 125%
d. 75%
Q:
A loss due to a discontinued operation should be reported on the income statement
a. above income from continuing operations
b. without related tax effect
c. below income from continuing operations
d. as an operating expense
Q:
Using the data provided for Diane Company, what is the dividend yield?
a. 7.5%
b. 0.75%
c. 13.3%
d. 1.3%
Q:
Horizontal analysis of comparative financial statements includesa. development of common-sized statementsb. computation of liquidity ratiosc. computation of dollar amount changes and percentage changes from the previous to the current yeard. evaluation of each component in a financial statement to a total within the statement
Q:
Which of the following would appear as an unusual item on the income statement?
a. loss resulting from the sale of fixed assets
b. gain resulting from the disposal of a segment of the business
c. presentation of earnings per share
d. stock split
Q:
On a common-sized income statement, 100% is assigned to
a. net cost of merchandise sold
b. net income
c. gross profit
d. sales
Q:
The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because of
a. leverage
b. solvency
c. yield
d. quick assets
Q:
In a vertical analysis of an income statement, the base for computing the cost of merchandise sold percentage is
a. the previous years cost of merchandise sold amount
b. sales
c. total expenses
d. gross profit
Q:
In the vertical analysis of an income statement, each item is generally stated as a percentage of sales.a. Trueb. False