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Accounting
Q:
Which of the following is not a characteristic of all fraud?
A. It is done to provide direct or indirect benefit to the employee.
B. It violates the employees duties to his employer.
C. It costs the employer money.
D. It is secret.
E. Can be intentional or unintentional.
Q:
The way of doing business whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is:
A. Total quality management.
B. Managerial accounting.
C. Customer orientation.
D. Continuous improvement.
E. Lean business model.
Q:
A management concept that applies quality improvement to all aspects of business activities is called:
A. Continuous operations.
B. Customer orientation.
C. Just-in-time.
D. Managerial accounting.
E. Total quality management.
Q:
An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:
A. Continuous improvement.
B. Customer orientation.
C. Just-in-time manufacturing.
D. Theory of constraints.
E. Total quality management.
Q:
A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called:
A. Continuous improvement.
B. Customer orientation.
C. Just-in-time.
D. Theory of constraints.
E. Total quality management.
Q:
An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called:
A. Continuous improvement.
B. Customer orientation.
C. Just-in-time.
D. Theory of constraints.
E. Total quality measurement.
Q:
Continuous improvement:
A. Is a measure of profits.
B. Is a measure of costs.
C. Rejects the notion of "good enough."
D. Is not applicable to most businesses.
E. Is possible only in service businesses.
Q:
The Malcolm Baldrige Award was established by:
A. The United Nations.
B. The U. S. Chamber of Commerce.
C. The Malcolm Baldrige Foundation.
D. The U. S. Congress.
E. The SEC.
Q:
Flexibility of practice when applied to managerial accounting means that:
A. The information must be presented in electronic format so that it is easily changed.
B. Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for.
C. The managerial accountants need to be on call 24 hours a day.
D. The design of a company's managerial accounting system largely depends on the nature of the business and the arrangement of the internal operations of the company.
E. Managers must be flexible with information provided in varying forms and using inconsistent measures.
Q:
Managerial accounting is different from financial accounting in that:
A. Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.
B. Managerial accounting never includes nonmonetary information.
C. Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
D. Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.
E. Managerial accounting is mainly used to set stock prices.
Q:
Managerial accounting information:
A. Is used mainly by external users.
B. Involves gathering information about costs for planning and control decisions.
C. Is generally the only accounting information available to managers.
D. Can be used for control purposes but not for planning purposes.
E. Has little to do with controlling costs.
Q:
The manufacturing statement must be prepared monthly as it is a required general-purpose financial statement.
Q:
The manufacturing statement is also known as the schedule of manufacturing activities or the schedule of cost of goods manufactured.
Q:
Factory overhead includes selling and administrative expenses because they are indirect costs of a product.
Q:
Indirect labor refers to the cost of the workers whose efforts are directly traceable to specific units or batches of product.
Q:
A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.
Q:
Raw materials inventory turnover equals raw materials used divided by average raw materials inventory.
Q:
The series of activities that add value to a company's products or services is called a value chain.
Q:
Newly completed units are combined with beginning finished goods inventory to make up total ending goods in process inventory.
Q:
Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.
Q:
The main difference between the income statement of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased.
Q:
The Goods in Process Inventory account is found only in the ledgers of merchandising companies.
Q:
Raw materials inventory includes only direct materials.
Q:
Manufacturers usually have three inventories: raw materials, goods in process, and finished goods.
Q:
Raw materials that become part of a product and are identified with specific units or batches of a product are called direct materials.
Q:
The cost of partially completed products is included in the balance of the Goods in Process Inventory account.
Q:
Selling and administrative expenses are normally product costs.
Q:
Although direct labor and raw materials costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost, factory overhead is charged to expense as it is incurred because it is a period cost.
Q:
Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and not to service companies.
Q:
An opportunity cost requires a future cash outlay and is relevant for decision making.
Q:
An out-of-pocket cost requires a future cash outlay and is relevant for decision making.
Q:
A sunk cost has already been incurred and cannot be avoided or changed, so it is irrelevant to decision making.
Q:
Direct costs are incurred for the benefit of more than one cost object.
Q:
A variable cost changes in proportion to changes in the volume in activity.
Q:
Indirect materials are accounted for as factory overhead because they are not easily traced to specific units or batches of production.
Q:
Whether a cost is controllable or not controllable by an employee depends on the employee's level of responsibility.
Q:
Product costs can be classified as one of three types: direct materials, direct labor, or overhead.
Q:
Fraud involves the deliberate or accidental misuse of the employers assets.
Q:
Fraud affects all business.
Q:
The Lean Business Model should have no effect on cost in a modern manufacturing environment.
Q:
The balanced scorecard aids in continuous improvement by augmenting financial measures with drivers or indicators of future financial performance.
Q:
Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that needed components are available each time that they are needed.
Q:
Total quality management and just-in-time manufacturing are two modern systems designed to improve the quality of management and the products and services offered.
Q:
The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers.
Q:
The management concept of customer orientation causes a company to spend large amounts on advertising to convince customers to buy the company's standard products.
Q:
The main principle of the lean business model is the elimination of waste of every kind while satisfying the customer and providing a positive return to the company.
Q:
When the attitude of continuous improvement exists throughout an organization, every manager and employee seeks to continuously experiment with new and improved business practices.
Q:
The orientation of just-in-time manufacturing is that products are "pulled" through the manufacturing process by the orders received from customers.
Q:
Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.
Q:
The focus of financial accounting is on an organization's projects, processes, and subdivisions, and the focus of managerial accounting is on the whole organization.
Q:
Financial accounting relies on accepted principles that are enforced through an extensive set of rules and guidelines; managerial accounting systems are flexible.
Q:
One difference between financial and managerial accounting is that the external users that use financial information must plan a company's future, but the internal users of managerial accounting information generally must decide whether to invest in or lend to a company.
Q:
Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.
Q:
One of the usual differences between financial and managerial accounting is the time dimension of the information reported.
Q:
Managerial accounting is an activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers.
Q:
Control is the process of setting goals and determining ways to achieve them.
Q:
Much of managerial accounting is directed at gathering useful information about costs for planning and control decisions.
Q:
The following selected company information was reported: Accounts receivable, beginning-year
$170,000 Accounts receivable, year-end
190,000 Merchandise inventory, beginning-year
80,000 Merchandise inventory, year-end
60,000 Cost of goods sold
580,000 Credit sales
1,000,000 Calculate the following company ratios:
(a) Accounts receivable turnover
(b) Inventory turnover
(c) Days' sales uncollected
Q:
Selected balances from a company's financial statements are shown below: Dec. 31, 2013
Dec. 31, 2014
For the Year 2014 Merchandise inventory
$ 15,000
$ 20,000 Accounts payable
32,000
26,000 Salaries payable
4,400
3,000 Accounts receivable
24,000
21,000 Total assets
234,000
286,000 Sales (all on credit) $312,000 Cost of goods sold 165,600 Salaries expense 48,000 Other expenses 75,000 Net income 24,000 Use the information above to calculate the following current year ratios:
(a) 2014 inventory turnover.
(b) Days' sales uncollected at Dec. 31, 2014.
(c) 2014 profit margin.
(d) 2011 return on total assets.
Q:
A corporation reports the following year-end balance sheet data: Cash
$ 40,000
Current liabilities
$ 64,000 Accounts receivable
35,000
Long-term liabilities
72,000 Inventory
60,000
Common stock
100,000 Equipment
150,000
Retained earnings
49,000 Total assets
$285,000
Total liabilities and equity
$285,000 Calculate the corporation's current ratio and its acid-test ratio.
Q:
The 2014 income statement for Golden Company is shown below: GOLDEN COMPANY Income Statements For the Year Ended December 31, 2014 Sales
$720,000 Cost of goods sold
450,000 Gross profit
$270,000 Operating expense
168,500 Income from operations
$101,500 Interest expense
22,300 Income before taxes
$ 79,200 Income taxes
28,000 Net income
51,200 Calculate the times interest earned ratio for 2014.
Q:
The current year-end balance sheet data for a company are shown below: Assets: Cash
$ 18,000 Marketable securities
45,000 Accounts receivable (net)
157,500 Merchandise inventory
139,500 Long-term investments
135,000 Plant assets (net)
517,500 Total assets
$1,012,500 Liabilities and equity: Accounts payable
$ 168,700 Accrued liabilities
90,000 Notes payable (secured by plant assets)
234,800 Common stock ($12 par)
180,000 Contributed capital in excess of par
135,000 Retained earnings
204,000 Total liabilities and equity
$1,012,500 Calculate this company's:
(1) Working capital
(2) Acid-test ratio
Q:
Comparative calendar year financial data for a company are shown below: 2014
2013 Sales
$ 720,000
$ 607,500 Gross profit
270,000
224,800 Income before taxes
79,200
78,700 Net income
51,200
51,700 December 31,
December 31, 2014
2013 Liabilities
$ 493,500
$ 452,500 Common stock ($12 par)
180,000
180,000 Contributed capital in excess of par
135,000
135,000 Retained earnings
204,000
177,300 Total liabilities and equity
$1,012,500
$ 944,800 Calculate:
(1) Return on total assets for 2014.
(2) Return on common stockholders' equity for 2014.
Q:
Comparative calendar-year financial data for a company are shown below: 2014
2013 Sales
$ 720,000
$ 607,500 Cost of goods sold
450,000
382,700 Operating expenses
168,500
134,900 Net income
51,200
51,700 December 31,
December 31, 2014
2013 Accounts receivable (net
$ 157,500
$162,500 Inventory
139,500
110,500 Total assets
1,012,500
944,800 Calculate:
(1) Accounts receivable turnover for 2014.
(2) Days' sales uncollected for 2014.
(3) Inventory turnover for 2014.
(4) Days' sales in inventory for 2014.
Q:
A company's calendar-year financial data are shown below. The company has pledged all of its net plant assets as security for its long-term notes payable: Sales
$650,000 Cost of goods sold
422,500 Gross profit
$227,500 Operating expenses
140,500 Operating income
$ 87,000 Interest expense
9,100 Income before taxes
$ 77,900 Income taxes
23,400 Net income
$ 54,500 Ending Balances Cash
$ 19,500 Accounts receivable (net)
65,000 Inventory
71,500 Plant assets (net)
195,000 Total assets
$351,000 Current liabilities
$ 74,100 Long-term notes payable
97,500 Common stock
65,000 Retained earnings
114,400 Total liabilities and equity
$351,000 Calculate the following ratios for this company:
(a) Equity ratio.
(b) Pledged assets to secured liabilities ratio.
(c) Times interest earned.
Q:
A company paid cash dividends on its preferred stock of $40,000 in the current year when its net income was $120,000 and its average common stockholders' equity was $640,000. What is the company's return on common stockholders' equity?
Q:
A company reported net income of $78,000 and had 15,000 common shares outstanding throughout the current year. At year-end, the price per share of the company's stock was $49.40. What is the company's year-end price-earnings ratio?
Q:
Information from a manufacturing company's current year income statement follows: Sales
$800,000 Cost of goods sold
455,000 Gross profit
$345,000 Operating expenses
265,000 Operating income
$ 80,000 Interest expense
32,000 Income before taxes
$ 48,000 Income taxes expense
12,400 Net income
$35,600 Calculate the company's times interest earned.
Q:
The following current year information is available from a manufacturing company: Sales
$640,000 Gross profit on sales
276,000 Operating income
64,000 Income before taxes
44,000 Net income
33,600 Accounts receivable, beginning-year
58,000 Accounts receivable, end-of-year
70,000 Calculate the company's accounts receivable turnover and its days' sales uncollected.
Q:
The following information is available for the McCartney Corporation: Sales
$750,000 Cost of goods sold
450,000 Gross profit
300,000 Operating income
85,000 Net income
42,000 Inventory, beginning-year
71,200 Inventory, end-of-year
48,800 Calculate the company's inventory turnover and its days' sales in inventory.
Q:
Use the balance sheets of Sando shown below to calculate the following ratios for 2013 (round to the hundredths):
(a) Current ratio
(b) Acid-test ratio
(c) Debt ratio
(d) Equity ratio SANDO COMPANY Balance Sheets December 31, 2013 Assets: Cash
$ 43,000 Accounts receivable
38,000 Merchandise inventory
61,000 Prepaid insurance
6,000 Long-term investments
49,000 Plant assets (net)
218,000 Total assets
$415,000 Liabilities and Equity: Current liabilities
$ 62,000 Long-term liabilities
45,000 Common stock
150,000 Retained earnings
158,000 Total liabilities and equity
$415,000
Q:
Express the following income statement information in common-size percents (round to nearest whole percent). Comment on the results. THORSTEN CORP. Comparative Income Statement For Years Ended December 31, 2014 and 2013 2014
2013 Sales
$1,200,000
$1,000,000 Cost of goods sold
804,000
650,000 Gross profit
$ 396,000
$ 350,000 Selling expenses
132,000
120,000 Administrative expenses
180,000
150,000 Net income
$ 84,000
$ 80,000
Q:
Express the following balance sheets for Alberts Company in common-size percents. ALBERTS COMPANY Balance Sheet December 31, 2013 and 2014 2013
2014 Assets Cash
$ 22,000
$ 43,000 Accounts receivable
42,000
38,000 Merchandise inventory
52,000
61,000 Prepaid insurance
9,000
6,000 Long-term investments
20,000
49,000 Plant assets (net)
218,000
218,000 Total assets
$363,000
$415,000 Liabilities and Equity Current liabilities
$ 75,000
$ 62,000 Long-term liabilities
36,000
45,000 Common stock
150,000
150,000 Retained earnings
102,000
158,000 Total liabilities and equity
$363,000
$415,000
Q:
The comparative balance sheet for Golden Co. is shown below. Express these amounts in a comparative, common-size balance sheet. GOLDEN COMPANY Comparative Balance Sheets (in $000) December 31, 2012 2014 2012 2013 2014 Cash $ 49.6 $ 34.2 $ 35.7 Accounts receivable 4 85.5 76.5 Merchandise inventory 148.8 125.4 91.8 Plant assets (net) 347.2 324.9 306.0 Total assets $620.0 $570.0 $510.0 Accounts payable $117.8 $ 51.3 $ 76.5 Bonds payable 130.2 159.6 107.1 Common stock 266.6 279.3 265.2 Retained earnings 105.4 79.8 61.2 Total liabilities and equity $620.0 $570.0 $510.0
Q:
A company reports the following comparative income statements: 2014
2013 Net sales
$736,000
$840,000 Cost of goods sold
518,880
571,200 Gross profit
$217,120
$268,800 Operating expenses
104,800
130,000 Net income
$112,320
$138,800 What are the costs of goods sold in common-size percents for 2013 and 2014, respectively?
Q:
Express the following income statement information in common-size percents and in trend percents using 2013 as the base year. Common-Size Percents
Trend Percents 2013
2014
2013
2014
2013
2014 Sales
$460,000
$540,000 Cost of goods sold
240,000
290,000 Gross profit
$220,000
$250,000
Q:
For the following financial statement items, calculate trend percents using 2010 as the base year: 2014
2013
2012
2011
2010 Sales
$1,195,400
$1,118,000
$1,049,000
$963,200
$860,000 Cost of sales
752,400
704,000
671,000
616,700
559,000 Gross profit
$ 443,000
$ 414,000
$ 378,000
$ 346,500
$ 301,000
Q:
Calculate the percent increases for each of the following selected balance sheet items. 2014
2013 Cash
$ 569
$ 448 Accounts receivable
2,234
2,337 Merchandise inventory
1,062
1,071 Plant assets
2,432
2,138 Bonds payable
1,164
1,666 Equity
2,777
2,894
Q:
Comparative statements for Kool Corporation are shown below: KOOL CORPORATION Comparative Income Statement For the Years Ended December 31 2014 2013 2012 Sales $14,800 $13,229 $13,994 Cost of goods sold 8,225 8,661 8,375 Gross profit 6,575 4,568 5,619 Operating expenses 3,664 3,576 3,487 Operating income $ 2,911 $ 992 $ 2,132 Calculate trend percentages for all income statement amounts shown and comment on the results. Use 2012 as the base year.
Q:
Calculate the percent increase or decrease for each of the following financial statement items: 2014
2013 Cash
$ 37,500
$ 30,000 Accounts receivable
63,000
52,500 Inventory
67,500
90,000 Accounts payable
35,100
27,000 Sales
187,500
150,000 Equipment
165,000
125,000