Problem 1: The primary goal of managerial accounting is to provide information to:
a. creditors
b. management
c. investors
d. external auditors
Problem 2: On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be
a. added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
b. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
c. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
d. added to net income in converting the net income reported on the income statement to cash flows from operating activities
Problem 3: When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture.
a. True
b. False
Problem 4: If the bonds are purchased between interest dates, the purchase price includes accrued interest since the last interest payment.
a. True
b. False
Problem 5: Loster Company reported a net loss of $14,089 for the year ended December 31, 2008. During the year, accounts receivable decreased $7,731, merchandise inventory increased $6,803, accounts payable increased by $13,479, and depreciation expense of $4,042 was recorded. What was the net cash used for or provided by operating activities during the year 2008?
Select the correct answer.
a. used net cash of $4,360.
b. used net cash of $14,089.
c. provided net cash of $4,360.
d. provided net cash of $14,089
Problem 6: Job order cost accounting systems can be used only for companies that manufacture a product.
a. True
b. False
Problem 7: Sinking Fund Income is reported in the income statement as
a. extraordinary
b. other income
c. gain on sinking fund transactions
d. income from operations
Problem 8: The payment of dividends is an example of a cost.
a. True
b. False
Problem 9: Period costs are
a. found on the balance sheet.
b. found on the job order cost sheets.
c. not involved in the production process.
d. classified as direct labor, direct material, or factory overhead.
The Stamping Department accepted Job 051507A on May 15th to make 1,000 funnels.
To complete the job they requisitioned 1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set.
The cost driver that the Stamping Department uses is drop-forge strokes which are counted on a machine mounted counter. $2.25 is applied as overhead for each drop-forge stroke. Additionally $375.00 of overhead is applied to each job due to setup and teardown.
Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader. The job required 6 1/2 hours of labor by the team.
When the job was complete Job 051507A was transferred to Semi-finished Goods Inventory (SFGI). When the job was transferred, 20 sheets were returned unused to raw material inventory, 75 grommet sets were returned, and there were 1,115 strokes on the counter.
Problem 9: Journalize all events depicted as of May 15th.
(a) Journalize the purchasing of raw materials.
(b) Journalize the application of manufacturing overhead.
(c) Journalize the application of direct labor.
(d) Journalize the transfer to Semi-finished Goods Inventory (SFGI).
For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0". If required, round your answers to two decimal places.
Problem 10: Temporary investments
a. do not include equity securities
b. include cash equivalents
c. are reported as current assets
d. all of these
Problem 11: Problem Conversion costs are
a. direct materials and factory overhead
b. factory overhead and direct labor
c. direct materials and indirect labor
d. direct materials and direct labor
Problem 12: 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
Problem 13: The percent of fixed assets to total assets is an example of
a. solvency analysis
b. horizontal analysis
c. profitability analysis
d. vertical analysis
Problem 14:Debtors are interested in the times-interest-earned ratio because they want to
a. know the tax effect of lending to a corporation
b. have adequate protection against a potential drop in earnings jeopardizing their interest payments
c. be sure their debt is backed by collateral
d. know what rate of interest the corporation is paying
Problem 15: An example of a period cost is:
a. property taxes on plant facilities
b. advertising expense
c. depreciation on factory equipment
d. indirect materials
Problem 16: Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
a. $150,000.
b. $102,000.
c. $110,000.
d. $118,000.
Problem 17: When there are material differences between the results of using the straight-line method and using the effective interest method of amortization, the effective interest method should be used.
a. True
b. False
Problem 18: The job order costing system is used by service firms to determine revenues, expenses, and ultimately profit.
a. True
b. False
Problem 19: A company that has 25,000 shares of $5.00 par value common stock issued and outstanding paid a dividend of $.75 per share. The market value of the stock is $20.00 per share. The company's dividend yield is:
a. 400%
b. 25%
c. 3.75%
d. 15%
Problem 20: Cash outflows from financing activities include the payment of cash dividends, the acquisition of treasury stock, and the repayment of amounts borrowed.
a. True
b. False
Problem 21: When a job is completed in a service organization, the job costs are transferred to the
a. finished goods account.
b. work in process account.
c. cost of goods sold account.
d. cost of services account
Problem 22: The vice presidents of production and sales and the controller hold line positions in most large organizations.
a. True
b. False
Problem 23: A staff department has no direct authority over a line department.
a. True
b. False