Which of the following is the chronological record of transactions?
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1) Trial balance
Which of the following is an asset that is expected to be converted to cash, sold, or consumed during the next year (or normal operating cycle if longer)?
1) Long-term asset
2) Quick liability
3) Liquid asset
4) Current asset
Which of the following is not a use of international accounting standards?
1) As national requirements
2) As standards to be violated to improve intercountry comparability
3) As an international benchmark for those countries that develop their own requirements
4) By regulatory authorities for domestic and foreign companies
Which of the following statements regarding the budgeting process is correct?
1) The budget should be designed by top management and communicated to lower-level personnel.
2) The budget should be approved by the company’s external auditors.
3) The budget should be designed from the bottom up with input from employees at all levels.
4) The budgeting process should include limited input from lower management.
Which of the following sections from the statement of cash flows includes activities that affect net income on the income statement?
1) Activities that affect net income on the income statement are included in the financing section.
2) Activities that affect net income on the income statement are included in the investing section.
3) Activities that affect net income on the income statement are included in the operating section.
4) Activities that affect net income on the income statement are not included in any of the above-mentioned sections.
What is the current acronym for the body most responsible for issuing international accounting standards?
The standard variable overhead rate for Unbeatable Toys is $5. Budgeted fixed overhead is $20,000. Unbeatable Toys’ budgeted production was 2,000 units for the current period and actual production was 1,950. What is the production volume variance?
1) $250 unfavorable
2) $500 favorable
3) $250 favorable
4) $500 unfavorable
Solution: (5×1,950+20,000) – (1, 950 x 15) = 29,750-29,250=500
The net sales for a company were $3,600,000; gross profit was $600,000; and net income was $260,000. The rate of return on net sales would be:
1) Form 10-K
2) Form 10-Q
3) Form SX
Fairfield Company management has budgeted different amounts for its next fiscal year.
Total fixed expenses $832, 500
Sale price per unit $40
Variable expenses per unit $25
If Fairfield Company spends an additional $30,000 on advertising, sales volume should increase by 2,500 units. What effect will this decision have on operating income?
1) Operating income will decrease $62,500.
2) Operating income will increase $37,500.
3) Operating income will increase $70,000
4) Operating income will increase $7,500.
2,500 x $15 = $37,500
$37,500 – $30,000 = $7,500
Buildings, land, and equipment would be classified as:
1) current assets.
2) long-term assets.
3) fixed assets.
4) B or C.
Activity-based costing systems do not:
1) improve the accuracy of the costs allocated to the various products.
2) create homogeneous cost pools that are activity based.
3) determine a cause and effect relationship with respect to cost and cost drivers.
4) create a variety of direct manufacturing cost pools.
Which of the following is the formula to compute accounts receivable turnover?
1) The formula is Cost of goods sold/Average inventory.
2) The formula is Net credit sales/Average net accounts receivable.
3) The formula is Average net accounts receivable/One day’s sales.
4) The formula is Net credit sales/Average inventory.
Which of the following financial statements reports an entity’s cash receipts and cash payments during the period?
1) The balance sheet
2) The income statement
3) The statement of retained earnings
4) The statement of cash flows
Counting the actual physical inventory of a company would be an example of the:
1) entity concept.
2) objectivity principle (verifiability).
3) stable monetary unit concept.
4) going-concern concept.
Which of the following entries would be made to record the purchase of $20,000 of raw materials on account for Jake’s Custom Furniture?
1) Accounts payable 20,000
Work in process inventory 20,000
2) Work in process inventory 20,000
Accounts payable 20,000
3) Raw materials inventory 20,000
Accounts payable 20,000
4) Accounts payable 20,000
Materials inventory 20,000
Job order costing is most likely used in which of the following industries?
1) Pharmaceutical manufacturing
2) Architecture design firm
3) Food and beverage manufacturing
4) Chemical manufacturing
What is the name given to the agreement between the FASB and IASC to harmonize accounting standards?
1) The Norwalk Agreement
2) The London agreement
4) The Paris Accords
Which of the following is the formula to compute the acid-test ratio?
1) The formula is (Current liabilities + short-term investments + net current receivables)/Current assets.
2) The formula is (Cash + short-term investments + net current receivables)/Current liabilities.
3) The formula is Current liabilities/Current assets.
4) The formula is (Cash + short-term investments + net current receivables)/Current assets.
How does the IASC enforce its standards?
1) Through the International Organization of Securities Commission
2) Through the concept of best endeavors
3) Through the Securities and Exchange Commission
4) Through the Financial Accounting Standards Board