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Study Resources (Accounting)

Accounting:  Concepts & Applications, 11e Chapter 7  1 MULTIPLE CHOICE 1.Items that are either manufactured or purchased for resale in the normal course of business are called a. Supplies b. Inventory c. Purchases d. Materials 2.Which of the following is an inventory account for a retailer? a. Raw Materials b. Work In Process c. Finished Goods d. Merchandise 3.Which inventory account consists of partially finished products? a. Raw Materials b. Work In Process c. Finished Goods d. Merchandise 4.Which.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 5.Gribble's fiscal year is the calendar year. During the month of July 2012, the following tax related events occurred at the Gribble Company: ? Received a property tax summary from the county government for the period July 1, 2011 through June 30, 2012. The property.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 101.Ferrott Company purchased a machine that was installed and placed in service on January 2, 2011, at a total cost of $480,000. Salvage value was estimated at $80,000. The machine is being depreciated over ten years by the double-declining-balance method. For the year.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 31.The following information relates to the defined benefit pension plan of Williams Corporation for the year ending December 31, 2012: Pension benefit obligation $9,200,000 Pension fund assets 6,070,000 Service cost 900,000 Interest cost 605,000 Expected return on fund assets 850,000 What is the net pension expense for Williams Corporation in 2012? a. $1,145,000 b. $605,000 c. $900,000 d. $655,000 32.The following information relates.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 9.Accounting rules give specific instructions on whether to expense or capitalize research and development costs and advertising costs.  List the rules associated with these two costs. 10.Indicate whether the following independent expenditures should be capitalized or expensed. Explain your answers. 1. Cruz Company spent $500,000 on.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 71.Diluted earnings per share includes stock transactions that might occur in the future such as a. Sale of additional shares of stock b. Exercise of stock options c. Declaration of dividends d. All of the these are correct 72.Which of the following events would be considered an extraordinary item? a. An airline experienced a.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 121.Assuming that the lower of cost or market rule is applied to individual products, the amount at which product A should be valued is a. $12 b. $9 c. $10 d. $8 122.Commodity X sells for $18.00; selling expenses are $3.60; normal profit is $4.50. If the cost of Commodity X is.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 11.The cost of finished goods inventory includes all BUT which of the following? a. Advertising costs b. Manufacturing overhead costs c. Labor costs d. Raw material costs 12.If the shipping terms indicate that the seller owns the goods until delivered to the buyer, this arrangement is known as a. Goods in transit b. FOB shipping point c. FOB.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 41.Garfunkle Company had the following four transactions during January 2012: Jan. 3 Purchased 200 hair dryers from Hot Aire Corporation for $30 each, terms n/30.        5 Sold 50 hair dryers purchased on January 3 for $50 each, terms n/30.      15 Returned five of the hair dryers purchased on January.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 71.A truck that cost $19,200 and was expected to last 5 years was scrapped after 3 years. If the truck was being depreciated on a straight-line basis (with no salvage value), the loss recognized on disposal would be a. $19,200 b. $7,680 c. $9,600 d. $11,520 72.A truck that cost $19,200 and.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 81.Using this information, periodic LIFO cost of goods sold is a. $430 b. $360 c. $330 d. $300 82.Using this information, average (periodic) cost of goods sold is a. $450 b. $390 c. $375 d. $330 Martin Inc. is a wholesaler of office supplies. The activity for supply number 47519 during October is shown below: Date Balance/Transaction Units Cost Oct. 1 Inventory 2,000 $36.00         7 Purchase 3,000 37.20       12 Sales 3,600       21 Purchase 4,800 38.00       22 Sales 3,800       29 Purchase 1,600 38.60 83.If Martin Inc. uses a FIFO.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 111.If the estimate of an asset's useful life is changed, then a. Depreciation expense for all past periods must be recalculated b. There is no change in the amount of depreciation expense recorded for future years c. Only the depreciation expense in the remaining years is changed d. None of these.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 41.Marino, Inc. makes a sale and collects a total of $378, which includes an 8 percent sales tax. The amount credited to Sales Revenue is a. $378 b. $348 c. $400 d. $350 42.Marino, Inc. makes a sale and collects a total of $378, which includes an 8 percent sales tax. The.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 31.The perpetual method of accounting for inventory a. Requires that a physical count of inventory be taken before the cost of goods sold can be determined with any reasonable degree of accuracy b. Is likely to be less expensive to maintain than a periodic inventory method c. Is not.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 91.Which ratio tells how much long it takes a company to pay its suppliers? a. Number of days’ sales in inventory b. Accounts receivable turnover c. Number of days’ purchases in accounts payable d. Inventory turnover 92.Monica Mills Co. began the year with $100,000 in inventory and ends the year with $300,000..
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Accounting:  Concepts & Applications, 11e Chapter 9  1 51.On January 1, 2012, Brown Company purchased a mine for $100,000. On this same date, it was estimated that the mine contained 1,000 tons of ore. During 2012, 300 tons of ore were extracted from the mine. The amount of depletion expense for.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 101.When ending inventory is overstated in period 1, net income in period 2 will be a. Understated b. Overstated c. Stated correctly d. None of these are correct 102.An understatement of purchases results in cost of goods sold being a. Overstated b. Understated c. Stated correctly d. None of these are correct 103.Under the periodic inventory method, if an inventory purchase.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 MULTIPLE CHOICE 1.Which of the following is NOT a current asset? a. Marketable Securities b. Cash c. Accounts Receivable d. Property, Plant, and Equipment 2.The caption "property, plant, and equipment" generally includes a. Assets purchased for sale b. Depreciable assets c. Current assets d. Assets that have no future service potential 3.Which of the following is considered to be a long-term asset? a. Land b. Goodwill c. Equipment d. All.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 9.The following information was taken from the records of Colfax Company: Beginning inventory $  675,000 Ending inventory 750,000 Net credit sales 7,200,000 Cost of goods sold 4,050,000 Purchases 3,250,000 Beginning accounts payable 825,000 Ending accounts payable 975,000 Net income 562,500 Given this information, compute the following ratios for Colfax Company. 1. Inventory turnover 2. Number of days’ sales in inventory 3. Number of days’ purchases in accounts.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 51.For external reporting purposes, inventory shrinkage is usually combined with which account? a. Merchandise inventory b. Gross profit c. Cost of goods sold d. Operating expenses 52.A physical count would be necessary at the end of the accounting period under which inventory system? a. Periodic inventory system b. Perpetual inventory system c. Both periodic and perpetual inventory systems d. Neither.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 11.The party who owns an asset that is rented to another is referred to as the a. Lessor b. Mortgagee c. Lessee d. Principal 12.Which of the following is NOT a consideration in classifying a lease? a. Value of the asset on the lessor's books b. Economic life of the asset c. Present value of the lease payments d. Whether.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 7.Ling Company's inventory records for the current year are as follows: Number of Units Cost per Unit Total Cost Beginning inventory 2,200 $3.00 $  6,600 First purchase 3,000 $2.90 8,700 Second purchase 3,500 $2.80 9,800 Third purchase 2,800 $2.70 7,560 Fourth purchase   2,500 $2.60   6,500     Goods available for sale 14,000 $39,160     Units sold during the year 9,000 Compute the cost of ending inventory using the following inventory costing methods: 1. FIFO periodic 2. LIFO periodic 3. Average.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 5.Smolan Company purchased a new machine on September 1, 2011. It was expected to produce 200,000 units of product over its estimated useful life of eight years. Total cost of the machine was $900,000, and salvage value was estimated to be $90,000. Actual.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 15.Feldman Company has the following inventory information for the current year: Item Quantity Unit Cost Replacement Cost Net Realizable Value Floor 1A 100 $34  $36  $45  $41  2A 150 16 13 19 14 3A   50 25 20 21 18 4A 200 41 36 35 34 Determine the total inventory cost to appear on Feldman's balance sheet under the lower of cost or market rule assuming 1. The rule is applied to inventory as a whole. 2. The rule is applied on.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 PROBLEM 1.Amy Tan earns $7,200 per month as the only employee of a small shop. FICA taxes on her salary are 7.65 percent of the first $50,000. Federal income taxes are withheld at the rate of 30 percent and state income taxes at the.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 3.Belpre Inc. constructed a new office building. Building material costs for the new building were $3,000,000; total labor costs were $2,500,000; total company overhead was $9,000,000 (25% of which could be assigned to the new project); and interest paid on a new construction.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 MULTIPLE CHOICE 1.To properly recognize the expense associated with compensated absences, a company should a. Expense these obligations in the period the employee is absent b. Estimate and expense these obligations when a new employee is hired c. Estimate and expense these obligations in the period that the employee earns.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 41.When the cost of equipment is divided by its estimated useful life, the result is referred to as a. Book value b. Accumulated depreciation c. Carrying value d. Depreciation expense 42.In order to calculate periodic depreciation expense, which of the following need NOT be known about an asset? a. Its acquisition cost b. Its estimated salvage.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 13.Rawson Company’s inventory records for April are as follows:: Date Balance/Transaction Units Cost Apr. 1 Inventory 3,500 $110.00         9 Purchase 5,000 104.00       15 Sales 7,500       24 Purchase 7,000 100.00       26 Sales 5,000       30 Purchase 2,000 90.00 Compute the cost of ending inventory using the following inventory costing methods: 1. FIFO perpetual 2. LIFO perpetual 3. Average Cost perpetual 14.Rhame Company has the following information related to its two products: Original Cost Replacement Cost Ceiling Floor Product M $ 96 $ 72 $ 80 $ 64 Product N $120 $128 $144 $112 Given the above.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 PROBLEM 1.Minot Company’s inventory balance on December 31, 2012 was $775,000 before considering the following transactions: ? Goods were in transit from a vendor to Minot on December 31, 2012. The invoice price was $62,500, and the goods were shipped FOB shipping point on December 27,.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 51.What makes environmental liabilities unique among contingent liabilities? a. It is more difficult to estimate the costs b. It is more difficult to estimate the likelihood of a loss c. A company need not disclose environmental liabilities d. All of these are true of environmental liabilities 52.Which of the following is the.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 21.A cash compensation received by an employee after that employee has retired is a(n) a. Stock option b. Severance package c. Employee bonus d. Pension 22.Which type of pension plan requires a company to place a certain amount of money into a pension fund each year on behalf of the employees? a. Defined benefit.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 21.Furniture with a list price of $6,000 is purchased on account for $5,000. Which of the following entries properly records this transaction? a. Furniture                              5,000    Cash                                                5,000 b. Furniture                              6,000    Accounts Payable                             6,000 c. Furniture                              5,000    Accounts Payable                             5,000 d. Furniture                              6,000    Cash                                                6,000 22.Boone Company purchased a piece of machinery by paying $5,000 cash. In.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 71.Which inventory cost flow assumption best reflects the current value of inventory on the balance sheet? a. Average cost b. FIFO c. Specific identification d. LIFO 72.Which of the following would be true if inventory costs were increasing? a. LIFO would result in lower net income and lower ending inventory amounts than would FIFO b. FIFO.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 11.The following data are available for Toltec Company: Year 1 Year 2 Beginning inventory $  90,000 $  60,000 Purchases 150,000 180,000 Cost of goods available for sale 240,000 240,000 Ending inventory 60,000 50,000 Cost of goods sold 180,000 190,000 Based on these data, answer the following three independent questions: 1. If ending inventory in year 1 is understated by $5,000 (it is recorded as $55,000),.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 81.When Scranton Tools bought Tipton Hardware, included in the purchase price was a patent valued at $26,000. The patent still has 10 years remaining of its legal life. However, it is estimated that the useful life of the patent is only 8 years..
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Accounting:  Concepts & Applications, 11e Chapter 9  1 PROBLEM 1.On January 1, 2012, Versachi Industries, a calendar-year corporation, leased an airplane under a 7-year, noncancelable lease agreement that requires Versachi to pay the lessor $30,000 at the end of each year. The first payment is due December 31, 2012. The present value.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 Iliescu Sporting Goods had the following inventory records for one line of skis for the month of January: Beginning inventory 70 pairs ? $100 per pair = $7,000 Sales, Jan. 1 - Jan. 7 50 pairs Purchase, Jan. 8 46 pairs ? $104 per pair = $4,784 Sales, Jan. 9.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 11.During the month of July, Joel Mayer earned $2,000. Joel has been on the payroll all year at a salary of $2,000 per month. Salaries are paid at the end of each month. Assume that FICA taxes are 7.65 percent of wages up.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 61.Which type of income shows how much a company earns from carrying on its normal operations? a. Income before extraordinary items b. Net income after taxes c. Operating income d. Income after extraordinary items 62.Items incurred or earned from activities peripheral to normal operations are classified as a. Extraordinary gains and losses b. Other revenues and.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 21.When the periodic inventory method is used, the entry to record a return of defective merchandise to a supplier would include a a. Credit to Accounts Payable b. Credit to Inventory c. Credit to Purchase Returns d. Credit to Cash 22.When a company uses the perpetual inventory method, purchase returns are recorded.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 7.A contingency is an uncertain circumstance involving a potential gain or loss that will not be resolved until some future event occurs.  The following table lists the possible outcomes of a contingency.  Complete the table by filling in the definition and required accounting.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 91.Which depreciation method usually allows the highest amount of net income to be reported during the first year an asset is owned? a. Straight-line method b. Double-declining-balance method c. Sum-of-the-years'-digits method d. Either double-declining-balance method or sum-of-the-years’-digits method 92.Which of the following depreciation methods can NOT depreciate an asset below its salvage.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 31.During 2012, Bernard Inc. constructed a new factory. Bernard used its current employees to build the factory. Building material costs for the new factory were $2,700,000; total labor costs were $1,400,000; total company overhead was $7,500,000 (20% of which could be assigned to.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 3.Prepare journal entries to record the following four transactions for the Labatt Company using the perpetual inventory method. (Omit explanations for the entries.) 1. June 1 - purchased on account inventory costing $15,000 terms 2/10 n/30. 2. June 9 - returned inventory costing $1,500 that was purchased.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 11.On December 31, 2012, Rippey Corporation reported total revenue of $3,750,000 and total expenses of $2,125,000. Rippey had 50,000 shares of stocks outstanding. Also, as of January 1, 2012, Rippey had issued stock options that allowed employees to receive 15,000 shares of stock.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 61.If ending inventory on December 31, 2011, is overstated by $60,000, what is the effect on net income for 2012? a. Net income is overstated by $60,000 b. Net income is understated by $60,000 c. Net income is overstated by $120,000 d. The answer cannot be determined from the information given 62.Following.
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Accounting:  Concepts & Applications, 11e Chapter 7  1 5.Jahn Company had the following balances in its general ledger at December 31, 2012: Inventory (as of January 1, 2012) $240,000 Purchases 440,000 Purchase returns and allowances 5,000 For the year 2012, Jahn Company's electronic sales registers showed a total cost of goods sold of $480,000. Assuming that a physical.
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Accounting:  Concepts & Applications, 11e Chapter 9  1 61.Under U.S. accounting rules (generally accepted accounting principles), an asset is impaired when a. The asset's fair value is less than the book value b. The asset's future cash inflows are less than the book value c. The asset's market value is less than the book value d. The asset's cost.
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Accounting:  Concepts & Applications, 11e Chapter 8  1 3.Bristol Company's accounting records contained the following information for a current year: Pension service cost $   285,000 Pension fund assets, year-end 3,515,000 Pension related interest cost for the year 304,000 Pension obligation, year-end 3,306,000 Return on pension fund assets for the year 380,000 1. Indicate what pension amount Bristol will report in its balance.
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