Accounting II
Test Preparation
Course Introduction
Accounting II builds upon fundamental accounting principles introduced in the first course, focusing on more complex concepts such as partnerships, corporate accounting, long-term liabilities, investments, and the preparation and analysis of financial statements. Students will explore topics including payroll accounting, income taxes, cash flow statements, and managerial decision-making processes. Emphasis is placed on understanding the implications of accounting choices, ethical considerations, and the use of accounting information in business planning and control. By the end of the course, students will have a deeper grasp of how accounting impacts financial reporting and business operations.
Recommended Textbook
Financial And Managerial Accounting Principles International Edition 9th Edition by Crosson
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29 Chapters
4463 Verified Questions
4463 Flashcards
Source URL: https://quizplus.com/study-set/3625 Page 2
Chapter 1: Uses of Accounting Information and the Financial Statements
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170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/72011
Sample Questions
Q1) For accounting purposes,a business and its owners are considered separate entities.
A)True
B)False Answer: True
Q2) Transfer of ownership will not affect the continuity of a
A) corporation..
B) sole proprietorship.
C) partnership
D) corporation or partnership.
Answer: A
Q3) Which of the following groups uses accounting information primarily to help protect the public?
A) Management
B) Regulatory agencies
C) Taxing authorities
D) Economic planners
Answer: B
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Page 3
Chapter 2: Analyzing Business Transactions
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194 Verified Questions
194 Flashcards
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Sample Questions
Q1) By what amount,if any,would each of the following errors cause a trial balance to be out of balance?
a. A purchase of supplies of $840 was recorded as a debit to Equipment and a credit to Cash for $840.
b. An $890 balance in Prepaid Insurance was copied to the trial balance as a debit of $980.
c. A $600 balance in Accounts Payable was copied to the trial balance as a debit of $600.
Answer: a.$0
b.$90
c.$1,200
Q2) When a company receives a product previously ordered,a recordable transaction has occurred.
A)True
B)False
Answer: True
Q3) Another word for expense is debt.
A)True
B)False Answer: False
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Chapter 3: Measuring Business Income
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245 Verified Questions
245 Flashcards
Source URL: https://quizplus.com/quiz/72008
Sample Questions
Q1) Not all increases to cash represent revenues.
A)True
B)False
Answer: True
Q2) Which of the following accounts probably would be greater in amount on an adjusted trial balance than on a trial balance?
A) Wages Payable
B) Unearned Revenue
C) Prepaid Advertising
D) Painting Supplies
Answer: A
Q3) Expenses are often called the cost of doing business or expired costs.
A)True
B)False
Answer: True
Q4) Accounting periods should be of equal length to facilitate comparisons between periods.
A)True
B)False Answer: True
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Chapter 3: Supplement - Closing Entries and the Work Sheet
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58 Verified Questions
58 Flashcards
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Sample Questions
Q1) An amount for Retained Earnings would not appear in which of the following work sheet columns?
A) Trial Balance
B) Income Statement
C) Balance Sheet
D) Adjusted Trial Balance
Q2) A work sheet is more useful for a small company than for a large one.
A)True
B)False
Q3) The balances of the Accumulated Depreciation accounts will appear on the credit side of the work sheet's Balance Sheet columns.
A)True
B)False
Q4) An important use of the work sheet is as an aid in the preparation of financial statements.
A)True
B)False
Q5) Why would a large company probably benefit more from a work sheet than would a very small company?
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Chapter 4: Financial Reporting and Analysis
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166 Verified Questions
166 Flashcards
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Sample Questions
Q1) Both return on assets and working capital are profitability measures.
A)True
B)False
Q2) Which of the following should be classified as an intangible asset?
A) Land held for future use
B) Accounts receivable
C) Building
D) Franchises
Q3) Which of the following is not considered an operating expense?
A) General office expenses
B) Cost of goods sold
C) Freight-out expense
D) Advertising expense
Q4) Which of the following accounts is most likely to appear on the balance sheet as a current liability?
A) Accumulated Depreciation
B) Bonds Payable
C) Mortgage Payable
D) Wages Payable
Q5) State the definition of a current asset.
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Chapter 5: The Operating Cycle and Merchandising Operations
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176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/72006
Sample Questions
Q1) Which of the following documents would be sent to the treasurer?
A) Invoice
B) Purchase order
C) Check authorization
D) Bank statement
Q2) The purchasing department prepares a purchase requisition addressed to the vendor (seller)containing instructions related to the items ordered.
A)True
B)False
Q3) The periodic inventory system is used most commonly by companies that sell
A) low-priced, high-volume merchandise.
B) low-priced, low-volume merchandise.
C) high-priced, low-volume merchandise.
D) high-priced, high-volume merchandise.
Q4) Which of the following is not an internal control activity for cash?
A) Employees who have access to cash should be bonded.
B) Recordkeeping and physical custody of cash should be performed by the same person.
C) The amount of cash on hand should be kept to a minimum.
D) Banking facilities should be used as much as possible.
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Chapter 6: Inventories
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155 Verified Questions
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Sample Questions
Q1) If a company uses LIFO for tax purposes,it must also use LIFO for financial reporting purposes.
A)True
B)False
Q2) Average inventory equals $100,000,and cost of goods sold equals $216,000.Days' inventory on hand equals
A) 168.98 days.
B) 170.0 days.
C) 157.9 days.
D) 193.1 days.
Q3) Specific identification is a very popular inventory method because it is very easy to apply.
A)True
B)False
Q4) What is the chief objective of supply-chain management? How is it accomplished?
Q5) Which of the following costs normally would be included in the inventory cost?
A) Ordering costs
B) Receiving costs
C) Applicable taxes
D) Storage costs
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Chapter 7: Cash and Receivables
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Accounts receivable and inventory are considered short-term financial assets.
A)True
B)False
Q2) You have just received notice that Agnes Fisher,a customer of yours with an Accounts Receivable balance of $200,has gone bankrupt and will not be making any future payments.Assuming you use the allowance method,the journal entry you make is to
A) debit Uncollectible Accounts Expense and credit Accounts Receivable.
B) debit Allowance for Uncollectible Accounts and credit Uncollectible Accounts Expense.
C) debit Uncollectible Accounts Expense and credit Allowance for Uncollectible Accounts. D) debit Allowance for Uncollectible Accounts and credit Accounts Receivable.
Q3) In a petty cash fund,the current cash amount minus the receipts submitted should equal the original fixed amount.
A)True
B)False
Q4) The debtor named in a promissory note is called the payee.
A)True
B)False
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Page 10
Chapter 8: Current Liabilities and Fair Value Accounting
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184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/72003
Sample Questions
Q1) Promotional costs,such as coupons and rebates,should be recorded as an expense with a related liability.
A)True
B)False
Q2) Explain why the cost of employing someone is more than just the wage or salary paid to the employee.
Q3) The federal and state unemployment tax rates are identical.
A)True
B)False
Q4) Which of the following typically would not be done to satisfy a current liability?
A) Use long-term assets to satisfy the liability
B) Render a service to satisfy the liability
C) Use current assets to satisfy the liability
D) Take on another current liability to satisfy the liability
Q5) Which of the following does not represent a liability?
A) An obligation for estimated income taxes payable
B) Interest that has accrued on a bank loan
C) An obligation to pay for goods purchased, payable one year after purchase
D) An obligation for future purchases of goods
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Chapter 9: Long Term Assets
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Sample Questions
Q1) A natural resource is subject to a process called depletion.
A)True
B)False
Q2) Which of the following terms does not mean the same as the others?
A) Book value
B) Salvage value
C) Scrap value
D) Disposal value
Q3) Which of the following would not be a basis for estimating the useful life of a piece of equipment?
A) Potential production in units
B) Potential hours of service
C) Historical cost
D) Years of service
Q4) Prior to the disposal of an asset,depreciation should be updated and recorded.
A)True
B)False
Q5) The cost of a sewage system should be included in the Land Improvements account. A)True
B)False
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Chapter 10: Long-Term Liabilities
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Sample Questions
Q1) Dividends on stock are tax-deductible to the issuing corporation,whereas interest on debt is not.
A)True
B)False
Q2) A corporation probably does not know who owns its coupon bonds.
A)True
B)False
Q3) An unsecured bond is the same as a
A) term bond.
B) zero coupon bond.
C) debenture bond.
D) bond indenture.
Q4) Under a capital lease,the lessee does not record which of the following?
A) Rent expense
B) Capital lease obligations
C) Depreciation on the leased asset
D) Capital lease assets
Q5) The call price of bonds is usually below face value.
A)True
B)False
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Chapter 11: Contributed Capital
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Sample Questions
Q1) The price/earnings (P/E)ratio is measured in terms of A) dollars.
B) a percentage.
C) times.
D) days.
Q2) The stockholders' equity in a corporation consists of capital contributed by stockholders and retained earnings.
A)True
B)False
Q3) On the balance sheet,treasury stock owned by the company is classified properly as A) contra-stockholders' equity.
B) current assets.
C) investments.
D) a note to the financial statements.
Q4) Dividends yield equals
A) market price per share divided by dividends per share.
B) net income divided by dividends per share.
C) dividends per share divided by net income.
D) dividends per share divided by market price per share.
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Chapter 12: Investments
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Sample Questions
Q1) The equity method generally should be used to account for an investment in stock when the level of ownership is
A) between 20 and 50 percent.
B) 10 percent or more.
C) less than 10 percent.
D) between 10 and 20 percent.
Q2) Goodwill is the amount by which specific assets of a subsidiary are undervalued.
A)True
B)False
Q3) Which type of investment,if any,could be classified as short- or long-term,as well as debt or equity?
A) Available-for-sale securities
B) Trading securities
C) Held-to-maturity securities
D) None of the above
Q4) A Goodwill from Consolidation account may rise when a parent acquires a subsidiary company's common stock at a price in excess of the stock's book value.
A)True
B)False
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Chapter 13: The Corporate Income Statement and the Statement of Stockholders Equity
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175 Flashcards
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Sample Questions
Q1) A debit balance in the Retained Earnings account is referred to as a deficit.
A)True
B)False
Q2) On June 1,20xx,Sterling Corporation had 40,000 shares of $10 par value common stock outstanding.On June 2,20xx,Sterling declared a 40 percent stock dividend to be distributed on July 5,20xx,to shareholders of record on June 15,20xx.What amount of retained earnings should be transferred to contributed capital because of this dividend?
A) None
B) Par value per share multiplied by the number of dividend shares
C) Market value of the stock at the date of distribution multiplied by the number of dividend shares
D) Market value of the stock at the date of declaration multiplied by the number of dividend shares
Q3) A stock dividend is a pro rata distribution of cash to a corporation's stockholders.
A)True
B)False
Q4) Distinguish between cash and retained earnings.
Q5) Specifically,what gives rise to the Deferred Income Taxes account?
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Chapter 14: The Statement of Cash Flows
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Indicate on the blanks below the letter of the type of activity (O = operating activity,F = financing activity,I = investing activity,N = noncash transaction)each of the following transactions represents.
_____ 1.Firm sold 8,000 shares of its own common stock for cash.
_____ 2.Sold $200,000 worth of products for cash.
_____ 3.Paid $120,000 dividend.
_____ 4.Received $1,500 in interest income.
_____ 5.Exchanged 6,000 shares of stock for 15-year bonds.
_____ 6.Paid $121,000 to the U.S.Treasury for income taxes.
Q2) On the lines below,provide the components for the calculation of free cash flow.
Q3) Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Depreciation Expense-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:
A) Add to net income to arrive at net cash flows from operating activities
B) Subtract from net income to arrive at net cash flows from operating activities
C) Not used to adjust net income to calculate net cash flows from operating activities
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Chapter 15: The Changing Business Environment - a Managers Perspective
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Management accounting and financial accounting are similar in which of the following respects?
A) Both use the same unit of measurement.
B) Both rely heavily on the double-entry system.
C) Both produce almost all of their respective informational reports on a routine monthly basis.
D) Both provide relevant and useful information to management.
Q2) Management accounting activities
A) are synonymous with financial accounting activities.
B) substitute for the management cycle.
C) complement the management cycle.
D) have nothing to do with the management cycle.
Q3) The ethical standards for management accountants state that accountants are obligated to maintain professional competence at all times when dealing with A) people outside the company.
B) regulatory bodies.
C) the world marketplace.
D) people and resources of one's own company, outside entities, and the world marketplace.
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Chapter 16: Cost Concepts and Cost Allocation
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189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/quiz/71995
Sample Questions
Q1) The following are costs for a selected period: direct materials put into production,$94,000; direct labor cost of converting materials into product,$200,000; total indirect costs of manufacturing the product,$40,000.What is the per unit cost of manufacturing 20,000 units in this period?
A) $4.70
B) $16.70
C) $8.70
D) $12.70
Q2) Which of the following is a typical example of a variable cost?
A) Sales commissions
B) Rent
C) Depreciation
D) Salaries
Q3) The Overhead account is used to accumulate actual overhead costs.
A)True
B)False
Q4) Total manufacturing costs increase the balance of the Work in Process Inventory account.
A)True
B)False
Page 19
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Chapter 17: Costing Systems- Job Order Costing
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Sample Questions
Q1) Unit costs for each job are computed by dividing
A) estimated total costs by planned units to be produced.
B) actual costs by actual units sold.
C) cost of direct materials, direct labor, and overhead by number of units produced.
D) estimated total costs by actual units produced.
Q2) In a service organization using a job order costing system,actual overhead will be the same as applied overhead.
A)True
B)False
Q3) The balance in the Work in Process account equals the
A) balance in the Finished Goods Inventory account.
B) balance in the Cost of Goods Sold account.
C) balances on the job cost sheets of uncompleted jobs.
D) balance in the Overhead account.
Q4) In a job order costing system,a separate job order cost card is used for each individual job.
A)True
B)False
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Chapter 18: Costing Systems- Process Costing
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Average costing method tries to match cost flow with physical flow of production.
A)True
B)False
Q2) In a process cost report,accounting for physical units excludes the physical units in beginning inventory to arrive at "units to be accounted for."
A)True
B)False
Q3) In many instances,direct materials are added at the beginning of the process.
A)True
B)False
Q4) If 45,000 units of ending work in process inventory are 60 percent complete as to conversion costs,27,000 equivalent units of conversion costs must be incurred to complete these units during the next period.
A)True
B)False
Q5) In a process costing system,all production costs are assigned to departments.
A)True
B)False
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Page 21
Chapter 19: Value-Based Systems- Abm and Lean
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Sample Questions
Q1) The Yeva Company produces children's automobile car seats.The company recently changed from a traditional production environment to just-in-time work cells.The company's car seats are widely distributed in popular retail stores.Would you recommend the use of backflush costing or ABM/ABC for tracking product costs? Explain your choice of system.
Q2) Engineering design is an activity vital to the success of any motor vehicle manufacturer.Identify the level at which engineering design would be classified in the cost hierarchy used with ABC for a maker of built-to-order city and county emergency vehicles (orders are usually placed for 10 to 12 identical vehicles).
A) Unit-level activity
B) Batch-level activity
C) Product-level activity
D) Facility-level activity
Q3) Cost traceability is decreased in a just-in-time operating environment.
A)True
B)False
Q4) Backflush costing aims at decreasing waste in the production process.
A)True
B)False
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Chapter 20: Cost Behavior Analysis
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Sample Questions
Q1) The variable cost per unit ____________ as the number of sales increase.
A) decreases
B) changes
C) remains constant
D) increases
Q2) Unit fixed costs vary inversely with activity or volume.
A)True
B)False
Q3) Which of the following would not require the use of cost behavior analysis?
A) Transferring production costs from one department to another
B) Projecting anticipated costs of a new project
C) Buying an existing business
D) Changing an existing product or service
Q4) Contribution Margin Income Statement divides costs into product and period costs.
A)True
B)False
Q5) Explain what cost-volume-profit analysis is and how managers use it.Give examples of some purposes for which it might be used.
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Chapter 21: The Budgeting Process
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Sample Questions
Q1) Preparation of a production budget requires knowledge of the sales target in sales dollars.
A)True
B)False
Q2) Leaverton's forecast of sales is as follows: July,$60,000; August,$90,000; September,$130,000.Sales are normally 80 percent cash and 20 percent credit in any month.Credit sales are collected in full in the following month.Merchandise cost averages 60 percent of sales price.The company desires an inventory as of September 30 of $52,000.The inventory as of June 30 was $25,000. Total cash receipts for August will be
A) $72,000.
B) $66,000.
C) $98,000.
D) $84,000.
Q3) The Budget Committee oversees each stage in the preparation of a master budget.
A)True B)False
Q4) Projected financial statements are the final product of the budgeting process. A)True B)False
Page 24
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Chapter 22: Performance Management and Evaluation
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Sample Questions
Q1) Incentive awards are utilized mainly to encourage long-term performance.
A)True
B)False
Q2) The logical linking of goals to measurable objectives and targets and the tying of appropriate compensation incentives to the achievement of such objectives and targets are critical to the successful coordination of goals.
A)True
B)False
Q3) The manager of Center D designs,produces,and sells products to external parties.The manager makes both long-term and short-term decisions.What type of responsibility center is Center D?
A) Cost center
B) Profit center
C) Revenue center
D) Investment center
Q4) ROI is a performance measure mainly connected with a company's income statement.
A)True
B)False
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Chapter 23: Standard Costing and Variance Analysis
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Sample Questions
Q1) Underfoot Products uses standard costing.The following information about overhead was generated during May: \[\begin{array} { l l }
\text { Standard variable overhead rate } & \$ 2 \text { per machine hour } \\
\text { Standard fixed overhead rate } & \$ \text { per machine hour } \\
\text { Actual variable overhead costs } & \$ 390,000 \\
\text { Actual fixed overhead costs } & \$ 175,000 \\
\text { Budgeted fixed overhead costs } & \$ 190,000 \\
\text { Standard machine hours per unit produced } & 10 \\
\text { Good units produced } & 18,000 \\
\text { Actual machine hours } & 200,000
\end{array}\]
Compute the fixed overhead variance.
A) $5,000 (F)
B) $5,000 (U)
C) $10,000 (U)
D) $10,000 (F)
Q2) Another name for a flexible budget is a variable budget.
A)True
B)False
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Page 26
Chapter 24: Short Run Decision Analysis
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Sample Questions
Q1) Taylor manufactures 12,000 units of a part used in its production to manufacture guitars.The annual production activities related to this part are as follows:
Direct materials,$24,000
Direct labor,$60,000
Variable overhead,$54,000
Fixed overhead,$84,000
Best Guitars,Inc.,has offered to sell 12,000 units of the same part to Taylor for $22 per unit.If Taylor were to accept the offer,some of the facilities presently used to manufacture the part could be rented to a third party at an annual rental of $18,000.Moreover,$4 per unit of the fixed overhead applied to the part would be totally eliminated.
What should Taylor's decision be,and what is the total cost savings that would result?
A) Make, $60,000
B) Buy, $60,000
C) Make, $78,000
D) Buy, $78,000
Q2) What are the two steps in the analysis for a sales mix decision?
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Chapter 25: Capital Investment Analysis
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Sample Questions
Q1) An organization with several branches and a highly developed system for capital investment analysis requires that all proposals should go through preliminary screening.
A)True
B)False
Q2) Chicago Co.is interested in purchasing a machine that would improve its operational efficiency.The cost is $200,000 with an estimated residual value of $20,000 and a useful life of eight years.Cash inflows are expected to increase by $40,000 a year.The company's minimum rate of return is 10 percent.The present value of $1 for eight years at 10 percent is 0.467,and the present value of an annuity of $1 at 10 percent and eight years is 5.335. The net present value of the project is A) $74,520.
B) $120,100.
C) $93,400.
D) $22,740.
Q3) Capital investment analysis ensures that the resources are used wisely.
A)True B)False
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Chapter 26: Pricing Decisions, incltarget Costing and Transfer Pricing
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Sample Questions
Q1) An external issue to be considered when setting a price is
A) the quality of competing products or services.
B) the quality of materials and labor.
C) a price geared toward a minimum return on investment.
D) the total costs of the product or service.
Q2) When using traditional,cost-based pricing,the pricing decision is made before products have been put into production.
A)True
B)False
Q3) Within the relevant range,fixed and variable costs are fairly predictable.
A)True
B)False
Q4) The selling division may use a transfer price different from that used by the division buying the item being transferred in order to evaluate the performance of the managers.
A)True B)False
Q5) Cost and price information are irrelevant to transfer prices. A)True
B)False
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Chapter 27: Quality Management and Measurement
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Sample Questions
Q1) Internal reports on quality at the Acme Publishing Company generated the following information for the Trade Division for the first three months of the year: \(\begin{array}{lr}
\text { Total sales } & \$ 1,000,000 \\
\text { Costs of quality: } & \\
\text { Prevention } & 50,000 \\
\text { Appraisal } & 47,000 \\
\text { Internal failure } & 36,000 \\
\text { External failure } & 64,000 \end{array}\)
Compute the ratio of costs of nonconformance to total costs of quality.
A) 39.4%
B) 50.8%
C) 60.5%
D) 100%
Q2) Total quality management seeks continuous improvement on product quality and analyzes performance using nonfinancial measures.
A)True
B)False
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Chapter 28: Financial Analysis of Performance
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Sample Questions
Q1) A company with $50,000 in current assets,$25,000 in quick assets,and $30,000 in current liabilities makes a payment of a $1,500 current debt.As a result of this transaction,the current ratio and quick ratio will
A) both decrease.
B) increase and decrease, respectively.
C) both increase.
D) remain the same and decrease, respectively.
Q2) A general rule in choosing among alternative investments is the greater the risk taken,the
A) greater the return required.
B) lower the potential expected.
C) greater the price of the investment.
D) lower the profits expected.
Q3) Contrast the circumstances where horizontal analysis would be an effective analysis tool with those where common-sized analysis would be more useful.
Q4) The annual report of a publicly held corporation usually does not contain the auditors' report.
A)True
B)False
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