Business Accounting
Textbook Exam Questions
Course Introduction
Business Accounting introduces students to the fundamental principles and practices of accounting within a business context. The course covers key topics such as the accounting cycle, preparation and analysis of financial statements, recording business transactions, internal controls, and the interpretation of accounting data for decision-making. Emphasis is placed on understanding how financial information supports business operations, planning, and strategic management. By the end of the course, students will develop the essential skills needed to analyze financial information and apply accounting concepts to real-world business scenarios.
Recommended Textbook
College Accounting Chapters 1 to 30 15th Edition by John Price
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Page 2
Chapter 1: Accounting: The Language of Business
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Q1) The government agency that has final authority over the financial reporting of publicly owned corporations is the
A)Financial Accounting Standards Board.
B)Internal Revenue Service.
C)Federal Trade Commission.
D)Securities and Exchange Commission.
Answer: D
Q2) A form of business entity owned by one person is called a(n)________.
Answer: sole proprietorship
Q3) When a business is organized as a sole proprietorship, the owner should combine his/her personal financial information with the business financial information.
A)True
B)False
Answer: False
Q4) Managerial Accounting is any activity associated with the preparation of tax returns and the audit of those returns.
A)True
B)False Answer: False
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Chapter 2: Analyzing Business Transactions
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Q1) The statement of financial position is another term for which financial statement?
A)Balance Sheet
B)Income Statement
C)Statement of Owner's Equity
D)Trial Balance
Answer: A
Q2) The Statement of Owner's Equity is calculated as follows:
A)beginning capital + net income - withdrawals + additional investments = ending capital
B)beginning capital + net income + withdrawals + additional investments = ending capital
C)beginning capital + net loss - withdrawals + additional investments = ending capital
D)beginning capital + net loss + withdrawals + additional investments = ending capital
Answer: A
Q3) Purchased a computer for cash
Answer: plus Equipment; minus Cash
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Chapter 3: Analyzing Business Transactions Using T Accounts
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Q1) A(n)____________ account is used to record increases in owner's equity from the sale of goods or services.
Answer: revenue
Q2) When preparing the trial balance, the total debits MUST equal the total credits. A)True B)False
Answer: True
Q3) Issued a check for $2,000 in partial payment to pay creditor for copier equipment.
Answer: Debit Accounts Payable $2,000; credit Cash $2,000
Q4) When the trial balance totals are not equal, the error may have been caused by recording a debit as a credit if the difference is divisible by: A)9 B)5 C)3 D)2 Answer: D
Q5) Received cash from credit customers
Answer: Debit Cash; credit Accounts Receivable
5
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Chapter 4: The General Journal and the General Ledger
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Q1) The______ is referred to as the record of final entry.
Q2) Which of the following statements is CORRECT?
A)Accounts being debited should always follow the accounts being credited in a compound entry.
B)Compound entries affect more than one debit and/or more than one credit.
C)All transactions require compound entries.
D)Compound entries include only debits.
Q3) Which of the following statements is CORRECT?
A)When entries are posted from the general journal to the general ledger, the account number is written in the Posting Reference column in the general ledger.
B)The general ledger contains the accounts that are used to prepare the financial statements.
C)Some companies use the general ledger instead of a general journal.
D)When entries are posted from the general journal to the general ledger, the page number is written in the Posting Reference column in the general journal.
Q4) Transactions are recorded in either a journal or a ledger, but not in both.
A)True
B)False
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Chapter 5: Adjustments and the Worksheet
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Q1) Equipment costing $27,000 with an estimated salvage value of $2,040 and an estimated life of 4 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?
A)$520
B)$1,560
C)$1,125
D)$1,040
Q2) On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to:
A)the Balance Sheet Credit column.
B)the Income Statement Debit column.
C)the Income Statement Credit column.
D)the Balance Sheet Debit column.
Q3) Letters are used to label the corresponding debit and credit transactions of an adjustment on the worksheet.
A)True
B)False
Q4) The account accumulated depreciation has a normal________ balance.
Q5) Accumulated depreciation is classified as a(n)________ account.
Page 7
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Chapter 6: Closing Entries and Teh Postclosing Trial Balance
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Q1) The postclosing trial balance lists only the ________, and accounts.
Q2) One purpose of closing entries is to:
A)reduce the owner's capital account balance to zero so that the account is ready for the next period.
B)transfer the results of operations to owner's equity.
C)adjust the ledger account balances to provide complete and accurate figures for use on financial statements.
D)close all accounts so that the ledger is ready for the next accounting period.
Q3) Trial balances are prepared in a certain order. Given the choices below, which one depicts the trial balances in the correct order in which they would be prepared?
A)trial balance, post-closing trial balance, adjusted trial balance.
B)post-closing trial balance, adjusted trial balance, trial balance.
C)trial balance, adjusted trial balance, post-closing trial balance.
D)adjusted trial balance, trial balance, post-closing trial balance.
Q4) The firm had net income if the entry to close the Income Summary account is recorded as a________ to the owner's capital account.
Q5) After all the closing entries are posted to the ledger, the Income Summary account will have a________ balance.
Page 8
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Chapter 7: Accounting for Sales and Accounts Receivable
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Q1) Selected balances from the general ledger of the All Star Video Rentals on July 31, 2019, are listed below. Use the appropriate data to prepare the Revenue section of the firm's income statement for the month ended July 31, 2019. \(\begin{array}{l|l}
\text { Accounts Receivable } & \$ 12,500 \\
\hline \text { Sales Tax Payable } & 1,475 \\
\hline \text { Sales } & 32,500 \\
\hline \text { Sales Returns and Allowances } & 3,100 \end{array}\)
Q2) Which of the following describes Sales Tax Payable?
A)A revenue account with a normal credit balance.
B)A liability account with a normal credit balance.
C)An asset account with a normal debit balance.
D)A liability account with a normal debit balance.
Q3) The balances of selected accounts of Casper Company on February 28, 2019, were as follows: Sales $200,000 and Sales Returns and Allowances $5,000. The firm's net sales are subject to an 8 percent sales tax. Record the payment of the sales tax payable on February 28, 2019 on page 8 of a general journal.
Q4) The ________ ledger contains accounts for credit customers.
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Chapter 8: Accounting for Purchases and Accounts Payable
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Q1) The Freight In account should have a(n)________ balance.
Q2) In a firm that uses special journals, the receipt of a credit memorandum from a supplier for merchandise that was damaged but can be sold at a reduced price is recorded in the:
A)general journal.
B)cash receipts journal.
C)cash payments journal.
D)purchases journal.
Q3) At the end of the accounting period the total of the accounts in the accounts payable subsidiary ledgers need not agree to the total in the firm's accounts payable ledger account.
A)True
B)False
Q4) The type of account and normal balance of <i>Purchase Returns and Allowances</i> is a(n):
A)contra revenue account, credit balance.
B)contra cost of goods sold account, credit balance.
C)expense account, credit balance.
D)asset account, debit balance.
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Q5) After damaged goods are ________, the supplier issues a(n)credit memorandum.
Chapter 9: Cash Receipts, Cash Payments, and Banking Procedures
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Q1) Checks written by a firm that were paid by the bank are called ________ checks.
Q2) The process of determining why a difference exists between a firm's records and the bank's records and bringing the two sets of records into balance is known as ________ the bank statement.
Q3) A firm's bank reconciliation statement shows a book balance of $16,640, a non-interest note collected by the bank of $3,400 an NSF check of $1,650, and a service charge of $60. Its adjusted book balance is:
A)$14,950.
B)$21,750.
C)$18,330.
D)$14,930.
Q4) To record the payment of a purchase invoice when a cash discount is taken, the accountant would:
A)debit Accounts Payable and credit Cash.
B)debit Accounts Payable, credit Purchases Discounts, and credit Cash.
C)debit Purchases, credit Purchases Discounts, and credit Cash.
D)debit Accounts Payable, debit Purchases Discounts, and credit Cash.
Q5) A(n)________ is a written promise to pay a specified amount of money at a specified time.
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Chapter 10: Payroll Computations, Records, and Payment
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Q1) When checks are issued to employees after the entry to record the payroll has been made, the accountant would
A)debit Salaries and Wages Payable and credit Cash.
B)debit Salaries Expense, debit Wages Expense, and credit Cash.
C)debit Salaries and Wages Payable, debit Social Security Tax Payable, debit Medicare Tax Payable, debit Employee Income Tax Payable, and credit Cash.
D)debit Salaries and Wages Payable and credit Salaries Expense and Wages Expense.
Q2) Which of the following statements is not correct?
A)The SUTA tax protects employees against losses from job-related injuries or illnesses.
B)The FUTA tax provides benefits for employees who become unemployed.
C)The federal unemployment tax rate can be reduced by the rate charged by state for the state unemployment tax.
D)The earnings base for the federal and state unemployment taxes are the same, the first $7,000 of an employee's earnings for the year.
Q3) FICA tax is commonly referred to as ________ tax.
Q4) The amount of employees' ________ is recorded in the Wages Expense account.
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Chapter 11: Payroll Taxes, Deposits, and Reports
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Q1) The entry to record the Social security and Medicare taxes paid by a business includes a debit to Payroll Taxes Expense.
A)True
B)False
Q2) The payroll register of Burdick Travel Agency showed total employee earnings of $5,280 for the week ended June 7, 2019. Compute the employer's payroll taxes for the period. The tax rates are: <b>Social security</b> tax, 6.2 percent; <b>Medicare </b>tax, 1.45 percent; <b>FUTA</b> tax, 0.6 percent; SUTA tax, 2.2 percent. All earnings are taxable. Record the employer's payroll taxes for the period on page 4 of a general journal.
Q3) Form 940 must be filed________time(s)a year.
Q4) Which of the following forms is submitted with a copy of the Form W-2 for each employee to the Social Security Administration?
A)Form W-3
B)Form 941
C)Form W-4
D)Form 940
Q5) Form ________ is often referred to as a withholding statement.
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Chapter 12: Accruals, Deferrals, and the Worksheet
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Q1) The adjusting entry to record accrued interest on a note receivable increases the Interest Receivable account and increases the ________ account.
Q2) Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. The Supplies account has a balance of $1,400. On December 31, 2019, an inventory of supplies showed that items costing $500 were on hand.
Q3) Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. On December 31, 2019, the Notes Payable account had a balance of $12,000, for a 5-month, 8 percent note issued on December 1, 2019.
Q4) Prepaid Advertising has a debit balance in the Trial Balance section of the worksheet of $1,500 and a credit entry of $500 in the adjustments section of the worksheet, the balance of Prepaid Advertising in the Adjusted Trial Balance section of the worksheet is a
A)$1,000 credit.
B)$500 debit.
C)$1,500 debit.
D)$1,000 debit.
Q5) Uncollectible Accounts Expense is a(n)________ account.
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Chapter 13: Financial Statements and Closing Procedures
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Q1) Select the correct closing entry that RB Auto would make to close their expense account(s)at the end of the accounting period.
A)debit R. Holloway, Capital $9,000 and credit Salary Expense $4,000; credit Rent Expense
$3,000; credit Purchases $2,000
B)debit Income Summary $9,000 and credit Salary Expense $4,000; credit Rent Expense $3,000; credit Purchases $2,000
C)debit Salary Expense $4,000; debit Rent Expense $3,000; debit Purchases $2,000 and credit Income Summary $9,000
D)debit Income Summary $9,000 and credit R. Holloway, Capital for $9,000
Q2) Which of the following accounts will NOT appear on the post-closing trial balance?
A)Wages Expense
B)Equipment
C)Wages Payable
D)Prepaid Advertising
Q3) On the balance sheet, the cost of a fixed asset less its accumulated depreciation to date is the asset's________.
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Chapter 14: Accounting Principles and Reporting Standards
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Q1) Footnotes to financial statements are used to disclose information that may influence investor decisions.
A)True
B)False
Q2) Each year there was an increase in the market value of some of the stock owned by the Mudstream Company, but the accountant did not record the increase in the asset's value and equity until the stock was sold. In this situation, the accountant
A)followed the realization principle.
B)violated the accrual principle.
C)followed the matching principle.
D)violated the matching principle.
Q3) The ________ assumption, which assumes that a firm will continue to operate indefinitely, permits carrying forward a portion of the cost of assets that will be used in future periods .
Q4) The concept of realization permits a company to recognize income whenever there is an increase in the market value of the assets it holds.
A)True
B)False
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Chapter 15: Accounts Receivable and Uncollectible Accounts
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Q1) At the end of the current year, the trial balance of Aaron's Kitchen Supply Corporation included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable.
Accounts Receivable $ 860,000 Dr. Allowance for Doubtful Accounts 5,400 Cr.
Sales 7,000,000 Cr.
Sales Returns and Allowances 55,000 Dr.
1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?
Q2) The balance of the Allowance for Doubtful Accounts account is reported as
A)a deduction from Sales on the income statement.
B)an addition to Accounts Receivable on the balance sheet.
C)a deduction from Accounts Receivable on the balance sheet.
D)an expense on the income statement.
Q3) The longer an account is past due, the ________ likely it is to be collected.
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Chapter 16: Notes Payable and Notes Receivable
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Q1) The journal entry to record the payment of the amount due on a $4,000 face value, 60-day, 6 percent note, would include a debit to Notes Payable for $4,000.
A)True
B)False
Q2) The maturity value of a 180-day note for $8,000 that bears interest at 10 percent is (Assume 360 days in a year.)
A)$8,800.
B)$8,400.
C)$8,000.
D)$7,600.
Q3) Identify the 5 requirements necessary for a promissory note to be considered a "negotiable instrument".
Q4) The maturity value of a $12,000 face value, 180-day note bearing interest at 10 percent is (Assume 360 days in a year.)
A)$600.
B)$12,600.
C)$1,200.
D)$13,200.
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Chapter 17: Merchandise Inventory
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Q1) The------------ method of inventory costing must be used for financial accounting purposes if it is chosen for federal income tax purposes.
Q2) Under the retail inventory method, if the gross profit ratio is 40% and ending inventory at retail is $45,000, then estimated ending inventory is $27,000. A)True
B)False
Q3) On July 1, a tornado destroyed the warehouse where The Brooks Boys Sports Equipment Company stored their inventory. The inventory was, for the most part, destroyed by the force of the storm. The usual gross profit rate for the company was 30%. The beginning inventory of $220,000 was recorded on the prior year's financial reports. The net sales to date are known to be $886,450, and net purchases (including freight-in charges and purchases returns)were $580,000. Using the gross profit method of inventory valuation, determine the value of the inventory that was destroyed.
Q4) What is inventory shrinkage? What could cause inventory shrinkage?
Q5) Explain the following terms-markon, markup, and markdown.
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Chapter 18: Property, Plant, and Equipment
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Q1) To calculate declining-balance depreciation, the-------------- of an asset is multiplied by a predetermined appropriate rate.
Q2) The full disclosure principle requires businesses to show balance information in the depreciable asset accounts, accumulated depreciation amounts and methods used to compute depreciation expense.
A)True
B)False
Q3) Interest costs incurred during the construction of a long-term asset are capitalized as part of the asset cost along with permits fees, insurance and measurable direct overhead considered reasonable and necessary during the construction period.
A)True
B)False
Q4) On January 2, 2019, the Unit Manufacturing Company purchased manufacturing equipment for $62,000. The equipment is expected to have a useful life of six years and a salvage value of $2,000. Prepare a schedule showing the annual depreciation for each of the first three years of the asset's life under the straight-line method, the double-declining-balance method, and the sum-of-the-years'-digits method.
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Chapter 19: Accounting for Partnerships
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Q1) The characteristic of a partnership that means that any partner can make valid contracts for the partnership is known as---------- .
Q2) Each partner is empowered to act as an agent for the partnership creating binding agreements no matter what the agreement concerns.
A)True
B)False
Q3) Lenik and Olsen are partners who share profits and losses in the ratio of 60 and 40 percent, respectively. The partnership agreement provides that each will be paid a yearly salary of $28,000. The salaries were paid to the partners during 2019 and were charged to the partners' drawing accounts. The Income Summary account has a debit balance of $12,000 after revenue and expense accounts are closed at the end of the year.
1. What amount of net income or loss will be allocated to Lenik? 2. What amount of net income or loss will be allocated to Olsen?
Q4) Antonio Bandala wishes to sell half of his partnership interest for $70,000 to Phillips. His capital balance is $120,000. Prepare the journal entry to record this transaction in the partnership records.
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Chapter 20: Corporations: Formation and Capital Stock Transactions
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Q1) Which of the following statements is correct?
A)The owners of preferred stock are the only stockholders who have the right to vote.
B)The issuing corporation may retain the right to repurchase shares of preferred stock from the stockholders at a specific price
C)All stockholders are guaranteed the right to receive annual dividends.
D)In a liquidation, common shareholders are paid before preferred shareholders.
Q2) One disadvantage of a corporation is:
A)limited liability.
B)continuous existence.
C)transferability of ownership rights.
D)double taxation.
Q3) When the issuing corporation retains the right to repurchase shares of preferred stock at a specified price, the preferred stock is said to be:
A)callable.
B)convertible.
C)participating.
D)nonparticipating.
Q4) The Common Stock Subscribed account has a(n)----------balance.
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Chapter 21: Corporate Earnings and Capital Transactions
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Q1) A corporation reported a net income of $135,000 for the current fiscal year and declared and paid cash dividends of $58,000 and declared and distributed a stock dividend recorded at $45,000. If the beginning balance of the Retained Earnings account was $190,000, the ending balance is:
A)$222,000.
B)$267,000.
C)$135,000.
D)$190,000.
Q2) A corporation reported net income of $240,000 for its fiscal year and declared and paid cash dividends of $96,000. A stock dividend recorded at $36,000 was also distributed during the year. If the ending balance of the Retained Earnings account was $325,000, calculate the beginning balance in the Retained Earnings account.
Q3) A corporation reacquired 450 shares of its $100 par-value common stock for $112 a share. The entry to record this transaction includes a A)debit to Treasury Stock-Common for $50,400.
B)debit to Treasury Stock-Common for $45,000.
C)credit to Paid-in Capital for Treasury Stock Transactions-Common for $45,000.
D)credit to Treasury Stock-Common for $50,400.
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Chapter 22: Long-Term Bonds
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Q1) Interest on bonds must be paid in full as scheduled in the bond indenture even when the corporation operates at a loss.
A)True
B)False
Q2) Using borrowed funds to earn a profit higher than the interest charged for borrowing is called
A)secured borrowing.
B)amortizing.
C)investing.
D)leveraging.
Q3) If a corporation plans to issue $4,000,000 of 5% bonds at a time when the market rate of interest for similar bonds is 6%, the bonds will sell at:
A)their face value.
B)a premium.
C)a discount.
D)their maturity value.
Q4) Coupon bonds are often referred to as------------ bonds.
Q5) In the interest formula (I = Prt)the Prt stands for---------- .
Q6) The Discount on Bonds Payable account will have a(n)----------balance.
Page 24
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Chapter 23: Financial Statement Analysis
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Q1) In a vertical analysis of the income statement data, the cost of goods sold most likely would be expressed as a percentage of:
A)net income.
B)net sales.
C)gross profit on sales.
D)total expenses.
Q2) Using the information given, analyze the liquidity of Quotidian Industries for 2020.
Q3) If liabilities are $75,000, two-thirds of which represent current liabilities, and total assets are
$500,000, what is the ratio of Stockholders' Equity to Total Equities?
A)10 percent
B)6)7 percent
C)12.5 percent
D)85 percent
Q4) Peterson Company has current liabilities of $210,000 and working capital of $56,000. Its current assets, therefore, must equal $266,000.
A)True
B)False
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Chapter 24: The Statement of Cash Flows
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Q1) The method most often used by companies to prepare the statement of cash flows is the:
A)accrual method.
B)direct method.
C)indirect method.
D)deferral method.
Q2) A complete set of published financial statements for a corporation must include a statement of cash flows.
A)True
B)False
Q3) Cannon Manufacturing Co. sold equipment that cost $18,000 for $5,000. A gain on sale of $1,000 was recorded. How is the Cash Flows from Investing Activities affected?
A)A cash inflow of $5,000 is recorded.
B)A cash inflow of $6,000 is recorded.
C)A cash inflow of $11,000 is recorded.
D)A cash inflow of $12,000 is recorded.
Q4) Purchases and sales of land, buildings, and equipment for cash are shown as------------- on the statement of cash flows.
Q5) Why is the Statement of Cash Flows important?
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Chapter 25: Departmentalized Profit and Cost Centers
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Q1) Floor space would be a reasonable basis for the allocation of:
A)rent expense for a building.
B)sales revenue.
C)payroll taxes expense.
D)advertising expense.
Q2) Semidirect and indirect expenses are allocated to the sales department at the time the expenses are incurred.
A)True
B)False
Q3) Based on the information given, determine the basis for the allocation (value of the assets Equipment and Inventory; square feet of space; or sales)of each expense that will be allocated to the departments.
Q4) Accounting Department
A)Cost
B)Profit
Q5) Maintenance Department
A)Cost
B)Profit
Q6) When total revenues equal total expenses, a business is said to----------- .
Page 27
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Chapter 26: Accounting for Manufacturing Activities
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Q1) The cost of labor that is not clearly associated with specific units of product is called:
A)direct labor.
B)unspecified labor.
C)indirect labor.
D)basic labor.
Q2) All manufacturing costs that are NOT classified as direct materials or direct labor are:
A)indirect materials.
B)semidirect costs.
C)indirect labor.
D)manufacturing overhead.
Q3) Total manufacturing cost is the sum of direct materials used, direct labor incurred and manufacturing overhead applied.
A)True
B)False
Q4) On a worksheet for a manufacturing business, the beginning inventory of finished goods is extended to the -------------Debit column.
Q5) From the information given, determine total direct and total indirect costs.
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Chapter 27: Job Order Cost Accounting
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Sample Questions
Q1) A raw material subsidiary ledger:
A)contains a raw materials card for each item of direct materials only.
B)contains a raw materials card for each item of indirect materials only.
C)contains a raw material card for each supplier of raw materials.
D)contains a raw materials card for each item of direct materials and indirect materials.
Q2) If a firm applies its manufacturing overhead based on direct labor cost and estimates that for the coming year it will have expected total direct labor costs of $60,000 and total manufacturing overhead costs of $36,000, its overhead application rate will be 60 percent.
A)True
B)False
Q3) The Manufacturing Overhead Applied account for Cullverin Manufacturing had activity of $860 in indirect materials and supplies, $992 in indirect labor, and $4,654 in other overhead costs recorded in the account at April 30 of the current year. The Manufacturing Overhead Applied account had a total of $6,740 in overhead applied during April. What is the over- or underapplied overhead for April? Prepare the journal entry to close the related overhead accounts.
Q4) Record the necessary entries on page 8 of a general journal. Omit descriptions.
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Chapter 28: Process Cost Accounting
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Q1) Compute the cost of Noah's ending work in process inventory.
A)$49,000.
B)$50,000.
C)$89,000.
D)$99,000.
Q2) Under the average cost method, current period materials, labor and overhead added to production are added to the beginning inventory balance. The sum is then allocated between transferred out and costs remaining in ending work in process based on equivalent units of labor incurred.
A)True
B)False
Q3) During the month, 1,950 units of a product were completed and 900 units were two-thirds complete with respect to labor and are still in process. The total equivalent units of production for labor for the month is
A)2,850 units.
B)2,550 units.
C)1,950 units.
D)2,250 units.
Q4) Calculate the equivalent production units from the information given.
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Chapter 29: Controlling Manufacturing Costs: Standard Costs
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Q1) A key purpose of a manufacturing cost budget is to provide a basis for measuring performance.
A)True
B)False
Q2) Costs that vary in some degree with the volume of activity, but not in direct proportion to it are called----------- costs.
Q3) The following production information is available for January: \(\begin{array}{lrr}
\text { Actual Hours used } & 45,000 \\
\text { Actual Rate per hour } & \$ 15 \\
\text { Standard Rate per hour } & \$ 14 \\
\text { Standard hours for units produced } & 47,000 \end{array}\)
The direct materials price variance is:
A)$28,000 unfavorable
B)$45,000 unfavorable
C)$28,000 favorable
D)$45,000 favorable
Q4) As the volume of output increases, the------- cost per unit of output decreases.
Q5) Costs in excess of established standards are----------- .
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Chapter 30: Cost-Revenue Analysis for Decision Making
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Q1) In its first year of operations, a company has sales of $110,000, ending finished goods inventory of $12,000, variable manufacturing costs of $48,000, and fixed manufacturing costs of $30,000 for the year. Assuming the company uses direct costing, the manufacturing margin for the year is
A)$62,000.
B)$74,000.
C)$50,000.
D)$80,000.
Q2) Differential cost analysis emphasizes evaluating alternatives by calculating the differences in relevant costs.
A)True
B)False
Q3) In managerial decisions, nonmanufacturing costs can be ignored. A)True
B)False
Q4) Contribution margin is calculated by
A)deducting variable costs and common costs from revenue.
B)deducting variable costs and controllable fixed costs from revenue.
C)deducting variable costs from revenue.
D)deducting fixed costs from revenue.
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