In five years, when he is discharged from the Air Force, Steve wants to buy an

In five years, when he is discharged from the Air Force, Steve wants to buy an $8,600 power boat.
Required:
(a) What lump-sum amount must Steve invest now to have the $8,600 at the end of five years if he can invest money at 7 percent?
(b) What lump-sum amount must Steve invest now to have the $8,600 at the end of five years if he can invest money at 11 percent?

In describing the cost formula equation Y = a + bX, which of the following

In describing the cost formula equation Y = a + bX, which of the following statements is correct?
a) "X" is the dependent variable.
b) "a" is the fixed component.
c) In the high-low method, "b" equals change in activity divided by change in costs.
d) As "X" increases "Y" decreases.

In crafting a company's strategy A.Management's biggest challenge is how closely

In crafting a company's strategy
A. Management's biggest challenge is how closely to mimic the strategies of successful companies in the industry
B. Managers have comparatively little freedom in choosing the hows of strategy
C. Managers are wise not to decide on concrete courses of action in order to preserve maximum strategic flexibility
D. Managers need to come up with some distinctive "aha" element to the strategy that draws in customers and produces a competitive edge over rivals
E. Managers are well-advised to be risk-averse and develop a "conservative" strategy; "dare-to-be-different" strategies are rarely successful

In companies that have "no lay-off" policies, the total direct labor cost for a

In companies that have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.
a) True
b) False

In choosing among strategy alternatives, company managers

In choosing among strategy alternatives, company managers
A. Should recognize that they are duty-bound to make as much money for shareholders as possible, and that any and all strategic actions that are legal are entirely permissible and defensible in pursuit of this duty
B. Have no compelling duty to craft a strategy whose elements are considered ethical – their only real duty is to craft a strategy that is calculated to yield a sustainable competitive advantage
C. Are well-advised to go beyond merely keeping a company's strategic actions within the bounds of what is legal, and consider whether the various pieces of the company's strategy are compatible with ethical standards of "right" and "wrong" and duty – what a company should and should not do
D. Should take the position that any strategy that is legal can be defended as appropriate and well within the company's right to pursue – any notion that managers should have a moral conscience in making strategic choices is totally inappropriate in business situations
E. Should recognize that outsiders have no right to pressure a company to observe so-called moral and ethical standards – there is no validity to the notion that a company's strategy should pass any so-called test of moral scrutiny

In Caan Company it costs $32 per unit ($18 variable and $14 fixed) to make a product

In Caan Company it costs $32 per unit ($18 variable and $14 fixed) to make a product that normally sells for $54. A foreign wholesaler offers to buy 3,482 units at $26 each. Caan will incur special shipping costs of $1 per unit.Required:https://groups.google.com/forum/?fromgroups#!topic/allfinalexam/f_PNB66AdOk
https://groups.google.com/forum/?fromgroups#!topic/allfinalexam/f_PNB66AdOk 
Assuming that Caan has excess operating capacity, indicate the net income (loss) Caan would realize by accepting the special order.
ABE7-3

In August direct labor was 60% of conversion cost. If the manufacturing overhead

In August direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct material cost was $34,000, the direct labor cost was:
a) $36,000
b) $22,667
c) $51,000
d) $81,000

In applying the lower of cost or market method to inventory valuation, market

In applying the lower of cost or market method to inventory valuation, market is defined as:
A. Historical cost
B. Current replacement cost
C. Current sales price
D. FIFO
E. LIFO

In applying the lower of cost or market method to inventory valuation, market is

In applying the lower of cost or market method to inventory valuation, market is defined as:
A. Historical cost
B. Current replacement cost
C. Current sales price
D. FIFO
E. LIFO

In an effort to boost sales in the current year, Roy's Gym has implemented a new program

In an effort to boost sales in the current year, Roy's Gym has implemented a new program where members do not have to pay for their annual membership until the end of the year. The program seems to have substantially increased membership and revenues. Below are year-end amounts.
.
.
.
Required:
1. Do you agree with Arnold's reasoning for not reporting any allowance for future uncollectible accounts?
2. Suppose that similar programs in the past have resulted in uncollectible accounts of approximately 65%. If Arnold uses the allowance method, what should be the balance of allowance for uncollectible accounts at the end of the current year?
3. Based on your answer in Part 2, for what amount will total assets and expenses be misstated in the current year if Arnold uses the direct write-off method?

In a recent period 12,250 units were made and there was a favorable labor

In a recent period 12,250 units were made and there was a favorable labor efficiency variance of $22,500. If 41,000 labor-hours were worked and the standard wage rate was $12 per labor-hour, the standard hours allowed per unit of output is closest to:
a. 3.50
b. 3.19
c. 3.35
d. 6.00

In a process costing system, the number of work-in-process inventory accounts is

In a process costing system, the number of work-in-process inventory accounts is equal to which of the following?

In a process costing system, the journal entry used to record the transfer of

In a process costing system, the journal entry used to record the transfer of units from Department A, a processing department, to Department B, the next processing department, includes a debit to:
a) Work in Process – Department A and a credit to Work in Process – Department B.
b) Work in Process – Department B and a credit to Work in Process – Department A.
c) Work in Process – Department B and a credit to Materials.
d) Finished Goods and a credit to Work in Process – Department B.

In a process costing system, direct labor and manufacturing overhead are normally

In a process costing system, direct labor and manufacturing overhead are normally incurred when?

In a job order cost accounting system, the total balances of all of the job cost

In a job order cost accounting system, the total balances of all of the job cost sheets for unfinished jobs equal the balance in the Work in Process Inventory account.
a) True
b) False

In a contribution format income statement, sales minus cost of goods sold

In a contribution format income statement, sales minus cost of goods sold equal the gross margin.
a) True
b) False

In a contribution format income statement for a merchandising company, cost of

In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement.
a) True
b) False

In a contribution format income statement for a merchandising company

In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement.
a) True
b) False

In a common size income statement, the 100% figure is a net cost of goods

In a common size income statement, the 100% figure is
a. net cost of goods sold.
b. net income.
c. gross profit.
d. net sales.

In 2011, internal auditors discovered that Fay, Inc. had debited an expense

In 2011, internal auditors discovered that Fay, Inc. had debited an expense account for the $700,000 cost of a machine purchased on January 1, 2008. The machine's useful life was expected to be 5 years with no residual value. Straight-line depreciation is used by Fay. The journal entry to correct the error will include a credit to accumulated depreciation of:
a. $140,000.
b. $280,000.
c. $420,000.
d. $700,000.

In 2010, Logan sold 1,000 units at $500 each, and earned net income of $40,000

In 2010, Logan sold 1,000 units at $500 each, and earned net income of $40,000. Variable expenses were $300 per unit, and fixed expenses were $160,000. The same selling price is expected for 2011. Logan's variable cost per unit will rise by 10% in 2011 due to increasing material costs, so they are tentatively planning to cut fixed costs by $10,000. How many units must Logan sell in 2011 to maintain the same income level as 2010?
A) 882
B) 1,000
C) 1,056
D) 1,118

In 2006, the International Dairy Food Association introduced "Body by Milk,

In 2006, the International Dairy Food Association introduced "Body by Milk," which is a program that encourages consumers to buy more milk by letting them bid on goods ranging from T-shirts and hats to musical instruments and cell phones. The bidding is done using UPCs and expiration dates from milk containers. "Body by Milk" is an example of a:
A. directed coupon mailing
B. sweepstakes
C. loyalty marketing program
D. trade sales promotions
E. sampling program

In 2006, Atlanta once again hosted the Peachtree Road Race, a running event

In 2006, Atlanta once again hosted the Peachtree Road Race, a running event that attracts many world-calibre racers. This year race officials also sanctioned a race conducted in Iraq so that soldiers from the state would not have to miss the annual event. The winners of the Mideast race as well as scenes of the actual race were televised. In terms of a promotional mix, this Iraqi Peachtree Race was as example of:
A. advertising and personal selling efforts
B. strategic product promotions and resulting sales
C. a target marketing strategy
D. sales promotion efforts
E. public relations strategy and resulting publicity

Imperial Jewelers is considering a special order for 15 handcrafted gold

Imperial Jewelers is considering a special order for 15 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $401.50 and its unit product cost is $261.00 as shown below:
.
.
.
Required:
(a) What effect would accepting this order have on the company's net operating income if a special price of $361.50 per bracelet is offered for this order? (Input the amount as positive value.
(b) Should the special order be accepted at this price?

Imperial Jewelers is considering a special order for 11 handcrafted gold

Imperial Jewelers is considering a special order for 11 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $410.00 and its unit product cost is $266.00 as shown below:
.
.
.
Required:
(a) What effect would accepting this order have on the company's net operating income if a special price of $370.00 per bracelet is offered for this order? (Input the amount as positive value.
(b) Should the special order be accepted at this price?

ILK has preferred stock selling for 97 percent of par that pays an 8 percent

ILK has preferred stock selling for 97 percent of par that pays an 8 percent annual coupon. What would be ILK's component cost of preferred stock?
Problem 11-5

Ignatius College has provided the following data to be used in its service

Ignatius College has provided the following data to be used in its service department cost allocations:
Service Departments Operating Departments
Administration Physical Undergraduate Graduate
Plant Services Programs Programs
Departmental costs before allocations $ 2,070,000 $ 720,000 $ 23,650,000 $ 2,980,000
Student credit-hours 40,000 5,000
Space occupied in square feet 30,000 5,000 250,000 50,000
Required:
Using the direct method, allocate the costs of the service departments to the two operating departments. Allocate the costs of the Administration Department on the basis of student credit-hours and the costs of the Physical Plant Services Department on the basis of space occupied.

If, while taking a physical inventory, the company counts their inventory

If, while taking a physical inventory, the company counts their inventory figures more than the actual amount. How will the error affect their bottom line?
a. No change to net income.
b. Net income will be overstated
c. Net income will be understated.
d. Only gross profit will be affected.

If you wanted to withdraw $19,000 from a bank account at the end of each of the

If you wanted to withdraw $19,000 from a bank account at the end of each of the next 10 years, approximately how much would you have to invest in the account today assuming a 5% interest rate?
a) $30,945
b) $118,560
c) $33,130
d) $146,718

If you wanted to withdraw $18,000 from a bank account at the end of each

If you wanted to withdraw $18,000 from a bank account at the end of each of the next 10 years, approximately how much would you have to invest in the account today assuming a 6% interest rate?
a) $32,258
b) $31,386
c) $132,480
d) $112,320

If you deposit $10,000 in a bank account that pays 10% interest annually

If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
Question 2-1

If two companies have the same total sales and total expenses and make the

If two companies have the same total sales and total expenses and make the same product, the volatility of net operating income with changes in sales will tend to be greater in the company with a higher proportion of fixed expenses in its cost structure
a) True
b) False

If total liabilities are $7,000 and owner’s equity is $15,000, the total assets

If total liabilities are $7,000 and owner’s equity is $15,000, the total assets must be:
A) $8,000
B) $22,000
C) $23,000
D) $40,000

If there is an advance in the technology used to produce a product

If there is an advance in the technology used to produce a product, what is the likely effect it may have on the supply?
A. More people would be needed to produce the product.
B. It would decrease the supply.
C. The company would not change its manufacturing.
D. It would increase the supply.

If the price elasticity of demand is very elastic, which of the following could be

If the price elasticity of demand is very elastic, which of the following could be a possible value of the elasticity?

If the price elasticity of demand is 0.5, this means that a ________ increase

If the price elasticity of demand is 0.5, this means that a ________ increase in price causes a ________ decrease in quantity demanded.

If the prepaid rent account before adjustment at the end of the month has a

If the prepaid rent account before adjustment at the end of the month has a debit balance of $2,800, representing a payment made on the first day of the month, and if the monthly rent was $700, the amount of prepaid rent that would appear on the balance sheet at the end of the month, after adjustment, is
a) $700
b) $1,400
c) $2,100
d) $3,500

If the number of units produced exceeds the number of units sold

If the number of units produced exceeds the number of units sold, then net operating income under absorption costing will:
a) Be equal to the net operating income under variable costing.
b) Be greater than net operating income under variable costing.
c) Be equal to the net operating income under variable costing plus total fixed manufacturing costs.
d) Be equal to the net operating income under variable costing less total fixed manufacturing costs.

If the fixed expenses increase in a company, and all other factors remain unchanged

If the fixed expenses increase in a company, and all other factors remain unchanged, then one would expect the margin of safety to decrease.
a) True
b) False

If the expected level of activity is appreciably above or below the company's

If the expected level of activity is appreciably above or below the company's present capacity, it may be desirable to adjust fixed costs in the budget.
a) True
b) False

If the estimated rate of gross profit is 40%, what is the estimated cost of the

If the estimated rate of gross profit is 40%, what is the estimated cost of the merchandise inventory on June 30, based on the following data?
June 1 Merchandise inventory $75,000
June 1-30 Purchases (net) 150,000
June 1-30 Sales (net) 135,000
a. $144,000
b. $140,000
c. $ 81,000
d. $ 54,500

If the ending inventory is overstated, A) Gross profit is overstated

If the ending inventory is overstated,
A) Gross profit is overstated.
B) Cost of goods sold is overstated.
C) Gross profit is understated.
D) None of these answers are correct.

If the direct write-off method of accounting for uncollectible receivables is

If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
a. Uncollectible Accounts Payable
b. Accounts Receivable
c. Allowance for Doubtful Accounts
d. Bad Debt Expense

If the denominator activity (in hours) used to compute the predetermined overhead

If the denominator activity (in hours) used to compute the predetermined overhead rate is equal to the actual activity (in hours) for the period, then there is no volume variance.
a. True
b. False

If the bond contract rate is less than the market yield rate, the bonds will be

If the bond contract rate is less than the market yield rate, the bonds will be issued at:
A. Call
B. Discount
C. Market
D. Premium
E. None of the above

If the beginning balance of Retained Earnings equals $10,000, net income for the year

If the beginning balance of Retained Earnings equals $10,000, net income for the year equals $6,000, and dividends for the year equal $2,000, then the ending balance of Retained Earnings equals $18,000.
A. TRUE
B. FALSE

If the actual labor hours worked exceed the standard labor hours allowed

If the actual labor hours worked exceed the standard labor hours allowed, what type of variance will occur?
a) Favorable labor efficiency variance.
b) Favorable labor rate variance.
c) Unfavorable labor efficiency variance.
d) Unfavorable labor rate variance.

If scheduling delays occur, and a particular job must be worked on during an

If scheduling delays occur, and a particular job must be worked on during an overtime period, the overtime premium cost would most likely be charged to:
A. manufacturing overhead
B. work in process
C. finished goods inventory.
D. the job worked on during the overtime period.

If sales are $525,000, variable costs are 64% of sales, and operating income

If sales are $525,000, variable costs are 64% of sales, and operating income is $50,000, what is the contribution margin ratio?
A. 36%
B. 26.5%
C. 9.5%
D. 64%

If obsolete or damaged goods can be sold, they will be included in inventory at

If obsolete or damaged goods can be sold, they will be included in inventory at their net realizable value.
a) True
b) False

If net sales are $200,000 and cost of sales is $120,000 the gross profit percentage

If net sales are $200,000 and cost of sales is $120,000 the gross profit percentage is:
a. 40%
b. 60%
c. 120%
d. none of the above

If manufacturing overhead applied exceeds the actual manufacturing overhead

If manufacturing overhead applied exceeds the actual manufacturing overhead costs of the period, then manufacturing overhead is over-applied.
A. True
B. False

A project has a required return of 14.25 percent. The project’s initial cost

A project has a required return of 14.25 percent. The project’s initial cost is $13,000 and its cash flows are: year 1 = $3,800, year 2 = $8,000, and year 3 = $5,000. What is the project’s IRR?
a. 13.40 percent
b. 13.72 percent
c. 14.25 percent
d. 14.48 percent

Last year, you purchased a stock for $43 a share. Today, you sold this

Last year, you purchased a stock for $43 a share. Today, you sold this stock for $44.29 per share. What was the dividend yield if your total return on this stock was 5.26 percent?
a. 0.18 percent
b. 1.64 percent
c. 2.26 percent
d. 2.87 percent

2. Today, you sold 400 shares of Brown’s Movers stock at a price of $14.20 a share. The stock pays dividends of $0.20 per share per year. You bought these shares one year ago at a total cost of $6,520. What is the dollar amount of your total return on this investment?
a. -$760
b. -$320
c. $120
d. $430

3. Which one of the following statements is correct regarding the historical record for 1926-2008?
a. U.S. Treasury bills had a constant annual rate of return which is why they are referred to as risk-free.
b. U.S. Treasury bills outperformed both long-term government and long-term corporate bonds.
c. U.S. Treasury bills had a positive rate of return each and every year.
d. The average annual rate of inflation exceeded the average annual return on U.S. Treasury bills.

4. Over the past ten years, a stock had an average annual rate of return of 11.6 percent, while T-bills returned 4.8 percent and inflation averaged 4.2 percent. What was the average risk premium on this stock?
a. 2.6 percent
b. 4.3 percent
c. 6.8 percent
d. 7.4 percent

5. Assume long-term corporate bonds earned an average return of 6.97 percent over a 3-year period. Also assume the return on U.S. Treasury bills was 3.34 percent and inflation was 2.87 percent for the 3-year period. What was the real rate of return on long-term corporate bonds for the period?
a. 3.51 percent
b. 3.63 percent
c. 3.84 percent
d. 3.99 percent

6. A stock had annual returns of 11.4 percent, 10.3 percent, -18.4 percent, and 2.2 percent over the past 4 years, respectively. What is the geometric average rate of return for the period?
a. 0.61 percent
b. 1.38 percent
c. 2.49 percent
d. 2.87 percent

7. Over the past 4 years, a stock produced annual returns of 11 percent, 16 percent, 8 percent, and -21 percent. What is the standard deviation of these returns?
a. 2.78 percent
b. 8.91 percent
c. 13.56 percent
d. 16.66 percent

8. Which one of the following statements is true as of the end of 2008?
a. The DJIA has never declined by more than 25 percent in any one day.
b. There were multiple days in 2008 when the DJIA declined by more than 5 percent.
c. The largest single-day percentage decline in the DJIA occurred in 2008.
d. The top 5 largest daily declines in the DJIA all occurred during the late 1920s and early 1930s.

9. Which one of the following statements is correct?
a. In a truly efficient market, the risk premium on all stocks will be the same.
b. In a truly efficient market, prices will remain stable over time.
c. The stock market risk premium varies from one country to another.
d. Insider trading can only occur if the stock market is weak form efficient.

Last year, you purchased 200 shares of stock for $3,400. The stock pays

Last year, you purchased 200 shares of stock for $3,400. The stock pays an annual dividend of $0.04 per share. Today, you sold your shares for $3,740. What is your total percentage return on this investment?
a. 9.89 percent
b. 10.00 percent
c. 10.13 percent
d. 10.24 percent

2. You sold 400 shares of stock today for $38.20 a share. You bought those shares one year ago at a total cost of $15,000. Your percentage return on this investment was 5.70 percent. What is the amount of the dividend income you received on this investment?
a. $460
b. $540
c. $575
d. $855

3. Which one of the following had the largest risk premium for the period of 1926-2008?
a. long-term corporate bonds
b. small-company stocks
c. large-company stocks
d. U.S. Treasury bills

4. Which one of the following represents the average return on long-term corporate bonds over the period 1926-2008?
a. 3.8 percent
b. 6.2 percent
c. 11.7 percent
d. 13.4 percent

5. Assume large-company stocks earned 11.4 percent over a period of years. Over that same period, the risk-free rate was 3.6 percent and the inflation rate was 3.2 percent. What was the risk premium on large-company stocks during this time period?
a. 7.4 percent
b. 7.8 percent
c. 8.2 percent
d. 4.6 percent

6. Over the past 5 years, Buster’s had annual returns of 5.4 percent, -19.2 percent, 21.2 percent, 14.6 percent, and -2.1 percent. What is the geometric average rate of return?
a. -1.03 percent
b. -2.80 percent
c. 1.03 percent
d. 2.98 percent

7. A company had annual returns of 16 percent, 9 percent, -4 percent, and 13 percent over the past 4 years. What is the standard deviation of the returns for this period?
a. 7.63 percent
b. 8.81 percent
c. 13.46 percent

8. Over the past year, you earned a return of 13.6 percent on your investments. During that period, the inflation rate was 4.8 percent and the risk-free rate of return was 5.1 percent. What actual real rate of return did you earn?
a. 8.40 percent
b. 8.50 percent
c. 8.85 percent
d. 8.09 percent

9. No one could ever be sent to jail for profiting from insider trading if the market was which form of efficient?
a. weak
b. semi-weak
c. semi-strong
d. strong

Which one of the following is the definition of a sunk cost

Which one of the following is the definition of a sunk cost?
a. the most valuable alternative that is given up when an investment is undertaken
b. current sales that are lost when a new product is added
c. money spent that cannot be recouped
d. decrease in sales due to a decline in the economy

2. Which one of the following is the best formula to use to determine the after tax salvage value of a fixed asset?
a. (selling price – initial cost)  (1 – tax rate)
b. selling price  tax rate
c. market value + (book value – market value)  (1 – tax rate)
d. market value + (market value – book value)  (1 – tax rate)

3. Which one of the following will increase the operating cash flow of a project?
a. decrease in sales revenue
b. decrease in the pretax salvage value
c. increase in the variable cost per unit
d. increase in the depreciation expense

4. A project has sales of $538,000, costs of $406,000, and depreciation of $61,000. The tax rate is 35 percent. What is the OCF according to the tax shield approach?
a. $85,800
b. $94,750
c. $107,150
d. $118,500

5. A firm has accounts receivable of $26,000, inventory of $38,000, and accounts payable of $21,000. If a new project is accepted, the estimated values are projected to be accounts receivable of $31,000, inventory of $29,000, and accounts payable of $24,000. What is the project’s initial net working capital cash flow?
a. outflow of $4,000
b. outflow of $1,000
c. inflow of $3,000
d. inflow of $7,000

6. The 3-year MACRS depreciation allowances are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. What is the depreciation expense in year 2 for an asset with an initial cost of $87,000?
a. $25,782.29
b. $32,406.18
c. $38,671.50
d. $41,222.02

7. Brent’s Kar Kare is analyzing a new product. The estimated sales for the first year are 215 units at a price of $79 a unit. The fixed costs for the year are $3,920 and the variable cost per unit is $51. The depreciation expense is $1,200 and the tax rate is 34 percent. What is the value of the depreciation tax shield?
a. $408
b. $521
c. $1,337
d. $1,794

8. A 5-year project requires the initial purchase of a $345,000 machine. This machine has a 6-year life and will be depreciated straight-line to zero. At the end of the project, the equipment can be sold for $79,000. The tax rate is 35 percent. What is the after tax salvage value?
a. $68,500
b. $71,475
c. $78,875
d. $86,525


9. The Tire Store expects to sell 2,800 sets of tires, plus or minus 3 percent, next year. The estimated sales price is $579, plus or minus 4 percent. What is the anticipated annual revenue under the best case scenario?
a. $1,603,043
b. $1,736,629
c. $1,509,661
d. $1,638,707

10. Gloria’s is reviewing a project with projected sales of 895 units a year, plus or minus 5 percent. The estimated sales price is $79 a unit, plus or minus 3 percent. Variable costs are estimated at $42 a unit, plus or minus 2 percent, and the fixed costs are $19,000, plus or minus $500. What are the estimated total costs under the worst case scenario?
a. $55,924.71
b. $36,424.71
c. $34,996.29
d. $40,258.89

Which one of the following is the best example of a sunk cost

Which one of the following is the best example of a sunk cost?
a. Angelo’s decided to accept project A rather than project B.
b. Burt’s spent $18,000 last year patching potholes in its parking lot caused by a severe winter frost.
c. Lester’s added desserts to its menu which caused its sandwich sales to increase.
d. A new fish sandwich was added to a menu and as a result hamburger sales declined.

2. Which one of the following terms refers to the possibility that errors in projected cash flows will cause managers to make incorrect decisions?
a. erosion
b. forecasting risk
c. opportunity cost
d. sunk cost

3. Richard’s Market has projected net income of $38,000 and taxes of $4,100 for the year. Which one of the following will increase this firm’s operating cash flow?
a. increase in tax rates
b. increase in the depreciation expense
c. sales decrease
d. decrease in interest expense

4. The MACRS depreciation allowances on 3-year property are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. What is the amount of the depreciation in year 2 for 3-year property with an initial cost of $64,000?
a. $18,966.28
b. $22,225.00
c. $28,448.00
d. $30,514.91

5. The Grist Mill estimates it can sell 600 pairs of shoes a year, plus or minus 2 percent. It also estimates the variable cost at $31 per pair, plus or minus 3 percent. What is the expected total annual variable costs under the worst case scenario?
a. $17,681.16
b. $18,774.84
c. $19,204.14
d. $19,541.16

6. The Picture Gallery has compiled the following estimates. The gallery feels it can sell 240 paintings a year, plus or minus 4 percent. The selling price is $1,100, plus or minus 2 percent. The annual fixed costs are $57,000 and the variable costs are $780 per painting. The costs are accurate within a plus or minus 3 percent range. The tax rate is 33 percent and the annual depreciation expense is $2,100. What is the operating cash flow under the best case scenario?
a. $20,415.80
b. $21,311.09
c. $22,655.27
d. $24,755.27

7. Adding which of the following to the analysis of a proposed project will increase the NPV of that project?
a. option to expand
b. option to wait
c. option to abandon
d. options to expand, wait, and abandon

8. Which one of the following terms is used to describe the process where a single variable, such as variable cost per unit, is analyzed to determine its effect on a project’s outcome?
a. contingency planning
b. scenario analysis
c. soft rationing
d. sensitivity analysis

9. The Towne Diner currently serves 387 adult dinners each week and another 46 children’s dinners. The average price is $14 per adult meal and $5 per child’s meal. The Diner is considering offering a senior’s meal for $12. A marketing group has estimated that adding the senior’s meal would change the weekly meals sold to 345 adult, 65 senior, and 40 children’s meals. What is the amount of the weekly revenue that should be used when analyzing the addition of the senior’s meal?
a. $162
b. $222
c. $618
d. $780
10. Frank’s is analyzing a 6-year project that requires $578,000 in equipment to start the project. This cost will be depreciated on a straight-line basis to a zero book value over the life of the project. At the end of the project, this equipment is expected to have an aftertax salvage value of $123,000. The projected annual sales are $729,000 and the combined annual fixed and variable costs are $598,000. The tax rate is 35 percent. The project will reduce the firm’s inventory by $34,000 over the life of the project. What is the project’s initial cash flow?
a. -$544,000
b. -$563,000
c. -$578,000
d. -$612,000

Which one of the following has to occur if the NPV of an independent project is

Which one of the following has to occur if the NPV of an independent project is positive?
a. The payback period will exceed the life of the project.
b. The AAR will equal the IRR.
c. The PI will be greater than 1.0.
d. The IRR will be less than the required return.

2. The MIRR is designed specifically for which one of the following types of situations?
a. mutually exclusive projects
b. projects with unconventional cash flows
c. projects with perpetual cash flows
d. projects with differing initial costs

3. Which one of the following methods of analysis is geared more to accounting than to finance?
a. PI
b. NPV
c. payback
d. AAR

4. A project has an initial cost of $42,600 and cash inflows of $11,800 a year for 4 years. What is the NPV if the required return is 11 percent?
a. -$5,991.14
b. -$2,868.22
c. $411.15
d. $1,008.18

5. A project has an initial cost of $24,000, which will be depreciated straight-line to zero over the 4-year life of the project. The annual net income for each of the 4 years is $1,700, $2,100, $2,500, and $4,600. The required return is 13 percent. What is the AAR?
a. 8.87 percent
b. 11.35 percent
c. 17.82 percent
d. 22.71 percent

6. Gates Supply is considering purchasing some new equipment at a cost of $163,000. The equipment has a 3-year life and is expected to produce cash inflows of $46,000 in year 1, $87,000 in year 2, and $123,000 in year 3. The equipment will be depreciated using straight-line depreciation to a zero book value over the life of the project. What is the payback period?
a. 2.06 years
b. 2.24 years
c. 2.67 years
d. 3.11 years

7. You just analyzed a proposed project and came to the following conclusions. Which one of these conclusions is inconsistent with your other findings?
a. The NPV is $499.
b. The project should be accepted according to the IRR rule.
c. The project will pay back within its lifetime.
d. The PI is 0.98.


8. Kurt’s Drug Store is considering a $556,000 project. The project is expected to produce annual
cash inflows of $213,000 in year 1, $228,000 in year 2, and $329,000 in year 3. What is the project’s net present value if the discount rate is 14.5 percent?
a. $16,233.33
b. $17,006.38
c. $19,123.32
d. $23,105.09


9. Ralson’s is analyzing a project with projected cash flows of $48,000 in year 1, $52,000 in
year 2, $58,000 in year 3, and $61,000 in year 4. What is the PI of the project if the required return is 13.75 percent and the initial cash outlay is $152,500?
a. 0.93
b. 0.96
c. 1.04
d. 1.07

10. You are considering two mutually exclusive projects. Project A has a net present value of $11,507 and an IRR of 12.28 percent. Project B has a net present value of $10,208 and an IRR of 13.64 percent. Which project(s) should be accepted?
a. project A only
b. project B only
c. both A and B
d. neither A nor B

Which one of the following projects should you accept

Which one of the following projects should you accept?
a. A project with an IRR of 11.6 percent and a required return of 11.5 percent.
b. A project with an NPV of -$3,091.
c. A project with a PI of 0.87.
d. A project with a payback period of 2.6 years and a required period of 2.5 years.

2. What do you know for certain about two mutually exclusive projects if their NPVs both plot exactly at the crossover point on an NPV profile graph?
a. Both projects have a zero NPV.
b. Neither project is acceptable.
c. Both projects should be accepted.
d. You are indifferent between the two projects.

3. Which one of the following must equal zero if a project’s IRR is used as the discount rate for the project?
a. PI
b. payback period
c. AAR
d. NPV

4. A project has an initial cost of $16,000 and a 4-year life. The cash inflows are: year 1 = $7,000, year 2 = $8,400, year 3 = $3,600, and year 4 = $3,000. What is the value of the PI if the required return is 12 percent?
a. 0.88
b. 0.96
c. 1.09
d. 1.24


5. Winter Wear is considering a 5-year project with an initial cost of $211,000. The project will produce cash inflows of $56,500 a year over the life of the project . What is the net present value if the required rate of return is 15.8 percent?
a. -$32,407.16
b. -$25,136.01
c. $28,874.31
d. $31,406.17


6. Which one of the following methods of analysis is most suited to analyzing mutually exclusive projects with differing initial costs?
a. PI
b. AAR
c. IRR
d. NPV

7. The Candy Hut is considering a project with an initial cost of $6,500. The project will produce cash flows of: $2,000 in year 1, $2,200 in year 2, $2,400 in year 3, and $2,500 in year 4. What is the payback period?
a. 2.87 years
b. 2.96 years
c. 3.47 years
d. 3.96 years

8. You are considering two mutually exclusive projects. Project A costs $3.6 million, has a required return of 14.5 percent, and an IRR of 14.3 percent. Project B costs $4.1 million, has a required return of 16 percent, and an IRR of 15.6 percent. Which project(s) should be accepted?
a. project A only
b. project B only
c. both A and B
d. neither A nor B


9. A project produces cash inflows of $7,200 a year for 3 years. The PI is 1.02 at a discount rate of 14 percent.What is the initial cost of the project?
a. $15,887.78
b. $16,109.98
c. $16,387.99
d. $17,202.10

Which one of the following statements is correct? a The NYSE is a dealer

Which one of the following statements is correct?
a. The NYSE is a dealer market.
b. Staggering increases the ability of minority shareholders to elect a director under cumulative voting.
c. The total return is equal to the capital gains yield minus the dividend yield.
d. If you sell a stock to a dealer you will receive the bid price.

2. Morning Coffee, Inc. has 90,000 shares of stock outstanding and 4 open positions on its board of directors. Each share of stock is entitled to one vote and the firm uses cumulative voting. How many shares of stock do you need to own to guarantee your election to the board assuming no one else votes for you?
a. 37,501 shares
b. 23,001 shares
c. 18,001 shares
d. 22,501 shares

3. Which one of the following functions as a market maker on the floor of the NYSE?
a. floor trader
b. floor broker
c. commission broker
d. specialist

4. The 6 percent preferred stock of Marley Enterprises is currently selling for $51 a share. What is the nominal rate of return on this stock if the par value is $100 per share?
a. 13.06 percent
b. 14.92 percent
c. 11.76 percent
d. 12.48 percent

5. The Global Market will pay an annual dividend of $1.46 per share next year. The stock has a current market price of $48 and a dividend growth rate of 2.4 percent. What is the rate of return on this stock?
a. 5.44 percent
b. 5.67 percent
c. 6.01 percent
d. 6.28 percent

6. Furniture and More just paid an annual dividend of $2.60 a share. The company plans on increasing its dividend by 2 percent, 3 percent, and 4 percent a year for the next 3 years, respectively. After that, the growth rate will be held constant at 2.5 percent per year. What is one share of this stock worth to you today if you require a 16 percent rate of return?
a. $16.67
b. $19.95
c. $17.46
d. $18.05

7. Blasco Foods just paid an annual dividend of $1.65 per share. The firm plans to reduce this dividend by 4 percent annually. What is one share of this stock worth today if the required return is 15 percent?
a. $8.34
b. $8.67
c. $15.00
d. $15.60

8. Pop’s just paid an annual dividend of $0.60 a share. The stock is currently selling for $22 a share and has a growth rate of 3.1 percent. What is the dividend yield?
a. 2.81 percent
b. 2.90 percent
c. 3.37 percent
d. 3.42 percent

9. Which one of the following markets deals only with newly issued shares of stock?
a. NYSE
b. NASDAQ
c. primary
d. secondary

10. The Blue Plate has 43,000 shares of stock outstanding. Company sales for the year are $2.2 million and the profit margin is 4.8 percent. What is the current value of the stock if the price-earnings ratio is 8.4?
a. $20.63
b. $22.20
c. $25.15
d. $25.97

You currently own 3 percent of the 16,000 shares of outstanding stock in Ultimate

You currently own 3 percent of the 16,000 shares of outstanding stock in Ultimate Interiors. This year, there are 3 open seats on the board of directors and you want to win one of those seats. Assume each share of stock is granted one vote, the firm uses cumulative voting, and no one else votes for you. How many additional shares must you purchase to ensure your election to the board?
a. 2,100 shares
b. 2,809 shares
c. 3,521 shares
d. 4,854 shares

2. Which one of the following trades on the floor of an exchange solely for his or her own account?
a. floor trader.
b. floor broker.
c. specialist
d. commission broker

3. Jensen Shipping has a company policy of increasing its dividend by 3 percent annually. What will the annual dividend for this firm be 5 years from today if next year’s dividend will be $1.40 per share?
a. $1.53
b. $1.58
c. $1.62
d. $1.67

4. Golden Globe, Inc.’s 6 percent preferred stock is selling for $72 a share while the par value per share is $100. What is the rate of return on this stock?
a. 4.32 percent
b. 6.00 percent
c. 7.63 percent
d. 8.33 percent

5. Six years ago, The Oak Ridge Company paid $0.80 a share in dividends. This year, the dividends are $1.48 a share. What is the average dividend growth rate?
a. 2.67 percent
b. 4.33 percent
c. 7.79 percent
d. 10.80 percent

6. Better Built Homes stock is selling for $28 a share and has a current dividend yield of 1.2 percent. What is the amount of the last dividend paid if the dividend growth rate is 3.2 percent?
a. $0.33
b. $0.35
c. $0.37
d. $0.42

7. Dixie Hardware paid a dividend of $1.20 per share last year and has a policy of increasing its dividend by 2.5 percent annually. How much are you willing to pay to purchase one share of this stock considering that you require a 14 percent rate of return?
a. $10.43
b. $10.70
c. $10.96
d. $11.27

8. The Toy Store pays a constant annual dividend of $2.10 a share. The firm’s stock is selling for
$48.90 a share and has a market return of 15.4 percent. What is the capital gains yield?
a. 10.67 percent
b. 11.11 percent
c. 13.56 percent
d. 13.84 percent

9. Yorktowne Pharmacy recently announced that it will pay annual dividends of $0.80, $0.92, and $1.10 a share over the next three years, respectively. After that, the firm plans to increase its dividend by 3 percent annually. What is one share of this stock worth to you today if you require a 12 percent rate of return?
a. $11.19
b. $11.81
c. $12.11
d. $12.46

10. Which one of the following statements is correct?
a. The preemptive right grants an individual the right to vote on behalf of a shareholder.
b. Dividends become a liability of the firm on the date of payment.
c. The stated value of most preferred stock is $1,000 per share.
d. A market maker on the floor of an exchange is called a specialist.

If Jessie Sod’s hourly wage is $8.00, and she worked 35 hours during the week

If Jessie Sod’s hourly wage is $8.00, and she worked 35 hours during the week, what is her gross pay for the week?
A) $280
B) $320
C) $300
D) $250

If Jeff worked 55 hours, how many hours of overtime will Jeff earn

If Jeff worked 55 hours, how many hours of overtime will Jeff earn?
A) 20
B) 10
C) 5
D) 15

If fixed costs are $1,400,000, the unit selling price is $220, and the unit

If fixed costs are $1,400,000, the unit selling price is $220, and the unit variable costs are $120, what is the amount of sales required to realize an operating income of $200,000?
A. 14,000 units
B. 12,000 units
C. 16,000 units
D. 13,333 units

If equity is $300,000 and liabilities are $192,000, then assets equal

If equity is $300,000 and liabilities are $192,000, then assets equal:
a) $108,000.
b) $192,000.
c) $300,000.
d) $492,000.
e) $792,000.

f an arbitrage opportunity exists, an investor can act quickly in the hope of making

If an arbitrage opportunity exists, an investor can act quickly in the hope of making a risk-free profit.
a. True
b. False

If a purchaser returns goods purchased on credit to the supplier, under a

If a purchaser returns goods purchased on credit to the supplier, under a perpetual inventory system the purchaser would:
a. debit inventory and credit accounts payable
b. debit accounts receivable and credit inventory
c. debit accounts payable and credit inventory
d. debit inventory and credit accounts receivable

If a product has a large number of excellent substitutes, demand for the product

If a product has a large number of excellent substitutes, demand for the product is most likely to be:

If a parcel of land that was originally acquired for $85,000 is offered for sale

If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:
A. $95,000
B. $137,000
C. $138,500
D. $140,000
E. $150,000

If a parcel of land that was originally acquired for $85,000 is offered for

If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:
a) $95,000.
b) $137,000.
c) $138,500.
d) $140,000.
e) $150,000.

If a manager is not able to meet the budget and it has been--------------,

If a manager is not able to meet the budget and it has been--------------, the manager can always say that the budget was unreasonable or unrealistic to start with, and therefore was impossible to meet.

If a manager is not able to meet the budget and it has been--------------, the manager

If a manager is not able to meet the budget and it has been--------------, the manager can always say that the budget was unreasonable or unrealistic to start with, and therefore was impossible to meet.

If a gain of $9,000 is incurred in selling (for cash) office equipment having a

If a gain of $9,000 is incurred in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is
a. $46,000
b. $9,000
c. $55,000
d. $64,000

If a company uses the external resource approach, which of the following goals will

If a company uses the external resource approach, which of the following goals will it consider most important?
A. Reducing conflict
B. Raising stock price
C. Increasing the rate of product innovation
D. Reducing production costs

If a company has expenses that are more than revenues, the net loss decreases

If a company has expenses that are more than revenues, the net loss decreases retained earnings.
A. True
B. False

If a company applies overhead to jobs on the basis of a predetermined overhead rate

If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that:
a) more overhead cost has been charged to jobs than has been incurred during the period.
b) more overhead cost has been incurred during the period than has been charged to jobs.
c) the amount of overhead cost charged to jobs is greater than the estimated cost for the period.
d) the amount of overhead cost charged to jobs is less than the estimated overhead cost for the period.

Identify whether a debit or credit is needed to record the indicated change

Identify whether a debit or credit is needed to record the indicated change.
a. To increase Store Equipment
b. To increase Land
c. To decrease Cash
d. To increase Utilities Expense
e. To increase Fees Earned
f. To decrease Unearned Revenue
g. To decrease Prepaid Insurance
h. To increase Notes Payable
i. To decrease Accounts Receivable
j. To increase common stock

Identify the normal balance (debit or credit) for each of the following accounts

Identify the normal balance (debit or credit) for each of the following accounts.
a. Equipment
b. Wages Expense
c. Repair Services Revenue
d. Office Supplies
e. Dividends
f. Accounts Receivable
g. Prepaid Insurance
h. Wages Payable
i. Common stock

Identify the financial statement(s) where each of the following items appears

Identify the financial statement(s) where each of the following items appears. Use I for income statement, E for statement of retained earnings, and B for balance sheet. a. Accounts payable
b. Cash
c. Rent expense
d. Office supplies
e. Prepaid insurance
f. Revenue
g. Office equipment
h. Cash dividends
i. Unearned rent revenue

Identify the area of accounting that is most involved in each of the following

Identify the area of accounting that is most involved in each of the following responsibilities: Responsibilities
1. Reviewing reports for SEC compliance.
2. Planning transactions to minimize taxes.
3. Investigating violations of tax laws.
4. Preparing external financial statements.
5. Budgeting.
6. Cost accounting.
7. External auditing.
8. Internal auditing.

Iacopi Corporation is a wholesaler that sells a single product. Management has

Iacopi Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $172.50 per unit.
Sales volume (units) 4,000 5,000
Cost of sales $307,600 $384,500
Selling and administrative costs $321,200 $337,000
The best estimate of the total contribution margin when 4,300 units are sold is:
a) $343,140
b) $65,790
c) $121,260
d) $411,080

Huntsville Company reported a $4,000 unfavorable direct labor price variance

Huntsville Company reported a $4,000 unfavorable direct labor price variance and a $1,500 favorable direct labor usage variance. Select the incorrect statement from the following.
A. The standard direct labor rate must have exceeded the actual direct labor rate.
B. It took the employees less time to produce the outputs than expected.
C. The total direct labor variance is $2,500 unfavorable.
D. It is possible that the supervisor attempted to use more highly skilled (and paid) employees than allowed for by the direct labor standards.

Huntsville Company reported a $4,000 unfavorable direct labor price variance

Huntsville Company reported a $4,000 unfavorable direct labor price variance and a $1,500 favorable direct labor usage variance. Select the incorrect statement from the following.
A. The standard direct labor rate must have exceeded the actual direct labor rate.
B. It took the employees less time to produce the outputs than expected.
C. The total direct labor variance is $2,500 unfavorable.
D. It is possible that the supervisor attempted to use more highly skilled (and paid) employees than allowed for by the direct labor standards.

Humphrey, Inc. is considering purchasing equipment costing $30,000 with a 6-year

Humphrey, Inc. is considering purchasing equipment costing $30,000 with a 6-year useful life. The equipment will provide cost savings of $7,300 and will be depreciated straight-line over its useful life with no salvage value. Humphrey, Inc. requires a 10% rate of return.
Present Value of an Annuity of 1
Period 8% 9% 10% 11% 12% 15%
6 4.623 4.486 4.355 4.231 4.111 3.784
What is the approximate net present value of this investment?
A) $13,800
B) $1,792
C) $886
D) $2,748

Hue Company uses the perpetual inventory system and allows customers to use two

Hue Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Omni Bank Card, Hue receives an immediate credit to its account when it deposits sales receipts. Omni assesses a 4% service charge for credit card sales. The second credit card that Hue accepts is the Continental Card. Hue sends its accumulated receipts to Continental on a weekly basis and is paid by Continental about a week later. Continental assesses a 2.5% charge on sales for using its card.
Required:
Prepare journal entries to record the following selected credit card transactions of Hue Company.
Apr. 8 Sold merchandise for $6,600 (that had cost $4,877) and accepted the customer’s Omni Bank Card. The Omni receipts are immediately deposited in Hue’s bank account.
Apr. 12 Sold merchandise for $4,000 (that had cost $2,592) and accepted the customer’s Continental Card. Transferred $4,000 of credit card receipts to Continental, requesting payment.
Apr. 20 Received Continental's check for the April 12 billing, less the service charge.

How will the following adjusting journal entry affect the accounting

How will the following adjusting journal entry affect the accounting equation?
Unearned Subscriptions $11,500
Subscriptions earned $11,500
A. Decrease liabilities, increase revenues
B. Increase assets, increase revenues
C. Increase liabilities, increase revenues
D. Decrease liabilities, decrease revenues

How often is a 940 filed? A) Quarterly B) Annually

How often is a 940 filed?
A) Quarterly
B) Annually
C) During an eight-month period
D) All of these answers are correct.

How much would you have to invest today in the bank at an interest rate of 12%

How much would you have to invest today in the bank at an interest rate of 12% to have an annuity of $4,000 per year for 5 years, with nothing left in the bank at the end of the 5 years? Select the amount below that is closest to your answer.
a) $20,000
b) $2,172
c) $14,420
d) $17,699

How much would you have to invest today in the bank at an interest rate of

How much would you have to invest today in the bank at an interest rate of 12% to have an annuity of $4,000 per year for 5 years, with nothing left in the bank at the end of the 5 years? Select the amount below that is closest to your answer.
a) $20,000
b) $2,172
c) $14,420
d) $17,699

ow much would you have to invest today in the bank at an interest rate of 10%

How much would you have to invest today in the bank at an interest rate of 10% to have an annuity of $4,600 per year for 6 years, with nothing left in the bank at the end of the 6 years? Select the amount below that is closest to your answer.
a) $27,600
b) $20,354
c) $2,498
d) $20,033

How many acceptable approaches are there for changes in accounting principles

How many acceptable approaches are there for changes in accounting principles?
a. One
b. Two
c. Three
d. Four

How is the predetermined manufacturing overhead rate used to allocate

How is the predetermined manufacturing overhead rate used to allocate manufacturing overhead calculated?

How is depreciation handled by the following capital budgeting techniques

How is depreciation handled by the following capital budgeting techniques?
Internal Rate of Return Simple Rate of Return Payback
A) Excluded Included Excluded
B) Included Excluded Included
C) Excluded Excluded Included
D) Included Included Excluded
a) Choice A
b) Choice B
c) Choice C
d) Choice D

How is annual cash inflow determined? A) Depreciation is subtracted from net

How is annual cash inflow determined?
A) Depreciation is subtracted from net income because it is an expense.
B) Depreciation is added back to net income because it is not an outflow of cash.
C) Depreciation is subtracted from net income because it is an outflow of cash.
D) Depreciation is added back to net income because it is an inflow of cash.

How do public relations professionals use Internet Web sites? A to introduce

How do public relations professionals use Internet Web sites?
A. to introduce new products
B. to promote existing products
C. to obtain consumer feedback
D. to showcase upcoming events
E. to do all of these things

How are amortization and depreciation similar? A They are both methods of

How are amortization and depreciation similar?
A. They are both methods of adjusting the cost of an asset to its market value.
B. They are both applications of the matching concept.
C. Their calculations always involve allocations based on time.
D. They are methods of recognizing the cash used in maintaining an asset.

Horton Company applies overhead based on direct labor hours At the beginning

Horton Company applies overhead based on direct labor hours. At the beginning of 20x1, the company estimated that manufacturing overhead would be $500,000, and direct labor hours would be 10,000. Actual overhead by the conclusion of 20x1 amounted to $400,000. On the basis of this information, Horton's 20x1 predetermined overhead rate is:
a. $0.02 per direct labor hour.
b. $0.025 per direct labor hour.
c. $40 per direct labor hour.
d. $50 per direct labor hour.
e. none of the above.

Hormel Co. follows the practice of recording prepaid expenses and unearned revenues

Hormel Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company's annual accounting period ends on December 31, 2009. The following information concerns the adjusting entries to be recorded as of that date.
a. The Office Supplies account started the year with a $3,800 balance. During 2009, the company purchased supplies for $15,694, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2009, totaled $3,344.
b. An analysis of the company's insurance policies provided the following facts.
.
.
.
Requirement 1:
Use the information to prepare adjusting entries as of December 31, 2009.
Requirement 2:
Prepare journal entries to record the first subsequent cash transaction in 2010 for parts c and e.
Problem 3-2A

Horizon Co. owns equipment that cost $138,750, with accumulated depreciation

Horizon Co. owns equipment that cost $138,750, with accumulated depreciation of $81,000. Horizon sells the equipment for cash.
Required:
Record the sale of the equipment assuming Horizon sells the equipment for (1) $63,000 cash, (2) $57,750 cash, and (3) $46,500 cash.

Honeybutter Inc; manufactures a product that goes through two departments prior to

Honeybutter Inc; manufactures a product that goes through two departments prior to completion, The Mixing Department followed by a packaging Department. The following information is available about work in first department, the Mixing department during June.
Production data:
.
.
.
.
Required:
1. Compute the Equivalent units of production for June for the Mixing Department.
2. Compute the cost per equivalent unit for June for Mixing Department.
3. Determine the cost of ending work in process inventory and the units transferred out to the next department for mixing department for June.
4. Prepare a Cost reconciliation report for mixing department for June.

Home Decorating estimated depreciation on buildings as $7,000

Home Decorating estimated depreciation on buildings as $7,000. The adjusting entry for depreciation of the buildings would include:
A) A credit to Depreciation Expense for $7,000.
B) A credit to Accumulated Depreciation for $7,000.
C) A credit to Buildings for $7,000.
D) A debit to Accumulated Depreciation for $7,000.

Holden Graham started The Graham Co., a new business that began operations

Holden Graham started The Graham Co., a new business that began operations on May 1. The Graham Co. completed the following transactions during its first month of operations:
May 1 H. Graham invested $44,500 cash in the company.
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Required:
1) Show effects of the transactions on the accounts of the accounting equation by recording increases and decreases in the appropriate columns. Do not determine new account balances after each transaction. Determine the final total for each account and verify that the equation is in balance.
2) Prepare Graham Company's income statement for May.
3) Prepare Graham Company's statement of owner's equity for May.
4) Prepare Graham Company's Balance Sheet.
Problem 1-7A

Hinsey Corporation produces and sells a single product Data concerning

Hinsey Corporation produces and sells a single product. Data concerning the product appear below:
Per unit Percent of Sales
Selling price $220 100%
Variable expenses $132 60%
Contribution margin $88 40%
Fixed expenses are $300,000 per month. The company is currently selling 4,000 units per month.
The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $21,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?
A. decrease of $46,500
B. increase of $165,300
C. decrease of $5,500
D. increase of $46,500

High Tension Transformers, Inc., manufactures heavy-duty transformers for

High Tension Transformers, Inc., manufactures heavy-duty transformers for electrical switching stations. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data:
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Required:
1. Determine each year’s absorption costing net operating income.
2. In Year 4, the company’s variable costing net operating income was $240,200 and its absorption costing net operating income was $267,200.
a. Did inventories increase or decrease during Year 4?
b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?

Hepburn Company bought a copyright for $90,000 on January 1, 2008, at which

Hepburn Company bought a copyright for $90,000 on January 1, 2008, at which time the copyright had an estimated useful life of 15 years. On January 5, 2011, the company determined that the copyright would expire at the end of 2016. How much should Hepburn record as amortization expense for this copyright for 2011?
a. $14,400.
b. $7,200.
c. $8,000.
d. $12,000.

Henry wants to send his son to computer school which will start one year from

Henry wants to send his son to computer school which will start one year from today. Payments of $3,000 are due at the end of each of the next three years. What lump-sum will Henry have to invest now at 10% per year in order to have $3,000 at the end of each of the next three years?
a) $9,930
b) $3,993
c) $7,461
d) $2,253

Henry wants to send his son to computer school which will start one year from today

Henry wants to send his son to computer school which will start one year from today. Payments of $2,000 are due at the end of each of the next two years. What lump-sum will Henry have to invest now at 12% per year in order to have $2,000 at the end of each of the next two years?
a) $2,508
b) $1,594
c) $4,240
d) $3,380

Henley Company uses a standard cost system in which it applies manufacturing

Henley Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours. For the month of January, the fixed manufacturing overhead volume variance was $2,220 favorable. The company uses a fixed manufacturing overhead rate of $1.85 per direct labor-hour. During January, the standard direct labor-hours allowed for the month's output:
a. exceeded denominator hours by 1,200.
b. fell short of denominator hours by 1,000.
c. fell short of denominator hour by 1,200.
d. exceeded denominator hours by 1,000.

Helix Corporation produces prefabricated flooring in a series of steps carried

Helix Corporation produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow:
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Assume that the company uses the weighted-average method of accounting for units and costs.
Required:
a) Determine the equivalent units for May for the first process.
b) Compute the costs per equivalent unit for May for the first process.
c) Determine the total cost of ending work in process inventory.
d) Determine the total cost of units transferred to the next process in May.

Helga Anderson started a new business and completed these transactions

Helga Anderson started a new business and completed these transactions during December:
Dec. 1 Helga Anderson transferred $65,500 cash from a personal savings account to a checking account in the name of Anderson Electric.
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Required:
1) Show effects of the transactions on the accounts of the accounting equation by recording decreases by a "−" in the appropriate columns. Show new balances after each transaction.
2) Prepare an income statement for December.
3) Prepare a statement of owner's equity for the month.
4) Prepare a Balance Sheet as of the end of the month.
Problem 1-8A

Helen owns 12.5% of the stock of the Median Corporation. If Median makes a

Helen owns 12.5% of the stock of the Median Corporation. If Median makes a dividend payment of $25,000,000 paid proportionally to its shareholders, how much of this amount would Helen receive, disregarding tax?
a. $2,000,000
b. $3,125,000
c. $4,150,000
d. $12,500,000

Hecter Company estimates uncollectible accounts using the allowance method at

Hecter Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis.
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Required:
a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $600 credit.
c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $400 debit.

Harris Products, Inc. had $590,000 and $540,000, respectively, in its equipment

Harris Products, Inc. had $590,000 and $540,000, respectively, in its equipment account on January 1 and December 31. During the year, no assets were purchased. Which of the following is a likely explanation?
A. Depreciation expense during the year is $50,000.
B. Equipment with an original cost of $50,000 was sold during the year.
C. Equipment was sold during the year for $50,000.
D. Equipment with a book value of $50,000 was sold during the year.

Harper Co. reported the following current-year purchases and sales data for

Harper Co. reported the following current-year purchases and sales data for its only product:
Date Activities Units Acquired at Cost Units sold at Retail
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Harper uses a perpetual inventory system.
Required:
1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
3. Compute the gross margin for FIFO and LIFO method.

Harold Company reports the following information for its recent calendar year

Harold Company reports the following information for its recent calendar year. Sales $70,000
Expenses
Cost of goods sold 40,000
Salaries expense 12,000
Depreciation expense 6,000
Net income $12,000
Accounts receivable increase $9,000
Inventory decrease 3,000
Salaries payable increase 800
Required:
Prepare the operating activities section of the statement of cash flows for Harold Company using the indirect method.