ACC2240 Cost Accounting and ACC1112 Financial Accounting II

Published: 1 year ago

ACC2240 Cost Accounting and ACC1112 Financial Accounting II

A. $142,000.

B. $144,000.

C. $160,000.

D. $176,000.

8. Which of the following statements is TRUE regarding the indirect method of preparing a statement of cash flows?

A. A decrease in inventory is subtracted from net income.

B. A loss on the sale of an investment is added to net income.

C. Depreciation expense is subtracted from net income.

D. An increase in wages payable is subtracted from net income.

9.Which of the following statements is TRUE regarding the direct method of preparing a statement of cash flows?

A. Depreciation expense is added as a reconciling item.

B. It is easier and less costly to prepare than the indirect method.

C. A supplementary schedule reconciling net income to the cash basis must also be provided.

D. All of the statements above are correct.

10.Which of the following is an example of noncash investing and financing activity that is disclosed in a supplementary schedule accompanying the statement of cash flows or in a footnote to the financial statements?

A. Selling goods on credit

B. Paying the amount due a creditor

C. Purchasing equipment in exchange for a long-term note

D. Gain on the sale of land

44. 81. A company using the periodic inventory system has the following account balances:...

81. A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $4,000; Transportation-In, $450; Purchases, $12,000; Purchases Returns and Allowances, $2,300; Purchases Discounts, $220. The cost of merchandise purchased is equal to  

A. $13,930

B. $9,930

C. $9,489

D. $14520

82. A company, using the periodic inventory system, has merchandise inventory costing $140 on hand at the beginning of the period. During the period, merchandise costing $400 is purchased. At year-end, merchandise inventory costing $180 is on hand. The cost of merchandise sold for the year is  

A. $720

B. $550

C. $360

D. $140

83. Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as  

A. selling expenses

B. general expenses

C. other expenses

D. administrative expenses

84. Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense? 

A. selling expense

B. miscellaneous expense

C. administrative expense

D. other expense

85. The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a  

A. multiple-step statement

B. revenue statement

C. report-form statement

D. single-step statement

86. Multiple-step income statements show  

A. gross profit but not income from operations

B. neither gross profit nor income from operations

C. both gross profit and income from operations

D. income from operations but not gross profit

87. When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the  

A. account form

B. comparative form

C. horizontal form

D. report form

88. The statement of retained earnings shows  

A. only net income, beginning and ending retained earnings

B. only total assets, beginning and ending retained earnings

C. only net income, beginning Capital Stock, and dividends

D. only net income/net loss, dividends, and beginning and ending retained earnings

89. Merchandise inventory is classified on the balance sheet as a  

A. Current Liability

B. Current Asset

C. Long-Term Asset

D. Long-Term Liability

90. Which account is not classified as a selling expense? 

A. Sales Salaries

B. Transportation-Out

C. Sales Discounts

D. Advertising Expense

45. I think we goofed when we hired that new assistant

I think we goofed when we hired that new assistant controller,?? said Ruth Scarpino, president of Provost Industries. ?oJust look at this report that he prepared for last month for the Finishing Department. I can’t make heads or tails out of it.??



?oHe’s struggling to learn our system,?? replied Frank Harrop, the operations manager. ?oThe problem is that he’s been away from process costing for a long time, and it’s coming back slowly’

?oIt’s not just the format of his report that I’m concerned about. Look at that $25.71 unit cost that he’s come up with for April. Doesn’t that seem high to you??? said Ms. Scarpino.

?oYes. it does seem high; but on the other hand, I know we had an increase in materials prices during April, and that may be the explanation.?? replied Mr. Harrop. ?oI’ll get someone else to redo this report and then we may be able to see what’s going on.??

Provost Industries manufactures a ceramic product that goes through two processing departments—Molding and Finishing. The company uses the weighted-average method in its process costing.

Required:

1. Prepare a report for the Finishing Department showing how much cost should have been assigned to the units completed and transferred to finished goods, and how much cost should have been assigned to ending work in process inventory in the Finishing Department.

2. Explain to the president why the unit cost on the new assistant controller’s report is sohigh.

46. Matching graphs with descriptions of cost and revenue behavior.

Matching graphs with descriptions of cost and revenue behavior. Given here are a number of graphs.





The horizontal axis represents the units produced over the year and the vertical axis represents total cost or revenues. Indicate by number which graph best fits the situation or item described. Some graphs may be used more than once; some may not apply to any of the situations.

a. Direct material costs

b. Supervisors’ salaries for one shift and two shifts

c. A cost-volume-profit graph

d.Mixed costs—for example, car rental fixed charge plus a rate per mile driven

e. Depreciation of plant computed on a straight-line basis

f. Data supporting the use of a variable-cost rate, such as manufacturing labor cost of $14 per unit produced

g. Incentive bonus plan that pays managers $0.10 for every unit produced above some level of production

h. Interest expense on $2 million borrowed at a fixed rate ofinterest

47. Pace Distributing Company completed the following merchandising

Pace Distributing Company completed the following merchandising transactions in the month of April. At the beginning of April, the ledger of Pace showed Cash of $9,000 and Owner’s Capital of $9,000.

Apr. 2 Purchased merchandise on account from Monaghan Supply Co. $6,900, terms 1/10, n/30.

4 Sold merchandise on account $6,500, FOB destination, terms 1/10, n/30. The cost of the merchandise sold was $3,900.

5 Paid $240 freight on April 4 sale.

6 Received credit from Monaghan Supply Co. for merchandise returned $500.

11 Paid Monaghan Supply Co. in full, less discount.

13 Received collections in full, less discounts, from customers billed on April 4.

14 Purchased merchandise for cash $3,800.

16 Received refund from supplier for returned goods on cash purchase of April 14, $500.

18 Purchased merchandise from Dominic Distributors $4,500, FOB shipping point, terms 2/10, n/30.

20 Paid freight on April 18 purchase $100.

23 Sold merchandise for cash $7,400. The merchandise sold had a cost of $4,120.

26 Purchased merchandise for cash $2,300.

27 Paid Dominic Distributors in full, less discount.

29 Made refunds to cash customers for defective merchandise $90. The returned merchandise had a fair value of $30.

30 Sold merchandise on account $3,700, terms n/30. The cost of the merchandise sold was $2,800.

Pace Distributing Company’s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 301 Owner’s Capital, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold, and No. 644 Freight-out.

Instructions

(a) Journalize the transactions using a perpetual inventory system.

(b) Enter the beginning cash and capital balances, and post the transactions. (Use J1 for the journal reference.)

(c) Prepare the income statement through gross profit for the month of April 2012.

48. Bern Fly Rod Company is a small manufacturer of high quality graphite fly-fishing rods. It sells its...

Bern Fly Rod Company is a small manufacturer of high quality graphite fly-fishing rods. It sells its products to fly-fishing shops throughout the United States and Canada. Bern began as a small company with four salespeople, all family members of the owner. Because of the high popularity and recent growth of fly-fishing, Bern now employs a seasonal, nonfamily, sales force of 16. The salespeople travel around the country giving fly casting demonstrations of their new models to fly-fishing shops. When the fishing season ends in October, the temporary salespeople are laid off until the following spring. Once the salesperson takes an order, it is sent directly to the cash disbursement department, where commission is calculated and promptly paid. Sales staff compensation is tied directly to their sales (orders taken) figures. The order is then sent to the billing department, where the sale is recorded, and finally to the shipping department for delivery to the customer. Sales staff are also compensated for travel expenses. Each week they submit a hard-copy spreadsheet of expenses incurred to the cash disbursements clerk. The clerk immediately writes a check to the salesperson for the amount indicated in the spreadsheet. Bern’s financial statements for the December yearend reflect an unprecedented jump in sales for the month of October (35 percent higher than the same period in the previous year). On the other hand, the statements show a high rate of product returns in the months of November and December, which virtually offset the jump in sales. Furthermore, travel expenses for the period ending October 31 were disproportionately high compared with previous months.

Required

Analyze Bern’s situation and assess any potential internal control issues and exposures. Discuss some preventive measures this firm may wish to implement.

49. Compute the price, efficiency, and flexible-budget variances for direct materials and direct...

Materials and manufacturing labor variances. Consider the following data collected for Great Homes, Inc.:

Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing labor.

50. Bern Fly Rod Company is a small manufacturer of high quality graphite fly-fishing rods. It sells its...

Bern Fly Rod Company is a small manufacturer of high quality graphite fly-fishing rods. It sells its products to fly-fishing shops throughout the United States and Canada. Bern began as a small company with four salespeople, all family members of the owner. Because of the high popularity and recent growth of fly-fishing, Bern now employs a seasonal, nonfamily, sales force of 16. The salespeople travel around the country giving fly casting demonstrations of their new models to fly-fishing shops. When the fishing season ends in October, the temporary salespeople are laid off until the following spring. Once the salesperson takes an order, it is sent directly to the cash disbursement department, where commission is calculated and promptly paid. Sales staff compensation is tied directly to their sales (orders taken) figures. The order is then sent to the billing department, where the sale is recorded, and finally to the shipping department for delivery to the customer. Sales staff are also compensated for travel expenses. Each week they submit a hard-copy spreadsheet of expenses incurred to the cash disbursements clerk. The clerk immediately writes a check to the salesperson for the amount indicated in the spreadsheet. Bern’s financial statements for the December yearend reflect an unprecedented jump in sales for the month of October (35 percent higher than the same period in the previous year). On the other hand, the statements show a high rate of product returns in the months of November and December, which virtually offset the jump in sales. Furthermore, travel expenses for the period ending October 31 were disproportionately high compared with previous months.

Required

Analyze Bern’s situation and assess any potential internal control issues and exposures. Discuss some preventive measures this firm may wish to implement.