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. The most common form of quality control includes: a: Planning b: Organizing c: Inspection d:...The most common form of quality control includes:
a: Planning
b: Organizing
c: Inspection
d: Directing
2. 161.Costs incurred to increase the operating efficiency or useful life of a plant asset are referred
161.Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
a.capital expenditures.
b.expense expenditures.
c.ordinary repairs.
d.revenue expenditures.
162.Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally
a.expensed when incurred.
b.capitalized as a part of the cost of the asset.
c.debited to the Accumulated Depreciation account.
d.not recorded until they become material in amount.
163.Which of the following is not true of ordinary repairs?
a.They primarily benefit the current accounting period.
b.They can be referred to as revenue expenditures.
c.They maintain the expected productive life of the asset.
d.They increase the productive capacity of the asset.
164.Additions and improvements
a.occur frequently during the ownership of a plant asset.
b.normally involve immaterial expenditures.
c.increase the book value of plant assets when incurred.
d.typically only benefit the current accounting period.
165.Mento, Inc. spent $4,500,000 during 2014 to repair and update its plant assets. This consisted of $1,800,000 to paint the building, $345,000 to place worn-out gears on motors, $960,000 to install special shelving that will increase operating efficiency in the plant, and $1,395,000 on new machinery. What amount of these costs would appear as assets on Mento, Inc.'s December 31, 2014 statement of financial position?
a.$4,500,000
b.$2,355,000
c.$2,145,000
d.$4,155,000
166.Touch Tronix Company has a piece of manufacturing equipment that has become obsolete. On December 21, 2014, the company discards the equipment which has a historical cost of $500,000 and accumulated depreciation of $440,000. What is the net impact on the long-term assets of Touch Tronix Company on its December 31, 2014 statement of financial position?
a.Decrease of $500,000.
b.Increase of $60,000.
c.Decrease of $60,000.
d.Decrease of $940,000.
167.When a company sells an asset at a gain, which of the following is true?
a.Proceeds from the sale exceeded the historical cost of the asset on the statement of financial position.
b.Proceeds from the sale were less than the book value of the asset on the statement of financial position.
c.Proceeds from the sale exceeded the book value of the asset on the statement of financial position.
d.Proceeds from the sale are equal to the historical cost of the asset on the statement of financial position.
168.If a plant asset is retired before it is fully depreciated and no salvage value is received,
a.a gain on disposal occurs.
b.a loss on disposal occurs.
c.either a gain or a loss can occur.
d.neither a gain nor a loss occurs.
169.A gain or loss on disposal of a plant asset is determined by comparing the
a.replacement cost of the asset with the asset's original cost.
b.book value of the asset with the asset's original cost.
c.original cost of the asset with the proceeds received from its sale.
d.book value of the asset with the proceeds received from its sale.
170.The book value of a plant asset is the difference between the
a.replacement cost of the asset and its historical cost.
b.cost of the asset and the amount of depreciation expense for the year.
c.cost of the asset and the accumulated depreciation to date.
d.proceeds received from the sale of the asset and its original cost.
3. The Nantell Corporation just purchased an expensive piece of equipment. Assume that the firm planned
The Nantell Corporation just purchased an expensive piece of equipment. Assume that the firm planned to depreciate the equipment over 5 years on a straight-line basis, but Congress then passed a provision that requires the company to depreciate the equipment on a straight-line basis over 7 years. Other things held constant, which of the following will occur as a result of this Congressional action? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes
a. Nantell’s taxable income will be lower.
b. Nantell’s operating income (EBIT) will increase.
c. Nantell’s cash position will improve (increase).
d. Nantell’s reported net income for the year will be lower.
e. Nantell’s tax liability for the year will be lower.
4. Question Salmone Company reported the following purchases and sales of its only product. Salmone...
Question
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO. Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 290 units @ $14 5 Purchase 290 units @ $16 10 Sales 210 units @ $24 15 Purchase 170 units @ $17 24 Sales 160 units @ $25
5. 1. Is Sony a multinational enterprise? 2. If the vast majority of Sony’s consumer electronics...
1. Is Sony a multinational enterprise? 2. If the vast majority of Sony’s consumer electronics business is based and developed in Japan and the vast majority of Sony’s music and movie business is based in the United States, does Sony make decisions that are best for the entire company regardless of location? 3. Why does Sony need to license its technology to competitors?
6. True / False Questions 1. The cash budget is developed from the budgeted income statement....
True / False Questions
1. The cash budget is developed from the budgeted income statement.
2. The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements.
3. Budgets are used for planning rather than for control of operations.
4. Self-imposed budgets are those that are prepared by top management and then assigned to other managers within the organization.
5. One of the distinct advantages of a budget is that it can help to uncover potential bottlenecks before they occur.
6. A self-imposed budget can be a very effective control device in an organization.
7. A production budget is to a manufacturing firm as a merchandise purchases budget is to a merchandising firm.
8. In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units).
9. When preparing a materials purchase budget, desired ending inventory is deducted from total needs of the period to arrive at materials to be purchased.
10. 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.
7-1
7. 1. Accounting furnishes data on, A. income and cost for the managers B. financial conditions of the.
1. Accounting furnishes data on, A. income and cost for the managers B. financial conditions of the institutions C. company's tax liability for a particular year D. all of the above.
8. Which of the following statements about a 3-for-1 stock split is true? a. It will triple the market...
Which of the following statements about a 3-for-1 stock split is true?
a. It will triple the market value of the stock.
b. It will triple the amount of total stockholders’ equity.
c. It will have no effect on total stockholders’ equity.
d. It requires the company to distribute cash.
9. Accounting Question
The management of a business is concerned about its inability to obtain enough fully trained labour to enable it to meet its present budget projection.
Information concerning the three services offered by the business is as follows:
Service Alpha Beta Gamma Total
A??L000 A??L000 A??L000 A??L000
Variable cost
Materials 6 4 5 15
Labour 9 6 12 27
Expenses 3 2 2 7
Allocated fixed cost 6 15 12 33
Total cost 24 27 31 82
Profit 15 2 2 19
Sales revenue 39 29 33 101
The amount of labour likely to be available amounts to A??L20,000. All of the variable labour is paid at the same hourly rate. You have been asked to prepare a statement of plans ensuring that at least 50 per cent of the budgeted sales revenues are achieved for each service. The balance of labour is used to produce the greatest profit.
Required:
a) Prepare the statement, with explanations, showing the greatest profit available from the limited amount of skilled labour available, within the constraint stated. Hint: Remember that all labour is paid at the same rate.
b) What steps could the business take in an attempt to improve profitability, in the light of the labour shortage?
10. Job costing, journal entries. The University of Chicago Press is
Job costing, journal entries. The University of Chicago Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The Press uses normal costing to cost job. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead, allocated on the basis of direct manufacturing labor costs).
The following data (in thousands) pertain to 2008.
*The term manufacturing overhead is not used uniformly. Other terms that are often encountered in printing companies include lob overhead and shop overhead.
1. Prepare an overview diagram of the job-costing system at the University of Chicago Press.
2. Prepare journal entries to summarize the 2009 transactions. As your final entry, dispose of the year-end under- or over allocated manufacturing overhead as a write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be omitted.
3. Show posted T-accounts for all inventories, Cost of Goods Sold, Manufacturing Overhead Control, and Manufacturing OverheadAllocated.
11. Below is a flowchart of a portion of the revenue cycle related to cash collections. For each of t...
Below is a flowchart of a portion of the revenue cycle related to cash collections. For each of the numbered items, determine the control process, document or department that relates to each one. Items may be used once or not at all
Cancel Documents Checks Inititate Write-off
To Accounts Payable To Cashier To Accounts Receivable
To Purchasing To Receiving Department Listing of Checks
Match Documents Prepare Invoice Accounts Receivable Master File update
Sales Master Update Accounts Payable Master File Update Cost of Goods Sold Update
____________________________________________________________________________________________________
Control Process or Document:
#1 To Accounts Receivable
#2 To Cashier
#3 Checks
#4 Accounts Receivable Master File Update
#5 Listing of Checks
#6
I'm sure #1-5 is correct, but I can't figure out #6.
Revenue cycle Collections Cash Receipts and Accounts Receivable DEPTS: Mailroom Cashier Accounts Receivable Accounting (custody) (Custody) (Recordkeeping) (Recordkeeping) From cashier From mailroom CR Summary Remittance Checks Customer Check deposit 1. Separate check Check deposit advice check and advice; summary Summa restrictively Listing of Listing of endorse check checks checks 2. Prepare listing of checks Listing of checks Prepare CR summary deposit Deposit 1. Match remittance Listing of 1 advice/check Summary Checks checks deposit summary Post G/L 2. Update AVR master file 3. Print CR journal Check deposit To Accounting, CR Summary Updated Cashier, and Summary G/L Accounts Receivable deposit Remittance Summary advice To To Bank Accounting Remittance advice CR journal To Accounting
12. Decision by Blades, Inc., to Invest in Thailand
1. Should the sales and the associated costs of 180,000 pairs of roller blades to be sold in Thailand under the existing agreement be included in the capital budgeting analysis to decide whether Blades should establish a subsidiary in Thailand? Should the sales resulting from a renewed agreement be included? Why or why not?
2. Using a spreadsheet, conduct a capital budgeting analysis for the proposed project, assuming that Blades renews the agreement with Entertainment Products. Should Blades establish a subsidiary in Thailand under these conditions?
3. Using a spreadsheet, conduct a capital budgeting analysis for the proposed project assuming that Blades does not renew the agreement with Entertainment Products. Should Blades establish a subsidiary in Thailand under these conditions? Should Blades renew the agreement with Entertainment Products?
4. Since future economic conditions in Thailand are uncertain, Ben Holt would like to know how critical the salvage value is in the alternative you think is most feasible.
5. The future value of the baht is highly uncertain. Under a worst-case scenario, the baht may depreciate by as much as 5 percent annually. Revise your spreadsheet to illustrate how this would affect Blades’ decision to establish a subsidiary in Thailand.
MINI CASE
Since Ben Holt, Blades’ chief financial officer (CFO), believes the growth potential for the roller blade market in Thailand is very high, he, together with Blades’ board of directors, has decided to invest in Thailand. The investment would involve establishing a subsidiary in Bangkok consisting of a manufacturing plant to produce ?oSpeedos,?? Blades’ high-quality roller blades. Holt believes that economic conditions in Thailand will be relatively strong in 10 years, when he expects to sell the subsidiary.
13. Josh Reilly is the owner of Dispatch Delivery Service. Recently Josh paid interest of $4,500 on a...
Josh Reilly is the owner of Dispatch Delivery Service. Recently Josh paid interest of $4,500 on a personal loan of $75,000 that he used to begin the business. Should Dispatch Delivery Service record the interest payment? Explain.
14. QUESTION 3-29 Mick Karra is the manager of MCZ Drilling Products, which produces a variety of...
QUESTION 3-29
Mick Karra is the manager of MCZ Drilling Products, which produces a variety of specialty valves for oil field equipment. Recent activity in the oil fields has caused demand to increase drastically, and a decision has been made to open a new manufacturing facility. Three locations are being considered, and the size of the facility would not be the same in each location. Thus. overtime might be necessary at times. The following table gives the total monthly cost (in $1,000s) for each possible location under each demand possibility. The probabilities for the demand levels have been determined to be 20% for low demand, 30% for medium demand, and 50% for high demand.
DEMAND IS LOW DEMAND IS MEDIUM DEMAND IS HIGH
Ardmore, OK 85 110 150
Sweetwater, TX 90 100 120
Lake Charles, LA 110 120 130
a) Which location would be selected based on the optimistic criterion?
b) Which location would be selected based on the pessimistic criterion?
c) Which location would be selected based on the minimax regret criterion?
d) Which location should be selected to minimize the expected cost of operation?
e) How much is a perfect forecast of the demand worth?
f) Which location would minimize the expected opportunity loss?
g) What is the expected value of perfect information in this situation?
15. Selected transactions for the Nikolai Company are presented in journal form below.
Selected transactions for the Nikolai Company are presented in journal form below.
Selected transactions for the Nikolai Company are presented in journal form below. Date Account Titles and Explanation Ref. Debit Credit May 5 Accounts Receivable 5,030 Service Revenue 5,030 (Billed for services performed) 12 Cash 1,970 Accounts Receivable 1,970 Received cash in payment of account) 15 cash 3,470 3,470 Service Revenue (Received cash for services performed)
16. The liabilities of Cai Company are $90,000. Meiyu Cai’s capital account is $150,000; drawings are...
Use the expanded accounting equation to answer each of the following questions:
(a) The liabilities of Cai Company are $90,000. Meiyu Cai’s capital account is $150,000; drawings are $40,000; revenues, $450,000; and expenses, $320,000. What is the amount of Cai Company’s total assets?
(b) The total assets of Pereira Company are $57,000. Karen Perry’s capital account is $25,000; drawings are $7,000; revenues, $50,000; and expenses, $35,000.What is the amount of the company’s total liabilities?
(c) The total assets of Yap Co. are $600,000 and its liabilities are equal to two-thirds of its total assets. What is the amount of Yap Co.’s owner’s equity?
17. ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.’s 2014 financial statements are shown here....
ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.’s 2014 financial statements are shown here. Suppose that in 2015, sales increase by 10% over 2014 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2014 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its Operating costs/Sales ratio to 87 5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities-to-assets ratio currently is too low relative to the industry average.) The firm will raise 30% of the 2015 forecasted interest bearing debt as notes payable, and it will issue long-term bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short-term and long-term debt) is 12 5%. Assume that any common stock issuances or repurchases can be made at the firm’s current stock price of $45.
a. Construct the forecasted financial statements assuming that these changes are made. What are the firm’s forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings?
b. If the profit margin remains at 5% and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero? In other words, what is the firm’s sustainable growth rate?
