1) When a corporation issues capital stock at a price higher than the par value:
ID: 2447603 • Letter: 1
Question
1)When a corporation issues capital stock at a price higher than the par value:
a.The amount received over par value increases retained earnings.
b.The entire issue price is credited to the Capital Stock account.
c.The amount received in excess of par value constitutes profit to the issuing corporation.
d.The amount received in excess of par value becomes part of paid-in capital.
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2) Treasury stock represents:
a.Shares of ownership in the United States Treasury Department.
b.A current asset.
c.Authorized shares that have never been issued.
d.Previously outstanding shares that have been repurchased by the issuing company.
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3)Seville Corporation has net assets of $2,072,000 and paid-in capital of $700,000. The only stock issue consists of 74,000 outstanding shares of common stock. From this information, it can be deduced that the company has:
a.Retained earnings of $2,072,000.
b.A deficit of $2,072,000.
c.A book value of $9.46 per share of common stock.
d.A book value of $28 per share of common stock.
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4)The statement of stockholders equity:
a.Is a required financial statement.
b.May be issued as a substitute for the statement of retained earnings.
c.Shows the changes during the year in all stockholders' equity accounts except retained earnings.
d.Is a statement sent to each stockholder showing that person's return on equity.
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5) Which of the following apply to closely held corporations?
a.There is no organized market for buying and selling the company's shares.
b.The company must prepare and issue its financial statements in conformity with generally accepted accounting principles.
c.The company must have its financial statements audited by an independent firm of CPAs.
d.The company's financial information must be submitted to the Securities and Exchange Commission.
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6)A cash dividend paid to shareholders is reported on the:
a.Financing activities section of the statement of cash flows.
b.Balance sheet.
c.Income statement.
d.Operating activities section of the statement of cash flows.
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7) A high quality of earnings is indicated by:
a.Earnings derived largely from newly introduced products.
b.Declaration of both cash and stock dividends.
c.Use of the FIFO method of inventory during sustained inflation.
d.A history of increasing earnings and conservative accounting methods.
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8) One number expressed as a percentage of another is called:
a.Money changes.
b.Trend percentages.
c.Component percentages.
d.Ratios.
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9) Net income differs from net cash flows from operations because of: rev: 04_09_2015_QC_CS-13072
a.Non-cash expenses such as depreciation.
b.Timing differences between recognizing revenue and expenses and their cash flows.
c.Gains and losses included in net income but classified as investing or financing activities will all cause a difference between net income and cash flows.
d.All of the above.
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10) The changes in financial statement items from a base year to following years are called:
a.Money changes.
b.Trend percentages.
c.Component percentages.
d.Ratios.
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11) Determine the amount of manufacturing overhead given the following information:
a.$7,750.
b.$10,430.
c.$9,750.
d.$11,080.
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12) The following information is available about the August transactions of the Helpful Tool Company:
a.$493,000.
b.$737,000.
c.$718,000.
d.$739,000.
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13) In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is less likely to:
a.Focus upon the entire organization as the accounting entity.
b.Focus upon future accounting periods.
c.Make use of estimated amounts.
d.Be tailored to the specific needs of an individual decision maker.
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14) Which of the following is not one of the three types of inventories of a manufacturing company?
a.Raw materials inventory.
b.Work in process inventory.
c.Product inventory.
d.Finished goods inventory.
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15) Debits to the Manufacturing Overhead account record:
a.The actual amounts of overhead costs incurred during a period.
b.The amount of overhead applied to production during a period.
c.The amount of overhead incurred on a specific job.
d.All conversion costs of a period.
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16) The method used by managers when comparing unit costs with budgeted costs or other measures is broadly known as:
a.Sales management.
b.Cost control.
c.Employee evaluation.
d.Account reconciliation.
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17)The type of cost accounting system best suited to a particular company depends on:
a.The nature of the company's manufacturing operations.
b.The requirements set forth by the FASB.
c.Government regulations.
d.The type of cost drivers available.
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18) A predetermined overhead application rate:
a.Expresses an expected relationship between overhead costs and an activity base.
b.Can be determined by dividing budgeted direct labor cost by the budgeted factory overhead costs.
c.Is computed at the end of the period once actual overhead costs are known.
d.Applies the same amount of overhead to each product or service.
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19) The advantage of using a predetermined overhead application rate is that:
a.Units produced are charged with a "normal" amount of manufacturing overhead regardless of whether they are produced in a high-volume month or a low-volume month.
b.Overhead costs will be limited to the predetermined amount.
c.Entries need not be made to record actual overhead costs incurred.
d.The unit cost of production will be lower than it would be if actual overhead costs were assigned to units produced.
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20) The employee time card for John Winter indicates that he spent last week performing routine maintenance on factory machinery. Payments made to Winter for last week's work should be:
a.Debited to Work in Process Inventory.
b.Credited to the Direct Labor account.
c.Debited to the Direct Labor account.
d.Debited to the Manufacturing Overhead account.
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21)The basic types of cost accounting systems are:
a.Job order cost systems, activity based cost systems, and process cost systems.
b.Direct cost systems and indirect cost systems.
c.Completed job cost systems and work in process cost systems.
d.Fixed cost systems and variable cost systems.
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22) Overhead costs are assigned to production using an overhead application rate, whereas no such "application rate" is used to assign the costs of direct materials and direct labor to production. The reason for this difference in procedures is that:
a.Overhead is an indirect cost which cannot be traced easily and directly to specific units of product.
b.Overhead is always larger in dollar amount than either direct materials or direct labor.
c.The amounts of direct material and direct labor applicable to each unit of production cannot be determined as easily as the amount of overhead.
d.Overhead is always equal to a constant percentage of direct labor costs.
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23) The computation of equivalent units is generally not necessary when:
a.Beginning work-in-process inventories are significantly larger than ending work-in-process inventories.
b.Beginning and ending work in process inventories differ only slightly.
c.The number of units in ending work-in-process exceeds the number of units completed and transferred to finished goods during the period.
d.Per-unit costs become distorted as a result of not computing equivalent units of production.
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24) Process costing systems:
a.Are used when companies produce homogeneous units.
b.Do not have work in process accounts for each department.
c.Do not use equivalent units of production.
d.Track costs to individual products.
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25)In a process costing system, the number of units started and completed for a period is equal to:
a.Units transferred out less units in beginning work in process.
b.Units transferred out less units in ending work in process.
c.Units transferred out plus units in beginning work in process.
d.Units transferred out plus units in ending work in process.
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26) Which of the following is not a characteristic of a process costing system?
a.The costs incurred in each process are accumulated in separate Work in Process Inventory accounts.
b.It is suitable for mass-produced operations.
c.Costs are accumulated separately for each unit of production as it moves through the factory.
d.The cost of a finished unit is the sum of the unit costs of performing each manufacturing process.
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27) The best cost system to use for a company producing a continuous stream of similar items would be a:
a.Job order system.
b.Process costing system.
c.Production costing system.
d.No cost system is required when jobs are similar.
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28) In a process costing system, costs flow from one Work in Process Inventory account to the next in the same sequence as:
a.Units flow through production.
b.In a LIFO periodic inventory system.
c.Shipped to customers.
d.In a job order cost system.
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29) The Work in Process - Assembly account would be credited and the Work in Process - Packaging account would be debited when:
a.Goods are transferred from Assembly to Packaging.
b.Goods are transferred from Packaging to Assembly.
c.The units are complete and ready for sale.
d.The number of units started during the period is greater than the number of units in process at the end of the period.
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30) Companies that compute equivalent units of production do so to:
a.Comply with income tax regulations.
b.Compute total manufacturing costs for the period.
c.Determine a manufacturing overhead application rate.
d.Determine departmental per-unit costs.
Explanation / Answer
A1) When a corporation issues capital atock at a price higher than the par value, the amount received over par value increases retained earnings. A2) Treasury Stock represents shares of ownership in the United States Treasury Department. A3) From the above information, it can be inferred that Seville Corporation has a book value of $ 9.46 per share of common stock, thereby leading to a paid in capital of $ 700,000. A4) The statement of stockholders' equity shows the changes during the year in all stockholders' equity accounts except retained earnings. A5) There is no organised market for buying and selling the Company's shares, for a closely held corporation. A6) A cash dividend paid to shareholders is reported in the financing activities section of the statement of cash flows. A7) A high quality of earnings is indicated by a history of increasing earnings and conservative accounting methods. A8) One number expressed as a percentage of another is called component percentages. A9) Net income differs from net cash flows from operations because of all the above reasons. A10) The changes in financial statement items from a base year to following years are called trend percentages. A11) The manufacturing overheads total $ 9,750 ($ 2,600 + $ 950 + $ 5,200 + $ 1,000) A12) The product costs to be deducted from Revenue in August amount to $ 739,000/ A13) In comparison with a financial statement prepared in conformity with general accepted accounting principles,a managerial accounting report is less likely to be tailored to the specific A14) Product inventory is not one of the three types of inventory. A15) Debits to the Manufacturing Overhead account record the amount of overhead applied to production during a period. A16) The method adopted is known as cost control. A17) The type of cost accounting system depends on the nature of the company's manufacturing operations. A18) A pre-determined overhead application rate expresses an expected relationship between overhead costs and an activity base. A19) The advantage of using a pre-determined overhead application rate is that Units produced are charged with a "normal" amount of manufacturing overhead A20) Payments made to Winter should be debited to the Manufacturing Overhead account. A21) The basic types of cost accounting systems are job order cost systems, activity based cost systems and process cost systems. A22) The reason for overhead application rate being applied is that Overhead is an indirect cost which cannot be traced easily and directly to specific units of product. A23) Equivalent units are not necessary when Beginning work-in-process inventories are significantly larger than ending work-in-process inventories. A24) Process costing systems are used when companies produce homogeneous units. A25) In a process costing system, the number of units started and completed for a period is equal to units transferred out plus units in ending work in progress. A26) Process costing is not suitable for mass-produced operations. A27) The best cost system to use would be a production costing system. A28) The work flow is same as in a job order cost system. A29) Debits and credits would occur when Goods are transferred from Assembly to Packaging. A30) Companies that compute equivalent units of production do so to determine a manufacturing overhead application rate.
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