Units 1-3
Which of these is not a step to developing a business?
a) Creating an idea for a product or service
b) Making investments
c) Obtaining financing
d) Withdrawing money from the business
d) Withdrawing money from the business
A company sold a customer $10,000 of goods on account with discount terms 2/10, n30. How much is the sales discount (in dollars) if the customer paid within the discount period?
$200 (2% * $10,000)
Which business structure typically has one owner with personal liability for any obligations of the business?
Sole Proprietorship
Which of these is not a direct cost for a research lab?
a) salaries of researchers
b) lab equipment used for research
c) general rent allocated among multiple departments
d) costs for tests conducted by the lab
c) general rent allocated among multiple departments
Financial Accounting deals with ____________ reporting while Cost Accounting deals mostly with _____________ reporting
Internal/External
What is the term for something that a business owns or controls that provides future benefit?
Asset, Liability, or Equity
Asset
Recording a purchase of inventory on account includes increasing which which two accounts?
Recording an accrued expense (salaries, legal fees, etc.) means that the company would record an increase to expenses and an increase to _______________
A payable account
Variable costs are ________ per unit while fixed costs are ____________ per unit
fixed; variable
As related to relevant costs - direct costs can also be considered ____________ costs (two possible answers)
Avoidable/Traceable
When you subtract liabilities from assets the result is -
Equity
Compared to LIFO, would cost of goods sold be lower for a company that uses FIFO under a period of inflation or deflation?
Inflation
True or false
When a company records sales tax on merchandise they sold, they record an increase to expenses
False
Contribution Margin is ___________ to fixed costs when a company is at the break-even point
equal
What is the revenue activity variance given the following information for the month of May?
Planned Budget Data (May):
100 units
Sales price per unit: $50
Variable Cost per unit: $30
Actual Data (May)
150 units
Total Sales: $8,000
Total Variable Costs: $4,800
$2,500
Which of these accounts does not have an effect on retained earnings?
a) Revenues
b) Expenses
c) Treasury Stock
d) Dividends
c) Treasury Stock
What is the net realizable value at the end of the month for a company with beginning Accounts Receivable of $50,000 and a beginning Allowance for Doubtful Accounts of $2,000. During the month, the company collected $10,000 and recorded $500 of bad debt expense.
$37,500
In a noncumulative arrangement, preferred shareholders are entitled to $10,000 per year. If a company pays $8,000 in dividends in year 1 and $12,000 in dividends in year 2, how much will the preferred shareholders receive?
$10,000
What is the number of units the company needs to sell to reach a target profit of $75,000. The selling price per unit is $50 per unit and the variable expense per unit is $20. Total fixed costs are $30,000.
3,500 units
Which of the following events would have no effect on the income statement (choose all that apply)
1. Borrowing cash from a bank
2. Earning revenue from services provided to customers
3. Paying cash for a lease that will not begin until the next year
4. Receiving cash for services to be provided in the next year
5. Paying operating expenses incurred in the current period
Events 1, 3, and 4
How much revenue would a company record in Year 1 if they were paid $18,000 cash in November, Year 1? The company performed the work evenly over 12 months beginning in November.
$3,000
The entry for recording a write-off involves a decrease to ___________ and a decrease to ____________
Accounts receivable and AFDA
What is the total inflow/outflow for investing activities based on the information below?
1. Provided $20,000 of cash services
2. Purchased equipment for $5,000
3. Borrowed $10,000 from a bank
4. Paid $1,000 in dividends to shareholders
$5,000 outflow
What is the revenue variance given the following information:
Planning Budget: 300 units
Selling Price = $100 per unit
Variable Expense = $60 per unit
Fixed Costs = $5,000
Actual Activity: 500 units
Sales = $45,000
Variable Expense = $38,000
Fixed Costs = $5,000
$5,000 unfavorable
JMU sold a house to a sorority for $300,000 cash. The house was initially purchased by JMU for $400,000 and had a total accumulated depreciation of $250,000.
What was the total gain/loss that JMU recorded for this sale?
$150,000 gain