Managerial Acct-Test Questions

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Retained earnings:

Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.

The price-earnings ratio is calculated by dividing:

Market value per share by earnings per share.

Bonds can be issued:

At par.
At a premium.
At a discount.
Between interest payment dates.

Amortizing a bond discount:

Allocates a part of the total discount to each interest period.

A company may retire bonds by:

Exercising a call option.
The holders converting them to stock.
Purchasing the bonds on the open market.
Paying them off at maturity.

At acquisition, debt securities are:

Recorded at cost.

Long-term investments can include:

Held-to-maturity debt securities.
Available-for-sale debt securities.
Available-for-sale equity securities.
Equity securities giving an investor significant influence over an investee.

Foreign exchange rates fluctuate due to changes in :

Political conditions.
Economic conditions.
Supply and demand for currencies.
Expectations of future events.

When a credit sale is denominated in a foreign currency, the foreign exchange rate used to record the sale is the current exchange rate:

On the date of the sale

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

Direct method of reporting net cash provided or used by operating activities.

The direct method of reporting operating cash flows:

Is recommended but not required by the FASB.

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

$(60,000).

Financial statement analysis:

Is the application of analytical tools to general-purpose financial statements and related data for making business decisions.
Involves transforming accounting data into useful information for decision-making.
Helps users to make better decisions.
Helps to reduce uncertainty in decision-making.

The ability to provide financial rewards sufficient to attract and retain financing is called:

Profitability.

Net sales divided by average accounts receivable is the:

Accounts receivable turnover ratio

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:

Just-in-time manufacturing

A fixed cost:

Does not change with changes in the volume of activity within the relevant range.

Factory overhead costs normally include all of the following except

Selling costs.

. A system of accounting for production operations that uses a periodic inventory system is called a

General accounting system.

job cost sheet shows information about each of the following items except:

The costs incurred by the marketing department in selling the job.

Canoe Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. Canoe Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied, $6,000. The overhead application rate was:

OH rate = OH applied/Dl = $6,000/$30,000 = 20%

If it is a material amount, overapplied or underapplied overhead should be disposed of by allocating it to:

Goods in process, finished goods, and cost of goods sold.

A process cost summary is a managerial accounting report that describes:

The costs charged to a department.
The equivalent units of production by the department.
How the costs were assigned to the output.
Physical transfers for a department.

. Direct material costs are recorded:

Directly to a Goods in Process account.

In a process costing system, when manufacturing overhead costs are applied to the cost of production, they are debited to:

. the Goods in Process Inventory account.

An expense that does not require allocation between departments is a

Direct expense.

A single cost incurred in producing or purchasing two or more essentially different products is a(n):

Joint cost.

A system of assigning costs to departments and products on the basis of a variety of activities instead of only one allocation base is called:

Activity-based costing.

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