Alex brought his lunch today but now a coworker has asked him to go to the deli across the street.
Multiple Choice
The cost of the lunch Alex already has represents the opportunity cost of dining with his friend.
The cost of the lunch that Alex had brought has nothing to do with his current decision.Correct
The cost of the lunch Alex had brought is relevant to Alex's decision to have lunch with his friend.
The cost to buy lunch at the deli is not relevant because it has not yet been incurred.
Answer
The cost of the lunch that Alex had brought has nothing to do with his current decision. Correct
Explanation
The cost of the lunch Alex had brought is a sunk cost. Since sunk costs have been incurred in past transactions, they cannot be changed and are not relevant for making current decisions.
A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?
Multiple Choice
Wood, glue, and varnish would all be direct materials.
Wood would be accounted for as a direct cost, and glue and varnish as indirect costs. Correct
The costs of wood and glue would be treated as direct costs.
The concepts of direct and indirect costs are not applicable here.
Answer
Wood would be accounted for as a direct cost, and glue and varnish as indirect costs. Correct
Explanation
The cost object is the custom chairs. Direct costs, such as wood, can be traced to the custom chairs in a cost-effective manner. Indirect costs, such as glue and varnish, cannot be traced to the custom chairs in a cost-effective manner.
Bates Company recognized $16,000 of estimated manufacturing overhead costs at the end of the month. As a result of this transaction the:
Multiple Choice
temporary account manufacturing overhead increases and the work in process account decreases.
temporary account manufacturing overhead decreases and the work in process account increases.
Correct
temporary account manufacturing overhead decreases and the wages expense account increases.
none of these answers are correct.
Answer
temporary account manufacturing overhead decreases and the work in process account increases.
Correct
Explanation
When estimated overhead is recognized (that is, applied or assigned to work in process inventory), the temporary account, Manufacturing Overhead, decreases and the Work in Process Inventory account increases.
Phibbs Company prepared the following data for the year.
Outflow to purchase treasury stock $ 68,000
Inflow from sale of machinery 26,500
Inflow from sale of marketable securities 8,500
Outflow to purchase building 97,000
Outflow to purchase land 22,000
Outflow to pay dividends 17,000
Outflow to pay interest 47,000
What is the net cash flow from investing activities?
Multiple Choice
$84,000 outflow
Correct
$55,500 outflow
$174,500 outflow
$209,500 outflow
Answer
$84,000 outflow
Correct
Explanation
The information necessary to identify cash inflows and outflows from investing activities is obtained by reconciling changes in a company’s long-term assets.
Net cash flow from investing activities = $26,500 + $8,500 − $97,000 − $22,000 = ($84,000)
The following balance sheet information is provided for Apex Company for Year 2:
Assets
Cash $ 5,600
Accounts receivable 11,750
Inventory 14,800
Prepaid expenses 1,600
Plant and equipment, net of depreciation 19,500
Land 13,400
Total assets $ 66,650
Liabilities and stockholders' equity
Accounts payable $ 2,790
Salaries payable 8,230
Bonds payable (due in ten years) 12,000
Common stock, no par 16,500
Retained earnings 27,130
Total liabilities and stockholders' equity $ 66,650
What is the company's working capital?
Multiple Choice
$22,730
Correct
$22,200
$5,100
$19,600
Answer
$22,730 Correct
Explanation
Working capital = Current assets − Current liabilities
Working capital = ($5,600 + $11,750 + $14,800 + $1,600) − ($2,790 + $8,230) = $33,750 − $11,020 Working capital = $22,730
Multiple Choice
The cost of the lunch Alex already has represents the opportunity cost of dining with his friend.
The cost of the lunch that Alex had brought has nothing to do with his current decision.Correct
The cost of the lunch Alex had brought is relevant to Alex's decision to have lunch with his friend.
The cost to buy lunch at the deli is not relevant because it has not yet been incurred.
Answer
The cost of the lunch that Alex had brought has nothing to do with his current decision. Correct
Explanation
The cost of the lunch Alex had brought is a sunk cost. Since sunk costs have been incurred in past transactions, they cannot be changed and are not relevant for making current decisions.
A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?
Multiple Choice
Wood, glue, and varnish would all be direct materials.
Wood would be accounted for as a direct cost, and glue and varnish as indirect costs. Correct
The costs of wood and glue would be treated as direct costs.
The concepts of direct and indirect costs are not applicable here.
Answer
Wood would be accounted for as a direct cost, and glue and varnish as indirect costs. Correct
Explanation
The cost object is the custom chairs. Direct costs, such as wood, can be traced to the custom chairs in a cost-effective manner. Indirect costs, such as glue and varnish, cannot be traced to the custom chairs in a cost-effective manner.
Bates Company recognized $16,000 of estimated manufacturing overhead costs at the end of the month. As a result of this transaction the:
Multiple Choice
temporary account manufacturing overhead increases and the work in process account decreases.
temporary account manufacturing overhead decreases and the work in process account increases.
Correct
temporary account manufacturing overhead decreases and the wages expense account increases.
none of these answers are correct.
Answer
temporary account manufacturing overhead decreases and the work in process account increases.
Correct
Explanation
When estimated overhead is recognized (that is, applied or assigned to work in process inventory), the temporary account, Manufacturing Overhead, decreases and the Work in Process Inventory account increases.
Phibbs Company prepared the following data for the year.
Outflow to purchase treasury stock $ 68,000
Inflow from sale of machinery 26,500
Inflow from sale of marketable securities 8,500
Outflow to purchase building 97,000
Outflow to purchase land 22,000
Outflow to pay dividends 17,000
Outflow to pay interest 47,000
What is the net cash flow from investing activities?
Multiple Choice
$84,000 outflow
Correct
$55,500 outflow
$174,500 outflow
$209,500 outflow
Answer
$84,000 outflow
Correct
Explanation
The information necessary to identify cash inflows and outflows from investing activities is obtained by reconciling changes in a company’s long-term assets.
Net cash flow from investing activities = $26,500 + $8,500 − $97,000 − $22,000 = ($84,000)
The following balance sheet information is provided for Apex Company for Year 2:
Assets
Cash $ 5,600
Accounts receivable 11,750
Inventory 14,800
Prepaid expenses 1,600
Plant and equipment, net of depreciation 19,500
Land 13,400
Total assets $ 66,650
Liabilities and stockholders' equity
Accounts payable $ 2,790
Salaries payable 8,230
Bonds payable (due in ten years) 12,000
Common stock, no par 16,500
Retained earnings 27,130
Total liabilities and stockholders' equity $ 66,650
What is the company's working capital?
Multiple Choice
$22,730
Correct
$22,200
$5,100
$19,600
Answer
$22,730 Correct
Explanation
Working capital = Current assets − Current liabilities
Working capital = ($5,600 + $11,750 + $14,800 + $1,600) − ($2,790 + $8,230) = $33,750 − $11,020 Working capital = $22,730
No comments:
Post a Comment