Quiz 3

Quiz 3

Quiz 3
On the ________, cash dividends become a liability of a corporation.
declaration date
date of record
end of the fiscal year
payment date
________ are equity securities in which the investor owns 20% or more, but less than 50%, of the investee's voting stock.
Held-to-maturity investments
Significant interest investments
Controlling interest investments
Available-for-sale investments
Held-to-maturity investments applies only to debt securities because:
these securities earn periodic interest.
equity securities do not mature on a specific date.
these are long-term investments.
equity securities are held for a very short period.
Equity securities in which the investor owns less than 20% ownership in the voting stock of the investee can be:
significant interest investments.
controlling interest investments.
held-to-maturity investments.
either trading investments or available-for-sale investments (security).
A bond is issued at premium :
when a bond's stated interest rate is equal to the market interest rate.
when a bond's stated interest rate is less than the effective interest rate.
when a bond's stated interest rate is less than the market interest rate.
when a bond's stated interest rate is higher than the market interest rate.
The date on which the principal amount is repaid to the bondholder is known as:
issuing date.
interest date.
maturity date.
installment date.
The following is summary of information presented on the financial statements of a company on December 31, 2015.

Net Sales Revenue
Cost of Goods Sold
Gross Profit
Selling Expenses
Net income before income tax expense
Income tax expense
Net Income

What would a horizontal analysis report show with respect to net income?
The accounts receivable turnover ratio of a merchandiser is 9.8 times. Calculate the days' sales in receivables for the merchandiser. (Round to the nearest day.)
Zebra Inc. cost of goods sold for the year is $1,900,000 and average merchandise inventory for the year is $129,000. Calculate the inventory turnover ratio of the company.
A $30,000, three-month, 7% note payable was issued on December 1, 2015. What is the journal entry to record the accrued interest on December 31, 2015?
Revival Corporation's annual report is as follows.

March 31, 2014
March 31, 2015
Net Income
Preferred Dividends
Total Stockholders' Equity
Stockholders' Equity attributable to Preferred Stock
Number of Common Shares Outstanding

The Avatar Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2015:
Sales Revenue, $515,000
Accounts Receivable, beginning balance, $92,000
Accounts Receivable, ending balance, $57,000
Accounts Payable, beginning balance, $43,000
Accounts Payable, ending balance, $27,500
In the operating activities section of the statement of cash flows, what amount will be shown for collections from customers?

Trek Company signed a 9%, 10-year note for $150,000. The company paid $1,900 as the installment for the first month. After the first payment, what is the updated principal balance?
Week 7 Homework 22-23
Multiple choice (5 pts each) (highlight or clearly mark your answer)
Which of the following is an example of the planning function of a budget?
A budget demands integrated input from different business units and functions.
Employees are motivated to achieve the goals set by the budget.
Budget figures are used to evaluate the performance of managers.
The budget outlines a specific course of action for the coming period.
Opportunity cost(s):
of a resource with excess capacity is zero
should be maximized by organizations
are recorded as an expense in the accounting records
are most important to financial accountants
Gnome Company is trying to decide whether to continue to manufacture a particular component or to buy the component from a supplier. Which of the following is relevant to this decision?
the potential uses of the facilities that are currently used to manufacture the component
the insurance on the manufacturing facility which will continue regardless of the decision
allocated corporate fixed costs which would have to be allocated to other products if the component is no longer manufactured
the cost of the equipment that is currently being used to manufacture the component
Which of following statements is true of short-term decision making?
Fixed costs and variable costs must be analyzed separately.
All costs behave in the same way.
Unit manufacturing costs are variable costs.
All costs involved in a decision are considered relevant.
A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n):
favorable flexible budget variance for sales revenues.
favorable sales volume variance for sales revenues.
unfavorable flexible budget variance for sales revenues.
unfavorable sales volume variance for sales revenues.
When replacing an old asset with a new one, the original purchase price of the old asset represents:
relevant cost.
differential costs.
opportunity cost.
sunk cost.
Polynesia Company manufactures sonars for fishing boats. Model 70 sells for $300. Polynesia produces and sells 5,500 of them per year. Cost data are as follows:

Variable manufacturing
 per unit
Variable marketing
 per unit
Fixed manufacturing
 per year
Fixed marketing & admin
 per year

Doro Fill Company fabricates inexpensive automobiles for sale to 3rd world countries. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows:
Volume           800      units per month
Variable cost per unit $7        per unit
Fixed costs      $15,000           per month
A factory in Indonesia has offered to supply Dora Fill with ready-made units for a price of $10 each. Assume that Doro Fill's fixed costs are unavoidable, but the company could use the vacated production facilities to earn an additional $5,000 of profit per month. Calculate the total relevant costs for both the in-house and outsourcing options.
In your words, describe a Flexible Operating Budget and a Static Budget and the major differences between them.
Kapital Inc. has prepared the operating budget for the first quarter of 2015. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales)
Miscellaneous expenses: (5% of Sales)
Fixed: Salary expense: $8,000 per month
Rent expense: $5,000 per month
Depreciation expense: $1,200 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1,000 per month
Calculate total selling and administrative expenses for the month of January & February.
McPherson Company is facing a $6 increase in the variable cost of producing one of its products for the upcoming year. Because of this situation, the sales manager has made a proposal to increase the selling price of the product while increasing the advertising budget at the same time. The price increase will lower sales volume, but the other changes may help the company maintain its profit margins. McPherson has provided the following information regarding the current year results and the proposal made by the sales manager:

Current Year
Unit sales
Sales price per unit
Variable cost per unit
Fixed cost

Relative to the current year, the sales manager's proposal will do what to Operating Income? (show calculations to support this)
Evans Company has estimated the following amounts for its next fiscal year:

Total fixed expenses
Sale price per unit
Variable expenses per unit

If the company spends an additional $30,000 on advertising, sales volume would increase by 2,500 units. What effect will this decision have on the operating income of Evans? (show calculations)
Moylan Company has provided the following information:

Variable expenses
Fixed expenses

What will be the change in variable expenses if the sales volume increases by 10%?

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