Partnerships and sole proprietorships

Partnerships and sole proprietorships

partnerships and sole proprietorships


Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Reduced legal liability for investors. Harder to transfer ownership. Lower taxes. Most common form of organization. The group of users of accounting information charged with achieving the goals of the business is its

managers. auditors. investors. creditors. Which of the following financial statements is concerned with the company at a point in time?

Retained Earnings statement. Income statement. Statement of cash flows. Balance sheet. An income statement

reports the changes in assets, liabilities, and stockholders’ equity over a period of time. presents the revenues and expenses for a specific period of time. reports the assets, liabilities, and stockholders’ equity at a specific date. summarizes the changes in retained earnings for a specific period of time. The most important information needed to determine if companies can pay their current obligations is the

relationship between short-term and long-term liabilities. projected net income for next year. net income for this year. relationship between current assets and current liabilities. A liquidity ratio measures the

ability of a company to survive over a long period of time. short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash. percentage of total financing provided by creditors. income or operating success of a company over a period of time. The convention of consistency refers to consistent use of accounting principles

within industries. among accounting periods. among firms. throughout the accounting periods. Horizontal analysis is also known as

linear analysis. vertical analysis. common size analysis. trend analysis. Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

to determine the amount and/or percentage increase or decrease that has taken place. that has been arranged from the highest number to the lowest number. that has been arranged from the lowest number to the highest number. to determine which items are in error. Vertical analysis is a technique that expresses each item in a financial statement

starting with the highest value down to the lowest value. as a percent of the item in the previous year. as a percent of a base amount. in dollars and cents. Process costing is used when

production is aimed at filling a specific customer order. dissimilar products are involved. costs are to be assigned to specific jobs. the production process is continuous. An important feature of a job order cost system is that each job

has its own distinguishing characteristics. must be completed before a new job is accepted. consists of one unit of output. must be similar to previous jobs completed. In a process cost system, product costs are summarized:

on job cost sheets. when the products are sold. after each unit is produced. on production cost reports. An activity that has a direct cause-effect relationship with the resources consumed is a(n)

cost driver. product activity. overhead rate. cost pool. Activity-based costing

assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. allocates overhead directly to products and services based on activity levels. accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. allocates overhead to multiple activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers. A cost which remains constant per unit at various levels of activity is a

fixed cost. variable cost. mixed cost. manufacturing cost. The break-even point is where

total sales equal total fixed costs. total sales equal total variable costs. contribution margin equals total fixed costs. total variable costs equal total fixed costs. Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point?

$4,000,000 1,500 units 4,000 units $1,500,000 When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using

variable costing. product costing. absorption costing. operations costing. If a division manager’s compensation is based upon the division’s net income, the manager may decide to meet the net income targets by increasing production when using

variable costing, in order to decrease net income. absorption costing, in order to increase net income. absorption costing, in order to decrease net income. variable costing, in order to increase net income An unrealistic budget is more likely to result when it

is developed with performance appraisal usages in mind. has been developed in a bottom up fashion. has been developed by all levels of management. has been developed in a top down fashion. A major element in budgetary control is

the comparison of actual results with planned objectives. the preparation of long-term plans. the valuation of inventories. approval of the budget by the stockholders. The purpose of the sales budget report is to

control sales commissions. determine whether sales goals are being met. control selling expenses. determine whether income objectives are being met. The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

static reporting. flexible accounting. responsibility accounting. master budgeting. Variance reports are

(a) external financial reports. (b) SEC financial reports. (c) internal reports for management. (d) all of these. Internal reports that review the actual impact of decisions are prepared by

management accountants. the controller. factory workers. department heads. The process of evaluating financial data that change under alternative courses of action is called

double entry analysis. incremental analysis. cost-benefit analysis. contribution margin analysis. Seasons Manufacturing manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

Income would increase by $8,000. Income would increase by $40,000. Income would increase by $140,000. Income would decrease by $8,000. Carter, Inc. can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 20,000 Variable Overhead 60,000 Fixed Overhead 40,000

If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

Buy and save $30,000 Buy and save $10,000 Make and save $30,000 Make and save $10,000 A company has a process that results in 15,000 pounds of Product A that can be sold for $16 per pound. An alternative would be to process Product A further at a cost of $200,000 and then sell it for $28 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action?

Process further, the company will be better off by $20,000. Sell now, the company will be better off by $20,000. Process further, the company will be better off by $180,000. Sell now, the company will be better off by $200,000
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