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Question : 11) A product may be passed from one subunit to : 1186221

Accounting

 

11) A product may be passed from one subunit to another subunit in the same organization. The product is known as

A) an interdepartmental product.

B) an intermediate product.

C) a subunit product.

D) a transfer product.

E) a secondary product.

12) The price one subunit of an organization charges for a product or service supplied to another subunit of the same organization is called

A) an interdepartmental product price.

B) an intermediate product price.

C) a subunit price.

D) a transfer price.

E) a fixed price.

 

13) All of the following criteria may be used to choose a transfer-pricing method EXCEPT

A) promotion of quality products.

B) promotion of a sustained high level of management effort.

C) promotion of a high level of subunit autonomy.

D) promotion of goal congruence.

E) promotion of optimal decision making.

 

14) All of the following are appropriate methods for determining transfer prices EXCEPT

A) cost-based transfer prices.

B) market-based transfer prices.

C) negotiated transfer prices.

D) taxation policies.

E) cost based transfer prices at 110% of full cost.

 

15) A transfer pricing method should lead to which of the following results?

A) managers always acting in their own best interest

B) managers acting in their own best interest and their decisions being in the long-term best interest of the manager’s subunit

C) managers acting in their own best interest and their decisions being in the long-term best interest of the company

D) managers acting in their own best interest and their decisions being in the short-term best interest of the company

E) managers competing with each other

 

16) Subunits X and Y determined the price for interdepartmental services during the last monthly meeting, using the selling prices charged to outside parties. This is an example of

A) subunit transfer prices.

B) negotiated transfer prices.

C) market-based transfer prices.

D) cost-based transfer prices.

E) multinational transfer pricing.

 

Use the information below to answer the following question(s).

 

Blackoil Corp. has two divisions, Refining and Production. The company’s primary product is Clean Oil. Each division’s costs are provided below:

 

Refining:

Variable costs per litre of oil

$30

 

Fixed costs per litre of oil

$24

 

 

 

Production:

Variable costs per litre of oil

$6

 

Fixed costs per litre of oil

$4

 

The Production Division is able to sell the oil to other areas for $24 per litre. The Refining Division has been operating at a capacity of 80,000 litres a day, using oil from the Production Division and oil purchased from other suppliers. The Refining Division usually purchases 50,000 litres of oil, on average, from the Production Division and 30,000 litres, on average, from other suppliers at $40/litre.

 

17) What is the transfer price per litre assuming the method used is 175% of variable costs?

A) $10.50

B) $12.00

C) $17.50

D) $24.50

E) $12.50

 

18) What is the transfer price per litre from the Production Division to the Refining Division assuming the method is 120% of full costs?

A) $16.80

B) $12.00

C) $9.50

D) $7.20

E) $12.50

19) What is the transfer price per litre from production to refining if the market price method of pricing is used?

A) $24

B) $32

C) $36

D) $40

E) $38

 

20) What is the Production Division’s operating income per 200 litres of oil reported under the 175% of variable costs method?

A) $1,500

B) $880

C) $100

D) $(100)

E) $1,200

 

 

 

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July 1, 2023
    

 

101. On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: 

A. Debit Bond Interest Expense $14,000; credit Cash $14,000.

B. Debit Bond Interest Expense $28,000; credit Cash $28,000.

C. Debit Bond Interest Expense $14,200; credit Cash $14,000; credit Discount on Bonds Payable $200.

D. Debit Bond Interest Expense $13,800; debit Discount on Bonds Payable $200; credit Cash $14,000.

E. Debit Bond Interest Expense $14,000; debit Discount on Bonds Payable $200; credit Cash $14,200.

102. A company issued 5-year, 7% bonds with a par value of $100,000. The company received $97,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is: 

A. $3,294.70.

B. $3,500.00.

C. $3,705.30.

D. $7,000.00.

E. $7,410.60.

103. The effective interest amortization method: 

A. Allocates bond interest expense over the bond's life using a changing interest rate.

B. Allocates bond interest expense over the bond's life using a constant interest rate.

C. Allocates a decreasing amount of interest over the life of a discounted bond.

D. Allocates bond interest expense using the current market rate for each interest period.

E. Is not allowed by the FASB.

104. A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,947 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is: 

A. $3,500.00.

B. $3,673.01.

C. $3,705.30.

D. $7,000.00.

E. $7,346.03.

105. The market value of a bond is equal to: 

A. The present value of all future cash payments provided by a bond.

B. The present value of all future interest payments provided by a bond.

C. The present value of the principal for an interest-bearing bond.

D. The future value of all future cash payments provided by a bond.

E. The future value of all future interest payments provided by a bond.

106. The Premium on Bonds Payable account is a(n): 

A. Revenue account.

B. Adjunct or accretion liability account.

C. Contra revenue account.

D. Contra asset account.

E. Contra liability account.

107. Adidas issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is True? 

A. Adidas must pay $200,000 at maturity and no interest payments.

B. Adidas must pay $206,948 at maturity and no interest payments.

C. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

D. Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each.

E. Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.

108. A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a: 

A. Credit to Interest Income.

B. Credit to Premium on Bonds Payable.

C. Credit to Discount on Bonds Payable.

D. Debit to Premium on Bonds Payable.

E. Debit to Discount on Bonds Payable.

109. If an issuer sells bonds at a date other than an interest payment date: 

A. This means the bonds sell at a premium.

B. This means the bonds sell at a discount.

C. The issuing company will report a loss on the sale of the bonds.

D. The issuing company will report a gain on the sale of the bonds.

E. The buyers normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date.

110. A company issues at par 9% bonds with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. The cash received for accrued interest on April 1 by the bond issuer is: 

A. $750.

B. $5,250.

C. $1,500.

D. $3,000.

E. $6,000.

 

default image
July 1, 2023
    

 

101. On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: 

A. Debit Bond Interest Expense $14,000; credit Cash $14,000.

B. Debit Bond Interest Expense $28,000; credit Cash $28,000.

C. Debit Bond Interest Expense $14,200; credit Cash $14,000; credit Discount on Bonds Payable $200.

D. Debit Bond Interest Expense $13,800; debit Discount on Bonds Payable $200; credit Cash $14,000.

E. Debit Bond Interest Expense $14,000; debit Discount on Bonds Payable $200; credit Cash $14,200.

102. A company issued 5-year, 7% bonds with a par value of $100,000. The company received $97,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is: 

A. $3,294.70.

B. $3,500.00.

C. $3,705.30.

D. $7,000.00.

E. $7,410.60.

103. The effective interest amortization method: 

A. Allocates bond interest expense over the bond's life using a changing interest rate.

B. Allocates bond interest expense over the bond's life using a constant interest rate.

C. Allocates a decreasing amount of interest over the life of a discounted bond.

D. Allocates bond interest expense using the current market rate for each interest period.

E. Is not allowed by the FASB.

104. A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,947 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is: 

A. $3,500.00.

B. $3,673.01.

C. $3,705.30.

D. $7,000.00.

E. $7,346.03.

105. The market value of a bond is equal to: 

A. The present value of all future cash payments provided by a bond.

B. The present value of all future interest payments provided by a bond.

C. The present value of the principal for an interest-bearing bond.

D. The future value of all future cash payments provided by a bond.

E. The future value of all future interest payments provided by a bond.

106. The Premium on Bonds Payable account is a(n): 

A. Revenue account.

B. Adjunct or accretion liability account.

C. Contra revenue account.

D. Contra asset account.

E. Contra liability account.

107. Adidas issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is True? 

A. Adidas must pay $200,000 at maturity and no interest payments.

B. Adidas must pay $206,948 at maturity and no interest payments.

C. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

D. Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each.

E. Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.

108. A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a: 

A. Credit to Interest Income.

B. Credit to Premium on Bonds Payable.

C. Credit to Discount on Bonds Payable.

D. Debit to Premium on Bonds Payable.

E. Debit to Discount on Bonds Payable.

109. If an issuer sells bonds at a date other than an interest payment date: 

A. This means the bonds sell at a premium.

B. This means the bonds sell at a discount.

C. The issuing company will report a loss on the sale of the bonds.

D. The issuing company will report a gain on the sale of the bonds.

E. The buyers normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date.

110. A company issues at par 9% bonds with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. The cash received for accrued interest on April 1 by the bond issuer is: 

A. $750.

B. $5,250.

C. $1,500.

D. $3,000.

E. $6,000.

 

default image
July 1, 2023
    

 

101. On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: 

A. Debit Bond Interest Expense $14,000; credit Cash $14,000.

B. Debit Bond Interest Expense $28,000; credit Cash $28,000.

C. Debit Bond Interest Expense $14,200; credit Cash $14,000; credit Discount on Bonds Payable $200.

D. Debit Bond Interest Expense $13,800; debit Discount on Bonds Payable $200; credit Cash $14,000.

E. Debit Bond Interest Expense $14,000; debit Discount on Bonds Payable $200; credit Cash $14,200.

102. A company issued 5-year, 7% bonds with a par value of $100,000. The company received $97,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is: 

A. $3,294.70.

B. $3,500.00.

C. $3,705.30.

D. $7,000.00.

E. $7,410.60.

103. The effective interest amortization method: 

A. Allocates bond interest expense over the bond's life using a changing interest rate.

B. Allocates bond interest expense over the bond's life using a constant interest rate.

C. Allocates a decreasing amount of interest over the life of a discounted bond.

D. Allocates bond interest expense using the current market rate for each interest period.

E. Is not allowed by the FASB.

104. A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,947 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is: 

A. $3,500.00.

B. $3,673.01.

C. $3,705.30.

D. $7,000.00.

E. $7,346.03.

105. The market value of a bond is equal to: 

A. The present value of all future cash payments provided by a bond.

B. The present value of all future interest payments provided by a bond.

C. The present value of the principal for an interest-bearing bond.

D. The future value of all future cash payments provided by a bond.

E. The future value of all future interest payments provided by a bond.

106. The Premium on Bonds Payable account is a(n): 

A. Revenue account.

B. Adjunct or accretion liability account.

C. Contra revenue account.

D. Contra asset account.

E. Contra liability account.

107. Adidas issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adidas received $206,948 in cash proceeds. Which of the following statements is True? 

A. Adidas must pay $200,000 at maturity and no interest payments.

B. Adidas must pay $206,948 at maturity and no interest payments.

C. Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

D. Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each.

E. Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.

108. A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a: 

A. Credit to Interest Income.

B. Credit to Premium on Bonds Payable.

C. Credit to Discount on Bonds Payable.

D. Debit to Premium on Bonds Payable.

E. Debit to Discount on Bonds Payable.

109. If an issuer sells bonds at a date other than an interest payment date: 

A. This means the bonds sell at a premium.

B. This means the bonds sell at a discount.

C. The issuing company will report a loss on the sale of the bonds.

D. The issuing company will report a gain on the sale of the bonds.

E. The buyers normally pay the issuer the purchase price plus any interest accrued since the prior interest payment date.

110. A company issues at par 9% bonds with a par value of $100,000 on April 1, which is 4 months after the most recent interest date. The cash received for accrued interest on April 1 by the bond issuer is: 

A. $750.

B. $5,250.

C. $1,500.

D. $3,000.

E. $6,000.

 

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