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Question : 61) Responsibility accounting a system that 61) ______ A) deals : 1196260

Accounting

 

61) Responsibility accounting is a system that 61) ______ A) deals mainly with revenues. B) measures the plans and actions of responsibility centres. C) requires subdividing all management levels. D) is most appropriate at the top levels of the organization. E) is closely tied to the master budget.

62) Which of the following statements is FALSE concerning controllability of costs? 62) ______ A) Controllable costs are difficult to identify with much accuracy. B) Few costs are under the sole influence of any one manager. C) Variable costs are controllable costs. D) All costs are controllable, given a sufficiently long time period. E) Senior managers differ in their reliance on controllable costs for performance measurement.

63) A traditional criticism of traditional budgeting is “Excessive reliance on extrapolating past trends”. Which of the following is a proposal for change to address this criticism? 63) ______ A) adopt a cross-functional approach B) use activity-based-budgeting C) balance financial aspects with nonfinancial D) signal to all employees, the need for continuous improvement E) link budgeting explicitly to strategy

64) One of the criticisms of traditional budgeting is not using budgets to evaluate performance until the end of the budget period. Which of the following proposals for change would address this criticism? 64) ______ A) relying strictly on extrapolation of past performance B) link budgeting explicitly to strategy C) balance financial aspects with non-financial aspects (such as quality and time) D) inform employees of the need for continuous improvement in performance within the budget period E) use Kaizen budgeting to guide areas for cost reduction before the end of the budget period

65) Boone Hobbies, a wholesaler, has a sales budget for next month of $600,000. Cost of units sold is expected to be 40 percent of sales. All units are paid for in the month following purchase. The beginning inventory of units is $20,000, and an ending amount of $24,000 is desired. Beginning accounts payable is $152,000.

Cash used to pay accounts payable for the month totalled 65) ______ A) $152,000 B) $156,000 C) $244,000 D) $148,600 E) $240,000

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

 

Copper Corporation has the following sales budget for the last six months of 2007:

 

July $200,000

 

October$180,000

August 160,000

 

November200,000

September220,000

 

December188,000

 

Historically, the cash collection of sales has been as follows:

65 percent of sales collected in month of sale,

25 percent of sales collected in month following sale,

8 percent of sales collected in second month following sale, and

2 percent of sales is uncollectible.

66) Cash collections for September are 66) ______ A) $161,400 B) $143,000 C) $204,000 D) $199,000 E) $240,000

67) What is the ending balance of accounts receivable for September assuming uncollectible balance is written off after the second month? 67) ______ A) $88,000 B) $89,800 C) $199,000 D) $97,000 E) $93,000

68) Cash collections for October are 68) ______ A) $199,000 B) $174,000 C) $176,400 D) $117,000 E) $184,800

69) The cash budget is a schedule of expected cash receipts and disbursements that 69) ______ A) is prepared immediately after the sales forecast. B) predicts the effect on the cash position at given levels of operations. C) is a self-liquidating cycle. D) requires an aging of accounts receivable and accounts payable. E) is prepared by the organization’s bank.

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

 

Grinnell Manufacturing Company has the following information:

 

Month

Budgeted Sales

January

$76,000

February

85,000

March

 

92,000

April

79,000

Budgeted Expenses per Month

Wages

$15,000

Advertising

12,000

Depreciation

3,000

Other

4 percent of sales

Note: All cash expenses are paid as incurred.

70) What is the expected total cash disbursements for expenses in February? 70) ______ A) $34,400 B) $30,200 C) $32,000 D) $30,400 E) $30,000

 

71) What are the expected total cash disbursements for expenses in January? 71) ______ A) $30,000 B) $30,040 C) $29,000 D) $33,040 E) $28,200

72) What are the expected total cash disbursements for expenses in March? 72) ______ A) $27,000 B) $30,680 C) $30,040 D) $30,400 E) $32,000

 

 

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July 1, 2023
    

 

 

106. An estimated liability: 
A. Is an unknown liability of a certain amount.
B. Is a known obligation of an uncertain amount that can be reasonably estimated.
C. Is a liability that may occur if a future event occurs.
D. Can be the result of a lawsuit.
E. Is not recorded until the amount is known for certain.

107. Estimated liabilities commonly arise from all of the following except: 
A. Warranties.
B. Vacation benefits.
C. Income taxes.
D. Employee benefits.
E. Unearned revenues.

 

 

108. Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July? 
A. $25
B. $100
C. $250
D. $2,500
E. $25,000

 

 

109. Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits? 
A. Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.
B. Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
C. Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.
D. Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.
E. Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.

 

 

110. Employee vacation benefits: 
A. Are estimated liabilities.
B. Are contingent liabilities.
C. Are recorded as an expense when the employee takes a vacation.
D. Are recorded as an expense when the employee retires.
E. Increase net income.

 

 

111. A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: 
A. Consider the warranty expense a remote liability since the rate is only 2%.
B. Recognize warranty expense at the time the warranty work is performed.
C. Recognize warranty expense and liability in the year of the sale.
D. Consider the warranty expense a contingent liability.
E. Recognize warranty liability when the company purchases the bicycles.

 

112. A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The current period’s entry to record the warranty expense is: 
A. Debit Warranty Expense $240; credit Cash $240.
B. Debit Prepaid Warranties $240; credit Warranty Expense $240.
C. Debit Estimated Warranty Liability $240; credit Cash $240.
D. Debit Sales Allowances $240; credit Estimated Warranty Liability $240.
E. Debit Warranty Expense $240; credit Estimated Warranty Liability $240.

 

113. The deferred income tax liability: 
A. Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.
B. Is a contingent liability.
C. Can result in a deferred income tax asset.
D. Is never recorded.
E. Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary.

 

114. A company estimates that warranty expense will be 4% of sales. The company’s sales for the current period are $185,000. The current period’s entry to record the warranty expense is: 
A. Debit Warranty Expense $7,400; credit Sales $7,400.
B. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400.
C. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400
D. Debit Estimated Warranty Liability $7,400; credit Cash $7,400.
E. No entry is recorded until the items are returned for warranty repairs.

 

 

115. A company has a selling price of $1,800 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 printers, and 400 printers were serviced under the warranty at a total cost of $55,000. The balance in the Estimated Warranty Liability account at November 1 was $29,000. What is the company’s warranty expense for the month of November? 
A. $26,000
B. $45,000
C. $55,000
D. $60,000
E. $90,000

 

 

 

default image
July 1, 2023
    

 

 

106. An estimated liability: 
A. Is an unknown liability of a certain amount.
B. Is a known obligation of an uncertain amount that can be reasonably estimated.
C. Is a liability that may occur if a future event occurs.
D. Can be the result of a lawsuit.
E. Is not recorded until the amount is known for certain.

107. Estimated liabilities commonly arise from all of the following except: 
A. Warranties.
B. Vacation benefits.
C. Income taxes.
D. Employee benefits.
E. Unearned revenues.

 

 

108. Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July? 
A. $25
B. $100
C. $250
D. $2,500
E. $25,000

 

 

109. Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits? 
A. Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.
B. Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
C. Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.
D. Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.
E. Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.

 

 

110. Employee vacation benefits: 
A. Are estimated liabilities.
B. Are contingent liabilities.
C. Are recorded as an expense when the employee takes a vacation.
D. Are recorded as an expense when the employee retires.
E. Increase net income.

 

 

111. A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: 
A. Consider the warranty expense a remote liability since the rate is only 2%.
B. Recognize warranty expense at the time the warranty work is performed.
C. Recognize warranty expense and liability in the year of the sale.
D. Consider the warranty expense a contingent liability.
E. Recognize warranty liability when the company purchases the bicycles.

 

112. A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The current period’s entry to record the warranty expense is: 
A. Debit Warranty Expense $240; credit Cash $240.
B. Debit Prepaid Warranties $240; credit Warranty Expense $240.
C. Debit Estimated Warranty Liability $240; credit Cash $240.
D. Debit Sales Allowances $240; credit Estimated Warranty Liability $240.
E. Debit Warranty Expense $240; credit Estimated Warranty Liability $240.

 

113. The deferred income tax liability: 
A. Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.
B. Is a contingent liability.
C. Can result in a deferred income tax asset.
D. Is never recorded.
E. Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary.

 

114. A company estimates that warranty expense will be 4% of sales. The company’s sales for the current period are $185,000. The current period’s entry to record the warranty expense is: 
A. Debit Warranty Expense $7,400; credit Sales $7,400.
B. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400.
C. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400
D. Debit Estimated Warranty Liability $7,400; credit Cash $7,400.
E. No entry is recorded until the items are returned for warranty repairs.

 

 

115. A company has a selling price of $1,800 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 printers, and 400 printers were serviced under the warranty at a total cost of $55,000. The balance in the Estimated Warranty Liability account at November 1 was $29,000. What is the company’s warranty expense for the month of November? 
A. $26,000
B. $45,000
C. $55,000
D. $60,000
E. $90,000

 

 

 

default image
July 1, 2023
    

 

 

106. An estimated liability: 
A. Is an unknown liability of a certain amount.
B. Is a known obligation of an uncertain amount that can be reasonably estimated.
C. Is a liability that may occur if a future event occurs.
D. Can be the result of a lawsuit.
E. Is not recorded until the amount is known for certain.

107. Estimated liabilities commonly arise from all of the following except: 
A. Warranties.
B. Vacation benefits.
C. Income taxes.
D. Employee benefits.
E. Unearned revenues.

 

 

108. Employees earn vacation pay at the rate of one day per month. During the month of July, 25 employees qualify for one vacation day each. Their average daily wage is $100 per day. What is the amount of vacation benefit expense to be recorded for the month of July? 
A. $25
B. $100
C. $250
D. $2,500
E. $25,000

 

 

109. Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits? 
A. Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.
B. Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
C. Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.
D. Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.
E. Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.

 

 

110. Employee vacation benefits: 
A. Are estimated liabilities.
B. Are contingent liabilities.
C. Are recorded as an expense when the employee takes a vacation.
D. Are recorded as an expense when the employee retires.
E. Increase net income.

 

 

111. A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The company should: 
A. Consider the warranty expense a remote liability since the rate is only 2%.
B. Recognize warranty expense at the time the warranty work is performed.
C. Recognize warranty expense and liability in the year of the sale.
D. Consider the warranty expense a contingent liability.
E. Recognize warranty liability when the company purchases the bicycles.

 

112. A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The current period’s entry to record the warranty expense is: 
A. Debit Warranty Expense $240; credit Cash $240.
B. Debit Prepaid Warranties $240; credit Warranty Expense $240.
C. Debit Estimated Warranty Liability $240; credit Cash $240.
D. Debit Sales Allowances $240; credit Estimated Warranty Liability $240.
E. Debit Warranty Expense $240; credit Estimated Warranty Liability $240.

 

113. The deferred income tax liability: 
A. Results from the income tax expense reported on the income statement differing from the amount of income taxes payable to the government.
B. Is a contingent liability.
C. Can result in a deferred income tax asset.
D. Is never recorded.
E. Is recorded whether or not the difference between taxable income and financial accounting income is permanent or temporary.

 

114. A company estimates that warranty expense will be 4% of sales. The company’s sales for the current period are $185,000. The current period’s entry to record the warranty expense is: 
A. Debit Warranty Expense $7,400; credit Sales $7,400.
B. Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400.
C. Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400
D. Debit Estimated Warranty Liability $7,400; credit Cash $7,400.
E. No entry is recorded until the items are returned for warranty repairs.

 

 

115. A company has a selling price of $1,800 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each. During November, the company sold 30,000 printers, and 400 printers were serviced under the warranty at a total cost of $55,000. The balance in the Estimated Warranty Liability account at November 1 was $29,000. What is the company’s warranty expense for the month of November? 
A. $26,000
B. $45,000
C. $55,000
D. $60,000
E. $90,000

 

 

 

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