Fill in the Blank Questions Port Pharmacy is considering the purchase of a copying machine, which it will make available to customers at a per copy charge. The copying machine has an initial cost of $8,500, an estimated useful life of five years, and an estimated salvage value of $2,500. The estimated annual revenue and expenses relating to operation of the machine are […]
15.4 Learning Objective 15-4 1) A method that uses average gross profit rate and net sales to compute inventory is: A) the retail method. B) the gross profit method. C) the weighted-average method. D) None of these answers is correct. 2) Hard Candy has a beginning inventory of $2,000. June purchases were $6,000, and retail sales were $3,000. The store has a normal gross […]
51. Which statement regarding the indirect method is false? A. Depreciation expense is added to net income. B. An increase in accounts receivable is added to net income. C. An increase in accounts payable is added to net income. D. An increase in merchandise inventory is subtracted from net income. 52. Which of the following statements about the quality of income ratio is correct? A. When sales are growing, receivables and […]
101. The amount by which a department’s revenues exceed its direct expenses is: A. Net sales. B. Gross profit. C. Departmental profit. D. Contribution margin. E. Departmental contribution to overhead. 102. Departmental contribution to overhead is calculated as revenues of the department less: A. Controllable costs. B. Product and period costs. C. Direct expenses. D. Direct and indirect costs. E. Joint costs. 103. The Footwear Department of Lee’s Department Store had sales of $188,000, cost of goods […]
1.Consolidated statements are proper for Neely, Inc., Randle, Inc., and Walker, Inc., if a.Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Randle owns 30 percent of Walker. b.Neely owns 100 percent of the outstanding common stock of Randle and 90 percent of Walker; Neely bought the stock of Walker one month before the balance sheet date […]
81. The rate of earnings is 10% and the cash to be received in three years is $10,000. Determine the present value amount, using the following partial table of present value of $1 at compound interest: Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 A. $13,316B. $6,830C. $7,510D. $8,260 82. Using the […]
41.Which of the following would be reported as a financing activity on the statement of cash flows? A. Dividends collected from an investment in marketable securities. B. Note payable issued to purchase equipment. C. Purchase of investment securities. D. Cash paid for the purchase of treasury stock. 42.In 2014, Wade Company reported wages expense of $32,000. The beginning balance in wages payable […]
23.3 Assess the market-based transfer price method. 1) When the intermediate market is perfectly competitive, interdependencies of subunits are minimal, and there are additional costs to the corporation as a whole in using the market instead of transacting internally. 2) When demand outstrips supply, market prices may drop below historical averages. These prices are known as distress prices. 3) Under distress […]
68. Which of the following statements concerning materiality is true? A. Generally accepted accounting principles are violated if estimates are used in end-of-period adjustments. B. Each year the Financial Accounting Standards Board (FASB) publishes the dollar amount considered “material” for each industry. C. Immaterial items should be handled in the most expedient manner, even if resulting financial statements are not completely precise. D. Accountants should not waste time […]
61. Which of the following items will not appear on a cash budget? A. Expected cash payments B. Expected credit sales C. Expected cash collections D. All of the other answers are correct. 62. Dobson Company expects to begin operating on January 1. The company’s master budget contained the following operating expense budget: Sales commissions are paid in cash in the month following the month in which the expense […]
51) In the short run, a decrease in aggregate demand will lead to
A) a decrease in the price level and an increase in real GDP.
B) an increase in the price level and a decrease in real GDP.
C) a decrease in the price level and an increase in the unemployment rate.
D) an increase in the price level and an increase in real GDP.
E) no change in the price level and a decrease in real GDP.
52) If the economy moves upward along its short-run Phillips curve, in the AS-AD diagram, this movement is shown by a
A) movement upward along the AS curve as a result of a rightward shift of the AD curve.
B) rightward shift of potential GDP.
C) movement downward along the AS curve as a result of a leftward shift of the AD curve.
D) rightward shift of the AS curve and a movement along the AD curve.
E) leftward shift of the AS curve and a movement along the AD curve.
53) If aggregate demand increases, thereby leading to an increase in real GDP and inflation, there is
A) a movement downward along the short-run Phillips curve.
B) a movement upward along the short-run Phillips curve.
C) a rightward shift in the short-run Phillips curve.
D) a leftward shift in the short-run Phillips curve.
E) neither a movement along nor a shift in the short-run Phillips curve.
54) The relationship between the AS-AD model and the Phillips curve points out that as aggregate demand increases, the unemployment rate
A) decreases and the inflation rate rises.
B) increases and the inflation rate falls.
C) decreases and the price level falls.
D) increases and the inflation rate rises.
E) decreases and the inflation rate does not change, only the price level rises.
55) Data from the United States and the United Kingdom show that the short-run Phillips curve exhibits
A) a great deal of shifting.
B) stability with shifts occurring only when external forces are strong.
C) stability with shifts occurring only when there is an internal change of government.
D) shifts that occur every five years or so.
E) positive slopes in both nations.
56) Changes in which of the following shift the short-run Phillips curve?
i.changes in the natural unemployment rate
ii.changes in the expected inflation rate
iii.changes in the inflation rate
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii
57) The short-run Phillips curve shows a relationship between the
A) inflation rate and the interest rate.
B) inflation rate and real GDP.
C) unemployment rate and the interest rate.
D) inflation rate and the unemployment rate.
E) price level and real GDP.
58) The short-run Phillips curve is
A) vertical at the natural unemployment rate.
B) upward sloping.
C) downward sloping.
D) horizontal at the expected inflation rate.
E) U-shaped.
59) Moving along the short-run Phillips curve, as the unemployment rate increases the inflation rate
A) decreases.
B) increases.
C) remains unchanged.
D) initially decreases and then increases.
E) initially increases and then decreases.
60) When a movement up along the aggregate supply curve occurs, there is also
A) a movement down along the short-run Phillips curve.
B) a movement up along the short-run Phillips curve.
C) a rightward shift of the short-run Phillips curve.
D) a leftward shift of the short-run Phillips curve.
E) no movement along nor a shift in the short-run Phillips curve.
61) If real GDP exceeds potential GDP, then employment is ________ full employment and the unemployment rate is ________ the natural unemployment rate.
A) below; above
B) equal to; below
C) above; below
D) above; above
E) equal to; equal to
62) According to Okun's Law, if the natural unemployment rate is 5 percent, the actual unemployment rate is 4 percent, and potential GDP is $15 trillion, then actual real GDP is
A) $12.0 trillion.
B) $15.0 trillion.
C) $14.7 trillion.
D) $15.4 trillion.
E) $15.3 trillion.
63) When aggregate demand increases, there is a movement ________ along the AS curve and ________.
A) up; a movement up along the short-run Phillips curve
B) up; a movement down along the short-run Phillips curve
C) up; an upward shift of the short-run Phillips curve
D) down; a downward shift of the short-run Phillips curve
E) down; a movement down along the short-run Phillips curve
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