Questions and Answers of Introduction To Accounting

What is an account and where is it located in a manual accounting system?
Refer to E7.15. Prepare the balance sheet for Wagner Services, Inc., as of August 31, 2018.Data from E7.15Given this adjusted trial balance for Wagner Services, Inc., prepare the income statement and
What is the difference between a general journal and the ledger and why is each needed in the accounting system?
What is the difference between journalizing and posting? Which occurs first?
What is the accounting cycle?
What is the difference between an expense and a revenue accrual?
Refer to E7.15. Prepare the closing entries for Wagner Services, Inc., on August 31, 2018.Data from E7.15Given this adjusted trial balance for Wagner Services, Inc., prepare the income statement and
What is a contra account? If an account is a contra liability, what is its normal balance?
On January 1, 2018, the start of its fiscal year, the Straley Company had these account balances.During the year, the company was involved in the following operating events:Make the entries for
Farris Corporation had the following operating events occur during the month of August 2018. Farris Corporation’s fiscal year-end is August 31.1 Paid $5,000 for four months’ rent in advance.2
An abbreviated payroll register for the Achermann Corporation for the week ending August 18, 2019, follows:Prepare the journal entry to record the following:1. Payment of the weekly payroll.2. The
Refer to the company you chose in C1.1. Based on your knowledge of this company, answer the following.A. Estimate the cash paid for inventory.B. Estimate the cash paid for operating expenses.C. What
Mr. X, the owner of XYZ Company, is having some cash flow problems. He is unable to take discounts on inventory and, in fact, is having trouble paying his inventory invoices as they become due. The
Gross pay for the employees of Adams Supply Company for September 2019 is as follows:Information on withholding and taxes:1. Federal income tax withheld, $62,000.2. FICA taxes withheld on employees,
Design a payroll register.
At the end of the fiscal year on June 30, 2018, Weisz Industries had unpaid accrued wages of $260,000. Assuming a FICA tax rate of 7.65 percent, a FUTA tax rate of 0.6 percent, and a SUTA tax rate of
Refer to E8.6. Determine the effect of each of the events on the accounting equation.Data from E8.6Using perpetual inventory procedures, journalize the following transactions on the books of Murray
Given the following account balances, determine the cash paid for insurance, office supplies, and wages in 2019. Prepaid insurance Office supplies Wages payable Insurance expense Office supplies
Who pays FICA taxes, the employee or the employer? Why?
What is the difference between prepaid rent and rent expense?
The Cole Corporation had cost of goods sold of $685,000 during 2018. Based on the beginning and ending balances of the Inventory and Accounts Payable—Merchandise accounts, how much cash did Cole
What is the difference between supplies and supplies expense?
What is the purpose of the account Accumulated Depreciation?
What is the difference between utilities expense and utilities payable?
A company’s Inventory account increased during the period. Is cost of goods sold greater than or less than the amount of net purchases during the period? Why?
A company’s Accounts Payable—Merchandise Inventory account decreased during the period. Were the net purchases on account greater than or less than the cash paid for purchases? Why?
How does a company decide whether to use a perpetual or a periodic inventory system?
How does a company decide whether to use the gross or net price method to record inventory?
Why would a company compare its actual financial results to its budgeted financial results?
Romero, Inc., had a $60,000 balance in its Accounts Payable account at the beginning of the year. By year-end this balance had increased by $10,000. During the year, Romero made $630,000 of
Refer to E3.15. These data were entered into a regression program, resulting in the following output. Use this output to determine the expected cost if 1,000 items are shipped in one month.Data from
What does each element in the equation Y = a + b (X) indicate in terms of costs?
What does each element in the equation Y = a + b (X) indicate in terms of revenues?
What are the advantages and disadvantages of the high/low method?
Refer to E3.18. What is the R square for this analysis? Evaluate the strength of the linear regression analysis.Data from E3.18Refer to E3.17. These data were entered into a linear regression
Define the following terms used in regression analysis:(a) Independent variable(b) Dependent variable(c) R square.
Refer to E3.16. What is the R square for this analysis? Evaluate the strength of this linear regression relationship.Data from E3.16Refer to E3.15. These data were entered into a regression program,
Is an R square of 0.9 good? Why or why not?
Explain how to use the output of linear regression analysis to define the cost (or revenue) line.
Explain how to calculate before-tax profit by using after-tax profit.
Crow, Inc., a not-for-profit company, has a product contribution margin of $40. The fixed costs are $800,000. Crow, Inc., has set a target profit of $35,000 per year.A. What is the breakeven point in
Explain each of the following: contribution margin per unit and contribution margin ratio.
Meeker Company is developing a new product. The selling price has not yet been determined, nor are the variable costs per unit known. The fixed costs are $600,000. Management plans to set the selling
Weber, Inc., sells its one product for $120 per unit. The variable cost per unit is $30. The fixed cost per year is $900,000.A. What is the contribution margin per unit?B. What is the breakeven point
In the 1980s, Ford Motor Company was taken to court to defend its safety practices concerning the Pinto in the 1970s. Apparently, the Pinto could burst into flames in crashes at 30 miles per hour if
Examine the following graph. Identify each of the items listed.A. _______B. _______C. _______D. _______E. _______F. _______G. _______ A B C E LL F
How is activity defined in cost-volume-profit analysis?
Refer to E3.21. These data were entered into a regression program, resulting in the following output. What is Batchelor’s revenue formula according to the regression analysis?Data from
Explain how short-term operating decisions differ from other decisions made by managers.
Use the following information to determine the profit equation: Selling price per unit ........................... $65Variable cost per
Long pre Company distributes insect repellent. Each can of repellent sells for $4.00. The variable cost per can of repellent is $0.75. The fixed selling and distribution costs are $80,000. The
Buchanan Enterprises has projected its income before taxes as follows:Required:A. What is the selling price per unit?B. What is the variable cost per unit?C. What is the contribution margin per
Explain the difference between product and nonproduct costs.
Discuss the basic assumptions of CVP analysis. Without using any numbers, prepare a graph that illustrates the first four assumptions.
What strategic decisions regarding operations must be made prior to planning operating activities? Be sure to consider strategic decisions related to the revenue process, the conversion process, and
Quinton Corporation produces and sells two types of chili: 1-Alarm and 5-Alarm. Operating performance for the most recent quarter is:Management is puzzled by these results because they spent $120,000
Roberts Shirts is a producer of men’s, women’s, and children’s shirts. Roberts expects to incur the following production costs. Determine whether each of the costs is direct materials, direct
What are the two attributes of a relevant variable?
Refer to E4.10. Classify each of the costs as unit-related, batch-related, product sustaining, or facility-sustaining. Use U for unit-related, B for batch-related, P for product sustaining, and F for
Explain the concept of sunk cost. Are sunk costs ever relevant in short-term operating decisions? Why or why not?
Explain the concept of opportunity cost. Are opportunity costs ever relevant in short-term operating decisions? Why or why not?
Explain the term incremental. How are incremental revenues, costs, and profits used in short-term operating decisions?
What are the steps in a relevant variable analysis?
What factors other than relevant costs and revenues must be considered when making a special order decision?
Refer to E4.17. Assume the contractor has changed its offer. It now proposes to supply all the tablecloths needed at a price of $9.50 per tablecloth. If Roccabruna accepts this offer, it will use the
What is a make-or-buy decision? What are the relevant variables in a make-or-buy decision?
How are opportunity costs incorporated into make-or-buy decisions?
What factors other than costs must be considered before making a make-or-buy decision?
What is a keep-or-drop decision? What are the relevant variables in a keep-or-drop decision?
What factors other than costs and revenues must be considered when making a keep-or drop decision?
Describe the four influences on selling price and how each is related to the balanced scorecard.
Refer to Walt Disney Company (www.disney.com). Based on your knowledge of this company, answer the following questions:A. Describe its customers, competitors, and legal/social environment.B. Do you
Write a paper comparing and contrasting the EOQ and JIT inventory methods. Make sure you compare and contrast.
During the financial crisis of 2008, Congress was particularly upset by the high salaries paid to CEOs of financial institutions that were losing money. Members of Congress argued that CEO
Clark has determined its economic order quantity to be 1,500 units. Demand for the year is 54,000. Five days elapse between the time an order is placed until it is received. Clark conducts business
Refer to PepsiCo (www.pepsico.com). Based on your knowledge of this company, answer the following questions:A. Describe its customers, competitors, and legal/social environment.B. Do you believe
Large companies such as Walmart have been accused in the past of predatory pricing. The accusers argue that a company such as Walmart comes into a smaller community and because of its buying power
What is price fixing?
Refer to Dell Computer (www.dell.com). Based on your knowledge of this company, answer the followingquestions:A. Describe its customers, competitors, and legal/social environment.B. Do you believe
JIT has gained in popularity throughout the business world. Yet we also see companies such as Amazon.com building huge warehouses. Conduct Internet research on the topic of JIT and write a four- to
If a company wishes to use JIT successfully, it must make a lot of demands on its suppliers for more frequent deliveries of smaller batches. This, in turn, increases distribution costs for the
Rossetter, Inc., has 10 employees. Jan and Fred are each paid a salary of $4,000 per month. Joe, Betty, Frankie, and Donita are paid $10 per hour. Abby, Norman, Bill, and Erika arepaid on a
What is price gouging?
Describe how markup pricing is done.
Compare and contrast penetration pricing and predatory pricing.
Refer to E5.6. If Ward, Inc., operates 300 days per year and its lead time is 2 days, what is the reorder point?Data from E5.6Ward, Inc., needs 180,000 units each year to meet its production
Grauberger Company has provided the following budgeting information for you to determine its expected bonus payments and cash outflows. Grauberger’s bonus rate is 15 percent and its tax rate is 30
Refer to P5.7. Assume Grauberger changes the bonus rate to 10 percent.Required:A. If Grauberger’s bonus base is income before bonus or taxes, what is the expected bonus amount?B. If Grauberger’s
Nelson operates 300 days per year. In the past, demand for its product has been fairly steady at 50 units per day. Recently however, customer orders have been inconsistent, ranging from 25 to 150
Praeuner Company has surveyed the market and set a target selling price of $2,000 per unit for its product. Praeuner believes it can sell 100,000 units of this product over its two-year life.
Engelhaupt Company is considering a switch to JIT. It has gathered the following data:In addition, Engelhaupt estimates that its relationship with its customers will improve by 10 percent. Because it
Discuss reasons to hold inventory.
Describe the anticipated cost increases when adopting JIT. Describe the anticipated cost decreases when adopting JIT. How should a company determine whether to adopt JIT?
Discuss reasons to not hold inventory.
What is a stockout cost and why is it important?
Refer to E5.12. Assuming Leithead remits the taxes to the proper authorities during the same period as the employees are paid, what is the expected cash outflow for Leithead (ignore employer
What is the difference between short-run and long-run ordering costs?
McQuary Enterprises plans to pay its managers a bonus to encourage performance. The bonus rate is 12 percent and the bonus base is net income before bonus or taxes. McQuary’s expected income before
What is the difference between short-run and long-run carrying costs?
Refer to E5.14. Determine the amount of the expected cash outflow assuming that taxes and bonus are paid in the budgeting period. Determine the net income expected.Data from E5.14McQuary Enterprises

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