A $100,000 mortgage note was created, and the note entailed equal monthly payments of $2,500. The interest rate is 1% per month. How much interest expense is associated with the second month? A. $985. B. $1,000. C. $1,515. D. $2,500. E. None of these.

The contract interest rate for bonds: A. must equal the effective interest rate. B. is greater than the effective interest rate when bonds are issued at a premium. C. has no relation to the cash flow associated with a particular bond. D. will fluctuate over the life of a bond. E. None of these.

On April 1, 20X6, Owen issued $100,000 of 12%, 10-year bonds. The bonds were issued at par plus accrued interest, are dated January 1, 20X6, and pay interest on July and January 1. Interest expense for the year ending December 31, 20X6 is: A. $12,000. B. $9,000. C. $6,000. D. $3,000. E. None of these.

Which of the following statements is true? A. Preemptive rights make it easy for a corporation to issue additional shares. B. One purpose of a corporation is to avoid "double taxation." C. A corporate entity is typically of unlimited duration. D. A corporation can issue common or preferred stock, but not both. E. None of these.

If 100,000 shares of common stock are authorized, but only 50,000 shares are issued, then: A. the other 50,000 shares become the property of the state. B. the other 50,000 shares must be issued within 90 days. C. notes should identify the number of shares authorized, issued, and outstanding. D. the underwriter must purchase the other 50,000 shares. E. None of these.

As a normal rule of thumb, which of the following statements is true? A. Par value exceeds the issue price of common stock. B. Par value is correlated to dividends on common stock. C. Par value is correlated to dividends on preferred stock. D. Par value is equivalent to total paid in capital. E. None of these.

In an effort to concentrate its resources in more profitable areas, Southern Steel Corporation recently sold its family pizza restaurant segment. The disposal constitutes: A. an extraodinary item. B. a discontinued operation which should be treated as a prior period adjustment. C. a discontinued operation which should be disclosed net-of-tax effects. D. a portion of income from continuing operations. E. None of these.

Which of the following events are considered as extraordinary by the accounting profession? A. Write-down or write-off of receivables, inventories, and intangible assets. B. Gains and losses on the disposal of a business segment. C. Gains and losses from the sale or abandonment of property, plant, and equipment. D. Effects of a strike, including those against competitors and major suppliers. E. None of these.

Which formula "calculates" the return on assets ratio? A. (Net Income + Interest Expense)/Average Assets. B. (Net Income + Extraordinary Items)/Average Assets C. (Net Income + Discontinued Operations)/Average Assets D. (Net Income + Income Tax Expense)/Average Assets. E. None of these.

Financial statement ratio analysis may be undertaken to study liquidity, turnover, profitability, and other measures. What type of ratio is the return on equity ratio? A. Liquidity. B. Turnover. C. Profitability. D. Other. E. None of these.

Taylor Company had net income of $50,000, paid income taxes of $20,000, and had before tax interest expense of $10,000. What was Taylor's times interest earned ratio? A. 5 B. 6 C. 7 D. 8 E. None of these.

Star Corporation wrote off a $100 uncollectible account receivable against the $1,200 balance in its allowance account. Compare the current ratio before the write-off (X) with the current ratio after the write-off (y). A. X greater than Y. B. X equals Y. C. X less than Y. D. Cannot be determined. E. None of these.

Managerial decision making is supported by accounting information related to: A. planning. B. directing. C. controlling. D. All of these. E. None of these.

Which of these acronyms is generally not applicable to some form of inventory management? A. RFID. B. JIT. C. EOQ. D. POP. E. None of these.

Manufacturing costs or product costs consist of: A. factory overhead. B. direct materials and direct labor. C. direct labor and factory overhead. D. direct materials, direct labor, and factory overhead. E. None of these.

Within a "relevant range," which of the following statements about fixed costs is true? A. Fixed costs are constant per unit of production. B. Fixed costs per unit will fall as production rises. C. Total fixed costs change as production volume changes. D. Fixed costs are costs which are paid uniformly over a year. E. None of these.

Straight-line depreciation on a building would best be classified as a: A. variable cost. B. committed fixed cost. C. discretionary fixed cost. D. mixed cost. E. None of these.

Employee salaries which consist of a $35,000 base amount plus 12% of sales would best be classified as a: A. variable cost. B. committed fixed cost. C. discretionary fixed cost. D. mixed cost. E. None of these.

In job order costing, the basic document to accumulate the cost of each order is the: A. invoice. B. purchase order. C. requisition sheet. D. job cost sheet. E. None of these.

Individual job-order cost sheets reflect the accumulation and/or assignment of costs related to: A. direct labor. B. direct materials. C. factory overhead. D. A, B, and C are all included. E. None of these.

Jose Company uses a job order cost system. At the end of an accounting period, Jose has a debit balance in the Factory Overhead account. This would indicate: A. a loss for the period. B. underapplied overhead. C. overapplied overhead. D. a malfunction in the job order cost system. E. None of these.

An equivalent unit of material is equal to: A. the amount of material necessary to complete one unit of production. B. a unit of work in process inventory. C. the amount of material necessary to start a unit of production into work in process. D. fifty percent of the material cost of a unit of finished goods. E. None of these.

Process cost accounting systems: A. employ job cost sheets. B. often accumulate work in process amounts by department. C. do not allow for overhead allocations. D. All of the above. E. None of these.

In computing percentage of completion of ending work in process, a lower percentage-of-completion was attached to each component of inventory than actually was the case. What is the resultant effect of this error on the calculation of cost per equivalent unit? A. No effect B. Understate C. Overstate D. Cannot be determined E. None of these.

The top-down budget development approach the budget: A. is imposed on lower-level personnel who rarely are involved in budget construction. B. centers on lower-level employee participation. C. process begins with the issuance of general guidelines by top management. D. Both B and C. E. None of these.

If budgeted sales increase from $100,000 to $110,000, budgeted production: A. should be increased by $10,000. B. should be increased by 9.1%. C. should be increased by 10%. D. could possibly decrease. E. None of these.

Which of the following budgets is not specifically dependent on the short-run production budget? A. Direct materials budget. B. Direct labor budget. C. Factory overhead budget. D. Capital expenditures budget. E. None of these.

The formula for calculating return on investment (ROI) can be reduced to: A. margin divided by turnover. B. sales divided by assets. C. income divided by sales. D. assets divided by income. E. None of these.

When used for performance evaluation, periodic internal reports based on a responsibility accounting system should not: A. be related to the organization chart. B. include allocated common fixed costs. C. include variances between actual and budgeted controllable costs. D. distinguish between controllable and noncontrollable costs. E. None of these.