Finance Questions

Which of the following is a period cost?A) Insurance on the factory buildingB) Salesman's commissions on the sale of a productC) Direct materialsD) Factory supervisor's salary

Management wants to use their production facilities to full capacity becauseA) it will reduce the fixed costs per unit.B) it will reduce the total fixed costs.C) it will reduce the variable costs per unit.D) it will reduce the total variable costs.

Last month, Buren, Inc. manufactured 10,000 units of its only product, and the cost per unit was $60. At this level of production, variable costs are 50% of total unit costs. If 10,500 units are manufactured this month and cost behavior patterns remain unchangedA) total variable cost will remain unchanged.B) variable cost per unit will increase.C) fixed costs per unit will increase.D) total cost per unit will decrease.

Venice Company had $46,000 in total assets, $26,000 in current liabilities, and $10,000 in stockholders' equity at December 31, 2026. At that time Venice's current ratio was 1.5. How much did Venice have in current assets at December 31, 2026?A) $24,000B) $15,000C) $10,000D) $39,000

Which of the following would be considered a period cost for a manufacturing firm?A) The fork life driver's wagesB) The president of the company's salaryC) Depreciation on equipment in the factoryD) Property taxes on the factory

Meldrum Company purchased land $6,000 in 2019. During 2025, Meldrum sold one-half of that land for $4,500 and bought another plot of land for $4,000. What was the balance in the land account at December 31, 2025?A) $8,500B) $10,000C) $5,500D) $7,000

Marvelous Company had sales of $66,000 during the year. The company's expenses were advertising expense of $8,000, depreciation expense of $5,000, and cost of goods sold of $16,000. In addition, Marvelous sold a plot of land and incurred a $1,000 loss. What was Marvelous' gross profit for the year?A) $37,000B) $36,000C) $38,000D) $50,000

Your bookkeeper forgot to make the adjustment for depreciation expense at the end of the period. What impact does that error have on your financial statements?A) Assets are overstated, and expenses are understated.B) Liabilities are overstated, and expenses are understated.C) Both assets and net income are understated.D) Both assets and expenses are overstated.

Which of the following is true about stockholders' equity?A) This section of the Balance Sheet will always equal total assets.B) This section of the Balance Sheet can only be increased if the company sells more stock to its stockholders.C) Corporations always must have at least two accounts in this section of the Balance Sheet: common stock and retained earnings.D) Retained earnings in stockholders equity is the one account on the Balance Sheet that the ending balance at the end of the period is zeroed out and does not carry over to the following period.

Which of the following statements is true?A) Managerial accounting for companies in the US is governed by GAAP.B) Managerial accounting statements are prepared to go to parties outside the company.C) Managerial accounting is more future oriented than financial accounting.D) The results of both managerial and financial accounting are reported only in currency.

Which of the following accounts would NOT be located on the Balance Sheet?A) Retained earningsB) Accumulated depreciationC) Cost of goods soldD) Interest payable

Which of the following statements is true regarding product (inventoriable) costs and period costs?A) Insurance on the factory is a period costB) The salary of the CEO of the company is a product costC) Property taxes on the factory is a product costD) The cost of labor in the factory is a period cost

Which of the following best describes interest payable?A) The amount of interest expense incurred during the period.B) The total amount of interest owed at the end of the period.C) The total amount of interest that has been paid on the loan by the end of the period.D) The total amount of interest that will be owed at the loan's maturity.

Company A delivered inventory to Company B on January 6th. Company B paid Company A for the inventory on January 20th. Company B sold all of the inventory to Customer on February 3rd. Customer paid Company B for the inventory on February 9th. On which day did Company B record an expense on its Income Statement for this inventory?A) January 6B) January 20C) February 3D) February 9

Utilities payable at the end of the reporting period areA) the total utilities used during the period.B) the amount paid for utilities during the period.C) the utilities used but not yet paid at the end of the period.D) the amount paid for utilities but not yet used at the end of the period.

Anjou Inc. owes its only employee $600 at the end of its first month in business. Anjou will pay its employee in the next month. Which of the following is true?A) Because no payment was made in month 1, Anjou does not need to record any entries until month 2, when the payment is made.B) Even though the payment has not yet been made, Anjou must reduce its cash account and record a liability for the amount due.C) Anjou records the transaction in the first month as if the payment was made. The entry is to reduce cash and record salary expense on the Income Statement.D) Anjou records the salary expense on the Income Statement and salaries payable on the Balance Sheet

Which of the following statements are true?A) Retained earnings is a Balance Sheet account.B) If no dividends were paid, net income will always equal ending retained earnings.C) The Balance Sheet is in balance when net income equals ending retained earnings.D) The Balance Sheet covers a period of time, while the Income Statement is at one point in time.

Which of the following transactions increases total assets?A) Collecting an accounts receivableB) Recording depreciation expenseC) Paying six months rent in advanceD) Purchasing inventory on account

Which of the following is true regarding accounts receivable?A) Both revenue and liabilities are increased when the sale is made.B) Revenue is increased when the cash is collected.C) Total assets do not change when the cash is collected.D) Total assets do not change when the sale is made.

When a company make an end-of-the-period adjustment for depreciation,A) it decreases retained earnings.B) there is no impact on total assets.C) the Balance Sheet stays in balance because total assets and total liabilities are decreased by the same amount.D) the cash paid for depreciation reduces total assets.