21)Luca Company overapplied manufacturing overhead during 2006. Which one of the
following is part of the year end entry to dispose of the overapplied amount
assuming the amount is material?

A.An increase to finished goods

B.A decrease to applied overhead

C.A decrease to work in process inventory

D.An increase to cost of goods sold

22) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased
to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9
per unit. For the make-or-buy decision,

A.incremental revenues are $2 per unit

B.incremental costs are $1 per unit

C.net relevant costs are $1 per unit

D.differential costs are $2 per unit

23) Disney’s variable costs are 30% of sales. The company is contemplating an
advertising campaign that will cost $22,000. If sales are expected to increase
$40,000, by how much will the company's net income increase?

A.$18,000

B.$28,000

C.$12,000

D.$6,000

24) Kershaw Bookstore had 600 units on hand at January 1, costing $18 each.
Purchases and sales during the month of January were as follows:

Date Purchases Sales

Jan. 14 450 @ $28

17 300 @ $20

25 300 @ $22

29 300 @ $32

Kershaw does not maintain perpetual inventory records. According to a physical
count, 450 units were on hand at January 31. The cost of the inventory at
January 31, under the LIFO method is:

A.$1,200.

B.$8,100.

C.$9,300.

D.$9,600.
25) The process of formally recording or incorporating an item in the financial
statements of an entity is

A.allocation

B.articulation.

C.realization.

D.recognition.
26) The primary purpose of the statement of cash flows is to provide information


A.about the operating, investing, and financing activities of an entity during a
period.

B.that is useful in assessing cash flow prospects.

C.about the cash receipts and cash payments of an entity during a period.

D.about the entity's ability to meet its obligations, its ability to pay
dividends, and its needs for external financing.

27) Which of the following is considered cash?

A.Travel Advances
B.Money market checking accounts

C.Money market savings certificates

D.Postdated checks

28) A company offers a cash rebate of $1 on each $4 package of batteries sold
during 2007. Historically, 10% of customers mail in the rebate form. During
2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are
mailed to customers. Assuming there is no beginning liability balance, what is
the rebate expense and liability, respectively, shown on the 2007 financial
statements dated December 31?

A$600,000; $600,000

B.$600,000; $390,000

C.$390,000; $390,000

D.$210,000; $390,000

29) Which of the following is a debt security?

A.Convertible bonds

B.Certificate of deposit

C.Loans receivable

D.US treasury bill
upto
40) As used in governmental accounting,
interperiod equity refers to a concept of


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