1. DeHoag Corporation provided the following information from its financial records

1. DeHoag Corporation provided the following information from its financial records:

Net income	$200,000	Number of common shares outstanding 1/1	200,000
Common stock dividends	$10,000	Number of common shares outstanding 12/31	300,000
Sales	$800,000

What is the amount of the company’s earnings per share? (Points : 2) $0.72
$0.76
$0.80
$3.20

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Question 2. 2. The Huntzicker Company reported gross sales of $850,000, sales returns and allowances of $5,000 and sales discounts of $5,000. The company has average total assets of $500,000, of which $250,000 is property, plant, and equipment. What is the company’s asset turnover ratio? (Points : 2)

1.68 times
1.72 times
0.59 times
1.8 times

Question 3. 3. Which of the following is a factor involved in communicating useful financial information? (Points : 2)

Attributes of the users
Purpose for which the information will be used
Process by which the information is analyzed
All of the above

Question 4. 4. Select the incorrect statement regarding the information disclosed in financial statements. (Points : 2)

Financial statements should be detailed enough to answer almost any accounting question an investor might have.
Some information disclosed in financial statements may be irrelevant to some users.
The costs of providing all possible accounting information about a firm would be too prohibitive to the business.
When too much information is presented users may suffer from information overload.

Question 5. 5. Financial statement analysis involves forms of comparison including: (Points : 2)

comparing changes in the same item over a number of periods.
comparing key relationships within the same year.
comparing key items to industry averages.
all of the above.

Question 6. 6. Select the correct statement regarding vertical analysis. (Points : 2)

Vertical analysis of the income statement involves showing each item as a percentage of sales.
Vertical analysis of the balance sheet involves showing each asset as a percentage of total assets.
Vertical analysis examines two or more items from the financial statements of one accounting period.
All of the above are correct.

Question 7. 7. The debt to asset ratio measures: (Points : 2)

solvency.
liquidity.
profitability.
efficiency in the use of assets.

Question 8. 8. Sliefert Company provided the following information from its financial records:

Net income	$200,000	Total stockholders’ equity	$800,000
Preferred dividends	$10,000	Common shares outstanding, 12/31	120,000
Preferred rights	$150,000

What is the company’s book value per share? (Points : 2)

$1.67
$6.67
$5.42
$1.58

Question 9. 9. The current ratio measures: (Points : 2)

solvency.
liquidity.
profitability.
efficiency in the use of assets.

Question 10. 10. The purpose of common size financial statements is to: (Points : 2)

compare the amount of common stock to other types of stock.
make comparisons between firms of different sizes.
make comparisons between different time periods for one company.
either B or C.

Question 11. 11. Howard Lumber Company mistakenly classified as an expense a product cost that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made: (Points : 2)

product costs were overstated.
management bonuses were overstated.
the company’s income statement portrayed a more favorable position than actually existed.
the company’s net income was understated.

Question 12. 12. Which of the following costs would not be classified as overhead for a company that produces small appliances? (Points : 2)

Assembly labor
Plant supervisory labor
Indirect material costs
Plant utilities costs

Question 13. 13. Assuming a company’s inventory increased during the period, which of the following misclassifications increases net income? (Points : 2)

Recording administrative salaries as a product cost
Recording depreciation on production equipment as an expense
Rxpensing raw material costs instead of including them in inventory
Both B and C

Question 14. 14. Select the incorrect statement regarding upstream and downstream costs. (Points : 2)

Profitability analysis should consider only manufacturing and downstream costs.
Companies must recover the total cost of developing, producing, and delivering products.
Pricing decisions must consider both upstream and downstream costs.
The total cost per unit includes upstream, manufacturing, and downstream costs.

Question 15. 15. All of the following are upstream costs except: (Points : 2)

research and development.
selling costs.
design costs.
costs to build a prototype product.

Question 16. 16. During its first year of operations, Martin Company paid $4,000 for direct materials and $8,500 for production workers’ wages. Lease payments and utilities on the production facilities amounted to $7,500 while general, selling, and administrative expenses totaled $3,000. The company produced 5,000 units and sold 4,000 units at a price of $7.50 a unit.

What was Martin’s net income for the first year in operation? (Points : 2)

$11,000
$7,000
$14,000
$20,000

Question 17. 17. Which of the following should not be recorded as an expense? (Points : 2)

Paid office salaries
Paid factory maintenance costs
Paid product advertising costs
Paid sales commissions

Question 18. 18. Select the incorrect statement regarding the relationship between type of user and type of information. (Points : 2)

Assembly line workers need more nonfinancial, or operational, data than do senior executives.
Assembly line workers need more immediate feedback on performance than do senior executives.
Senior executives use general economic information as well as financial information.
Senior executives need less aggregated information than do lower-level managers.

Question 19. 19. As a Certified Management Accountant, Zandra is bound by the standards of ethical conduct issued by the Institute of Management Accountants. During the course of business, Zandra learned that her company has decided to discontinue a major product line. If she mentions this fact to her brother, who is a stockbroker, Zandra could be in violation of the: (Points : 2)

competence standard.
confidentiality standard.
integrity standard.
objectivity standard.

Question 20. 20. Managerial accounting information is limited or restricted by which of the following authorities or principles? (Points : 2)

Securities and Exchange Commission
Financial Accounting Standards Board
Generally Accepted Accounting Principles
Value Added Principle

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