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web.groovymark@gmail.com
- December 8, 2024
Question 41
What is the formula for the variable cost ratio?
A. Variable cost per unit / Sales price per unit
B. Fixed costs / Sales price per unit
C. Contribution margin per unit / Sales price per unit
D. Variable cost per unit / Contribution margin
Answer: A
Explanation: The variable cost ratio is calculated by dividing the variable cost per unit by the sales price per unit.
Question 42
Which financial statement reports a company’s revenues and expenses for a specific period?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: A
Explanation: The income statement reports revenues and expenses for a specific period, resulting in net income or loss.
Question 43
What is the journal entry to record the purchase of supplies for cash?
A. Debit supplies; credit accounts payable
B. Debit supplies; credit cash
C. Debit cash; credit supplies
D. Debit accounts payable; credit cash
Answer: B
Explanation: When supplies are purchased for cash, the supplies account is debited, and cash is credited.
Question 44
Which of the following is considered a current asset?
A. Accounts receivable
B. Equipment
C. Land
D. Mortgage payable
Answer: A
Explanation: Accounts receivable is a current asset because it is expected to be converted into cash within one year.
Question 45
Which of the following costs is included in the cost of goods sold?
A. Advertising expenses
B. Office rent
C. Direct materials
D. Administrative salaries
Answer: C
Explanation: Direct materials are included in the cost of goods sold because they are directly related to production.
Question 46
Which financial statement provides a summary of a company’s financial performance over a specific period?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: A
Explanation: The income statement summarizes a company’s revenues and expenses over a specific period, resulting in net income or loss.
Question 47
Which of the following is an example of a financing activity on the statement of cash flows?
A. Paying dividends
B. Purchasing inventory
C. Paying wages
D. Selling products
Answer: A
Explanation: Paying dividends is a financing activity because it involves distributing cash to shareholders.
Question 48
What is the break-even point in units if the fixed costs are $50,000 and the contribution margin per unit is $25?
A. 1,500 units
B. 2,000 units
C. 2,500 units
D. 3,000 units
Answer: C
Explanation: Break-even in units is calculated by dividing fixed costs by the contribution margin per unit. ($50,000 / $25 = 2,000 units).
Question 49
Which of the following is an example of a fixed cost?
A. Factory utilities
B. Direct materials
C. Property taxes
D. Sales commissions
Answer: C
Explanation: Property taxes are a fixed cost because they remain the same regardless of production levels.
Question 50
Which financial statement shows a company’s financial position at a specific point in time?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Explanation: The balance sheet shows a company’s assets, liabilities, and equity at a specific date, reflecting its financial position.
