Which of the following statements about using a plantwide overhead rate based on direct labor is correct?
A. Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.
B. It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.
C. Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.
D. The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.
Answer: B
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If a business records revenues when earned, regardless of whether cash has been received, and records expenses when they are incurred, the accounting system is a(n)
a. cash basis of accounting; b. accrual basis of accounting; c. modified cash basis of accounting; d. either A or B; e. either B or C
A(n) ____________________ sale occurs when a merchant sells all or a major part of the business assets
Fill in the blank(s) with correct word
________ measures the overall effectiveness of management in generating profits with its available assets
A) Total asset turnover B) Price/earnings ratio C) Return on equity D) Return on total assets
Penny just won the state lottery that offers a choice of payments. She may opt for either receiving $1,000,000 today or $2,000,000 at the end of ten years. If she can invest her funds at 5% annually, which is the better choice?
A) The later payment since $1,000,000 invested at 5% for ten years will be worth $1,500,000. B) The immediate payment since the present value of the $2,000,000 payment is $1,200,000. C) The earlier payment since the future value of $1,000,000 in ten years is $1,628,894. D) The earlier payment since the present value of the $2,000,000 payment is $876,000. E) The later payment since the present value of the $2,000,000 payment is $1,227,827.