ACC2052t2

ACC2052t2

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

____ 1. The percentage analysis of increases and decreases in individual items in comparative financial statements is called:

____ 2. The percent of fixed assets to total assets is an example of:

____ 3. The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as:

____ 4. The ability of a business to earn a reasonable amount of income is referred to as the factor of:

____ 5. Which of the following is not an analysis used in assessing solvency?

____ 6. Which of the following is not an analysis used in assessing solvency?

____ 7. Which of the following is included in the computation of the acid-test ratio?

____ 8. Based on the following data for the current year, what is the accounts receivable turnover?

____ 9. Based on the following data for the current year, what is the number of days’ sales in accounts receivable?

____ 10. Based on the following data for the current year, what is the inventory turnover?

____ 11. Balance sheet and income statement data indicate the following:

Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?

____ 12. Based on the following data for the current year, what is the number of days’ sales in inventory?

____ 13. Based on the following data, what is the amount of quick assets?

____ 14. Based on the following data, what is the amount of working capital?

____ 15. Based on the following data, what is the acid-test ratio, rounded to one decimal point?

____ 16. Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

____ 17. The balance sheets at the end of each of the first two years of operations indicate the following:

If net income is $130,000 and interest expense is $40,000 for 2004 what is the rate earned on total assets for 2004 (round percent to one decimal point)?

____ 18. The balance sheets at the end of each of the first two years of operations indicate the following:

If net income is $130,000 and interest expense is $40,000 for 2004, what is the rate earned on stockholders’ equity for 2004 (round percent to one decimal point)?

____ 19. The balance sheets at the end of each of the first two years of operations indicate the following:

If net income is $130,000 and interest expense is $40,000 for 2004, what is the rate earned on common stockholders’ equity for 2004 (round percent to one decimal point)?

____ 20. The balance sheets at the end of each of the first two years of operations indicate the following:

If net income is $130,000 and interest expense is $40,000 for 2004, what are the earnings per share on common stock for 2004, (round to two decimal places)?

____ 21. The balance sheets at the end of each of the first two years of operations indicate the following:

If net income is $130,000 and interest expense is $40,000 for 2004, and the market price is $30, What is the price-earnings ratio on common stock (round to one decimal point)?

____ 22. For most profitable companies, the rate earned on stockholders’ equity will be less than:

____ 23. The following information is available for Willing Corp.:

Which of the following statements is correct?

____ 24. The following information is available for Dirks Co.:

Which of the following statements is correct?

____ 25. The particular analytical measures chosen to analyze a company may be influenced by all but one of the following. Which one?

____ 26. In order to be useful to managers, management accounting reports should possess all of the following characteristics except:

____ 27. In most business organizations, the chief management accountant is called the:

____ 28. The cost of materials entering directly into the manufacturing process is classified as:

____ 29. Which of the following is an example of a factory overhead cost?

____ 30. Which of the following items would not be classified as part of factory overhead?

____ 31. In a job order cost accounting system, the entry to record the flow of direct materials into production is:

____ 32. At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance. Which of the following describes the nature of this balance and how it would be reported on the interim balance sheet?

____ 33. If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a:

____ 34. The recording of the factory labor incurred for general factory use would include a debit to:

____ 35. The recording of the jobs completed would include a debit to:

____ 36. The recording of the jobs completed would include a credit to:

____ 37. The recording of the jobs shipped and customers billed would include a debit to:

____ 38. For which of the following businesses would a process cost system be appropriate?

____ 39. Which of the following is NOT a way in which process and job order cost systems are similar?

____ 40. In process cost accounting, the costs of direct materials and direct labor are charged directly to:

____ 41. Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?

____ 42. Which of the following costs incurred by a paper manufacturer would NOT be included in the group of costs referred to as conversion costs?

____ 43. If Department K had 2,000 units, 45% completed, in process at the beginning of the period, 12,000 units were completed during the period, and 1,200 units were 40% completed at the end of the period, what was the number of equivalent units of production for the period if the first-in, first-out method is used to cost inventories?

____ 44. Department G had 3,600 units, one-third completed at the beginning of the period, 12,000 units were completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:

Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the total cost of 3,600 units of beginning inventory which were completed during the period?

____ 45. Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period, 30,000 units of direct materials were added during the period, 32,000 units were completed during the period, and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was:

____ 46. The debits to Work in Process–Assembly Department for April, together with data concerning production, are as follows:

All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for April is:

____ 47. Department J had no work in process at the beginning of the period, 18,000 units were completed during the period, 2,000 units were 30% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:

Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the 18,000 units completed during the period?

____ 48. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 2 during the period for applied overhead is:

____ 49. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs from Department 1 into Department 2 during the period is:

____ 50. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 3 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 3 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 3 during the period for direct materials is:

____ 51. In a process cost system, ending inventory is valued by:

____ 52. The two categories of cost comprising conversion costs are:

____ 53. In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following entries?

____ 54. The four steps necessary to determine the cost of goods completed and the ending inventory valuation in a process cost system are:

1. allocate costs to transferred and partially completed

units

2. determine the units to be assigned costs

3. determine the cost per equivalent unit

4. calculate equivalent units of production

The correct ordering of the steps is:

____ 55. In the manufacture of 10,000 units of a product, direct materials cost incurred was $143,700, direct labor cost incurred was $85,000, and applied factory overhead was $43,500. What is the total conversion cost?

____ 56. If Department H had 500 units, 60% completed, in process at the beginning of the period, 6,000 units were completed during the period, and 600 units were 30% completed at the end of the period, what was the number of equivalent units of production for the period if the first-in, first-out method is used to cost inventories?

____ 57. Department G had 3,600 units, one-third completed at the beginning of the period, 12,000 units were completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:

Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the total cost of the units ‘started and completed” during the period?

____ 58. Department S had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900. The total cost of units completed during the period were:

____ 59. Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. 14,000 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710. The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:

____ 60. A form prepared periodically for each processing department summarizing (1) the units for which the department is accountable and the units to be assigned costs and (2) the costs charged to the department and the allocation of these costs is termed a:

____ 61. Department W had 2,400 units, one-third completed at the beginning of the period, 12,000 units were transferred to Department X from Department W during the period, and 1,800 units were one-half completed at the end of the period. What are the total whole units to be assigned cost on the cost of production report for Department W?

____ 62. Department W had 2,400 units, one-third completed at the beginning of the period, 12,000 units were transferred to Department X from Department W during the period, and 1,800 units were one-half completed at the end of the period. What is the equivalent units of production used to compute unit conversion cost on the cost of production report for Department W?

____ 63. Department J had no work in process at the beginning of the period, 18,000 units were completed during the period, 2,000 units were 30% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:

Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the departmental work in process inventory at the end of the period?

____ 64. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for direct materials is:

____ 65. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 2 during the period for direct materials is:

____ 66. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 2 during the period for direct labor is:

____ 67. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 1 during the period for applied overhead is:

____ 68. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. Work in process at the beginning of the period for Department 1 was $75,000, and work in process at the end of the period totaled $60,000. The records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for Department 2 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs into Department 3 during the period is:

____ 69. Lombardi Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. Department 2 has transferred-in costs of $390,000 for the current period. In addition, work in process at the beginning of the period for Department 2 totaled $75,000, and work in process at the end of the period totaled $90,000. The journal entry to record the flow of costs into Department 3 during the period is:

____ 70. Just-in-time processing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and nonmanufacturing processes by:

____ 71. The controller’s staff often consists of several management accountants. All of the following would most likely be on the controller’s staff except:

____ 72. Which of the following is an example of direct materials cost for an automobile manufacturer?

____ 73. Which of the following is an example of direct labor cost for an airplane manufacturer?

____ 74. Which of the following costs are referred to as conversion costs?

____ 75. Which of the following manufacturing costs is an indirect cost of producing a product?

____ 76. Which of the following are the two main types of cost accounting systems for manufacturing operations?

____ 77. The source of the data for debiting Work-in-Process for direct materials is the:

____ 78. In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a:

____ 79. The amount of time spent by each employee and the labor cost incurred for each individual job or for factory overhead are recorded on:

____ 80. Each account in the cost ledger is called a:

____ 81. Selected accounts with some debits and credits omitted are presented as follows:

Work in Process

Oct. 1 Balance 20,000 | Oct. 31 Goods

31 Direct | finished X

materials 96,700 |

31 Direct |

labor 201,000 |

31 Factory |

overhead X |

Finished Goods

Oct. 1 Balance 52,000 |

31 Goods |

finished 360,000 |

If the balance of Work in Process at October 31 is $21,000, what was the amount of factory overhead applied in October?

____ 82. Selected accounts with some debits and credits omitted are presented as follows:

Work in Process

Apr. 1 Balance 7,000 | Apr. 30 Goods

30 Direct | finished X

materials 78,400 |

30 Direct |

labor 195,000 |

30 Factory |

overhead 136,500 |

Finished Goods

Apr. 1 Balance 42,000 |

30 Goods |

finished 387,000 |

What was the balance of Work in Process as of April 30?

____ 83. The finished goods account is the controlling account for the:

____ 84. A widely used activity base for developing factory overhead rates in highly automated settings is:

____ 85. Materials purchased on account during the month amounted to $195,000. Materials requisitioned and placed in production totaled $168,000. From the following, select the entry to record the transaction on the day the materials were bought.

____ 86. Costs that are used in generating revenues during the current period are often referred to as:

____ 87. Costs that are treated as assets until the product is sold are called:

____ 88. Job cost sheets can provide information to managers for all but the following:

____ 89. A difference in quantity of materials used on two comparable jobs may be caused by:

____ 90. The direct labor and overhead costs of providing services to clients are accumulated in:

____ 91. If comparative balance sheets indicate no notes receivable on the first, or base, date and a $50,000 note receivable on the later date, the increase of $50,000:

____ 92. The percentage of change in long-term liabilities between two balance sheet dates is an example of:

____ 93. What type of analysis is indicated by the following?

____ 94. An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

____ 95. Statements in which all items are expressed only in relative terms (percentages of a common base) are:

____ 96. The ability of a business to pay its debts as they come due is referred to as the factor of:

____ 97. The ratio of the sum of cash, receivables, and marketable securities to current liabilities is called the:

____ 98. An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to:

____ 99. The tendency of the rate earned on stockholders’ equity to vary disproportionately from the rate earned on total assets is sometimes referred to as:

____ 100. Corporate annual reports typically do not contain which of the following?

ACC2052t2

Answer Section