The difference between the totals of the debit and credit columns of the Adjusted Trial
Balance columns on a work sheet
A.is the amount of net income or loss
B.indicates there is an error on the work sheet
C.is the amount of retained earnings
D.is the difference between revenue and expenses
Answer:
Jackson and Campbell have capital balances of $100,000 and $300,000 respectively.
Jackson devotes full time and Campbell one-half time to the business. Determine the
division of $150,000 of net income under each of the following assumptions:
(a) No agreement as to division of net income.
(b) In ratio of capital balances.
(c) In ratio of time devoted to business.
Answer:
Jarvis Corporation makes an investment in 100 shares of Saxton Company’s common
stock. The stock is purchased for $45 a share plus brokerage fees of $280. The entry for
the purchase is:
A.Cash 4,500
Stock Investments – Saxton Company 4,500
B.Stock Investments – Saxton Company 4,780
Cash 4,780
C.Stock Investments – Saxton Company 4,500
Brokerage Fee Expense 280
Cash 4,780
D.Stock Investments – Saxton Company 4,500
Cash 4,500
Answer:
Which of the following would not be used in preparing a cash budget for October?
A.Beginning cash balance on October 1.
B.Budgeted salaries expense for October.
C.Estimated depreciation expense for October.
D.Budgeted sales and collections for October.
Answer:
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:
A.$117,000
B.$143,400
C.$121,000
D.$127,450
Answer:
Which of the graphs in Figure 20-1 illustrates the nature of a mixed cost?
A.Graph 2
B.Graph 3
C.Graph 4
D.Graph 1
Answer:
Department A had 4,000 units in work in process that were 60% completed as to labor
and overhead at the beginning of the period, 29,000 units of direct materials were added
during the period, 31,000 units were completed during the period, and 2,000 units were
80% 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 material costs for the period was:
A.33,000
B.29,800
C.29,000
D.32,000
Answer:
If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even
point was:
A.$5,000,000
B.$3,000,000
C.$12,000,000
D.$1,000,000
Answer:
Under the periodic inventory system, the journal entry to record the purchase of
merchandise inventory will include a debit to
A.Merchandise Inventory
B.Purchases
C.Accounts Payable
D.Cost of Merchandise Purchased
Answer:
Blanton Corporation purchased 35% of the outstanding shares of common stock of
Worton Corporation as a long-term investment. Subsequently, Worton Corporation
reported net income and declared and paid cash dividends. What journal entry would
Blanton Corporation use to record the dividends it receives from Worton Corporation?
A.debit Investment in Worton Corporation; credit Cash
B.debit Cash; credit Dividend Revenue
C.debit Investment in Worton Corporation; credit Income of Worton Corporation
D.debit Cash; credit Investment in Worton Corporation
Answer:
The goal of systems analysis is to determine
A.when to implement a system
B.information needs
C.the size of the competitor’s system
D.changes to the present system
Answer:
Mallard Corporation uses the product cost concept of product pricing. Below is cost
information for the production and sale of 45,000 units of its sole product. Mallard
desires a profit equal to a 12% rate of return on invested assets of $800,000.
The markup percentage on product cost for the company’s product is:
A.23.4%
B.10.98%
C.26.1%
D.18%
Answer:
When a company receives an interest-bearing note receivable, it will
A.debit Notes Receivable for the maturity value of the note.
B.debit Notes Receivable for the face value of the note.
C.credit Notes Receivable for the maturity value of the note.
D.credit Notes Receivable for the face value of the note.
Answer:
Which of the following is not a factory overhead cost?
A.materials used directly in the manufacturing process of the product
B.insurance on factory equipment
C.salaries of production supervisors
D.property tax on factory building
Answer:
A business is considering a cash outlay of $300,000 for the purchase of land, which it
could lease for $36,000 per year. If alternative investments are available which yield an
18% return, the opportunity cost of the purchase of the land is:
A.$54,000
B.$36,000
C.$18,000
D.$72,000
Answer:
The income statement columns in the worksheet show that debits are equal to $55,800
and credits are $67,520. What does this information mean to the accountant?
A.Net income of $11,720
B.Net loss of $11,720
C.The accounts are out of balance, indicating an error has been made.
D.The accounts have not been updated.
Answer:
Damaged merchandise that can be sold only at prices below cost should be valued at
A.net realizable value
B.LIFO
C.FIFO
D.average
Answer:
McMann Company has a condensed income statement as shown::
Using horizontal analysis, calculate the amount and percent change for Sales. Round to
one decimal place.
A.(17,000), (11.3%)
B.(15,500), (10.3%)
C.($18,000), (10.9%)
D.($15,500), (9.4%)
Answer:
Jackson and Campbell have capital balances of $100,000 and $300,000 respectively.
Jackson devotes full time and Campbell one-half time to the business. Determine the
division of $150,000 of net income when there is no reference to division in partership
agreement.
A.$75,000 and $75,000
B.$37,500 and $112,500
C.$100,000 and $50,000
D.$112,500 and $37,500
Answer:
Which of the following is not true of accounting principles?
A.Financial accountants follow generally accepted accounting principles (GAAP).
B.Following GAAP allows accounting information users to compare one company to
another.
C.A new accounting principle can be adopted with stockholders approval.
D.The Financial Accounting Standards Board (FASB) has primary responsibility for
developing accounting principles.
Answer:
The point where the sales line and the total costs line intersect on the cost-volume-profit
chart represents:
A.the maximum possible operating loss
B.the maximum possible operating income
C.the total fixed costs
D.the break-even point
Answer:
A company reports the following:
Determine the company’s earnings per share on common stock.
A.$7.50
B.$7.00
C.$8.00
D.$35.00
Answer:
All of the following below are needed for the calculation of straight-line depreciation
except
A.cost
B.residual value
C.estimated life
D.units produced
Answer:
If Department K had 2,500 units, 45% completed, in process at the beginning of the
period, 15,000 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 for conversion if the first-in, first-out method is used to cost
inventories? Assume the completion percentage applies to both direct materials and
conversion cost.
A.16,855
B.16,605
C.13,460
D.14,355
Answer:
The interest expense recorded on an interest payment date is increased
A.only if the market rate of interest is less than the stated rate of interest on that date.
B.by the amortization of premium on bonds payable.
C.by the amortization of discount on bonds payable.
D.only if the bonds were sold at face value.
Answer:
Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks
and 56,000 units of Bins. Related data are:
What was Carter Co.’s sales mix last year?
A.20% Arks, 80% Bins
B.12% Arks, 28% Bins
C.70% Arks, 30% Bins
D.40% Arks, 20% Bins
Answer:
Grayson Bank agrees to lend the Trust Company $120,000 on January 1. Trust
Company signs a $120,000, 8%, 9-month note. The entry made by Trust Company on
January 1 to record the proceeds and issuance of the note is:
A.Interest Expense 9,600
Cash 110,400
Notes Payable 120,000
B.Cash 120,000
Notes Payable 120,000
C.Cash 129,600
Interest Expense 9,600
Notes Payable 120,000
D.Notes Payable 120,000
Interest Payable 7,200
Cash 120,000
Interest Expense 7,200
Answer:
Calculate the following:
Answer:
Reedy Company reports the following information for 2012:
Factory overhead is 75% of the cost of direct labor. Work in process inventory on
December 31, 2012, is:
A.$16,250
B.$8,500
C.$18,750
D.$13,500
Answer:
Two income statements for PS Enterprises are shown below:
(a) Prepare a vertical analysis of PS Enterprises’ income statements.
(b) Does the vertical analysis indicate a favorable or unfavorable trend?
Answer:
Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next
year. Operating income is:
A.unaffected
B.expected to increase by 3%
C.expected to increase by 48%
D.expected to increase by 4 %
Answer:
The means by which the accounting system collects, summarizes, and reports
accounting information is called information
A.reporting methods
B.accounting methods
C.control methods
D.processing methods
Answer: