1) Marley Jeans utilizes the retail inventory method to estimate its inventories. It
calculated its cost to retail ratio during the period at 80%. Goods available for sale at
retail amounted to $600,000 and goods were sold during the period for $420,000. How
much is the estimated cost of the ending inventory?
a.$180,000
b.$144,000
c.$480,000
d.$225,000
2) A cash register tape shows cash sales of $3,000 and sales taxes of $240. The journal
entry to record this information is
a.Cash3,240
Sales Revenue3,240
b.Cash3,240
Sales Taxes Payable240
Sales Revenue3,000
c.Cash3,000
Sales Tax Expense240
Sales Revenue3,240
d.Cash3,240
Sales Revenue3,000
Sales Tax Revenue240
3) Which of the following would not be considered an aspect of budgetary control?
a.It assists in the determination of differences between actual and planned results
b.It provides feedback value needed by management to see whether actual operations
are on course
c.It assists management in controlling operations
d.It provides a guarantee for favorable results
4) A materials requisition slip showed that direct materials requested were $65,000 and
indirect materials requested were $8,000. The entry to record the transfer of materials
from the storeroom is
a.Work In Process Inventory65,000
Raw Materials Inventory65,000
b.Direct Materials65,000
Indirect Materials8,000
Work in Process Inventory73,000
c.Manufacturing Overhead73,000
Raw Materials Inventory73,000
d.Work In Process Inventory65,000
Manufacturing Overhead8,000
Raw Materials Inventory73,000
5) On January 1, Benko Co. has a beginning cash balance of $42,000. During the year,
the company expects cash disbursements of $340,000 and cash receipts of $290,000. If
Benko requires an ending cash balance of $45,000, the company must borrow
a.$37,000
b.$45,000
c.$53,000
d.$92,000
6) When stock dividends are distributed,
a.Common Stock Dividends Distributable is decreased
b.Retained Earnings is decreased
c.Paid-in Capital in Excess of Par is debited if it is a small stock dividend
d.no entry is necessary if it is a large stock dividend
7) The date on which a cash dividend becomes a binding legal obligation is on the
a.declaration date
b.date of record
c.payment date
d.last day of the fiscal year-end
8) Property taxes on a manufacturing plant are an element of a
Product CostPeriod Cost
a.YesNo
b.YesYes
c.NoYes
d.NoNo
9) Rosle Company developed the following data for the current year:
Beginning work in process inventory$103,000
Direct materials used153,000
Actual overhead130,000
Overhead applied137,000
Cost of goods manufactured672,000
Total manufacturing costs645,000
How much is Rosle Company’s direct labor cost for the year?
a.$355,000
b.$458,000
c.$382,000
d.$393,000
10) If a company has sales revenue of $630,000, net sales of $600,000, and cost of
goods sold of $390,000, the gross profit rate is
a.35%
b.38%
c.62%
d.65%
11) Which of the following would not be considered internal users of accounting data
for a company?
a.The president of a company
b.The controller of a company
c.Creditors of a company
d.Salesmen of the company
12) Which of the following would not be reported on the balance sheet as a cash
equivalent?
a.Money market fund
b.Sixty-day certificate of deposit
c.Six-month Treasury bill
d.Money market savings certificate
13) Trans Company debited Prepaid Insurance for $1,320 on July 1, 2014, for a
one-year fire insurance policy. If the company prepares monthly financial statements,
failure to make an adjusting entry on July 31 for the amount of insurance that has
expired would cause:
a.assets to be overstated by $1,320 and expenses to be understated by $1,320
b.expenses to be overstated by $110 and assets to be understated by $110
c.assets to be overstated by $110 and expenses to be understated by $110
d.expenses to be overstated by $1,320 and assets to be understated by $1,320
14) The step in the accounting cycle that is performed on a periodic basis (i.e., monthly,
quarterly) is
a.analyzing transactions
b.journalizing and posting adjusting entries
c.preparing a post-closing trial balance
d.posting to ledger accounts
15) In the month of May, Kijak Company Inc. wrote checks in the amount of $56,000.
In June, checks in the amount of $76,000 were written. In May, $50,000 of these checks
were presented to the bank for payment, and $66,000 in June. What is the amount of
outstanding checks at the end of June?
a.$6,000
b.$10,000
c.$16,000
d.$20,000
16) Which one of the following statements is true?
a.If the materials price variance is unfavorable, then the materials quantity variance
must also be unfavorable
b.If the materials price variance is unfavorable, then the materials quantity variance
must be favorable
c.Price and quantity variances move in the same direction. If one is favorable, the others
will be as well
d.There is no correlation of favorable or unfavorable for price and quantity variances
17) Overstating ending inventory will overstate all of the following except
a.assets
b.cost of goods sold
c.net income
d.owner’s equity
18) Accounts Receivable and Accounts Payable are examples of
a.nominal accounts
b.controlling accounts
c.subsidiary ledger accounts
d.both nominal accounts and controlling accounts
19) Delta Corp. issues 4,000 shares of $10 par value common stock at $14 per share.
When the transaction is recorded, credits are made to
a.Common Stock $40,000 and Paid-in Capital in Excess of Stated Value $16,000
b.Common Stock $56,000
c.Common Stock $40,000 and Paid-in Capital in Excess of Par $16,000
d.Common Stock $40,000 and Retained Earnings $16,000
20) The account balances appearing on the trial balance (below) were taken from the
general ledger of Irick’s Copy Shop at September 30
Additional information for the month of September which has not yet been recorded in
the accounts is as follows:
(a)A physical count of supplies indicates $300 on hand at September 30
(b)The amount of insurance that expired in the month of September was $200
(c)Depreciation on equipment for September was $400
(d)Rent owed on the copy shop for the month of September was $600 but will not be
paid until October
Instructions
Using the above information, complete the worksheet on the following page for Irick’s
Copy Shop for the month of September.
21) Earnings per share is calculated
a.only for common stock
b.only for preferred stock
c.for common and preferred stock
d.only for treasury stock
22) Management by exception
a.is most effective at top levels of management
b.can be implemented at each level of responsibility within an organization
c.can only be applied when comparing actual results with the master budget
d.is the opposite of goal congruence
23) An accountant has debited an asset account for $1,200 and credited a liability
account for $500. What can be done to complete the recording of the transaction?
a.Nothing further must be done
b.Debit an owner’s equity account for $700
c.Debit another asset account for $700
d.Credit a different asset account for $700
24) In a job order cost accounting system, the Raw Materials Inventory account is
a.an expense
b.a control account
c.not used
d.a period cost
25) Roy Company developed the following data for the current year:
Beginning work in process inventory$170,000
Direct materials used104,000
Actual overhead200,000
Overhead applied150,000
Cost of goods manufactured175,000
Total manufacturing costs490,000
Roy Company’s direct labor cost for the year is
a.$186,000
b.$175,000
c.$150,000
d.$236,000
26) The two fundamental qualities of useful information are
a.verifiability and timeliness
b.relevance and faithful representation
c.comparability and flexibility
d.understandability and consistency
27) A $100 petty cash fund has cash of $17 and receipts of $86. The journal entry to
replenish the account would include a
a.debit to Cash for $86
b.credit to Petty Cash for $86
c.credit to Cash Over and Short for $3
d.credit to Cash for $86
28) The standard number of hours that should have been worked for the output attained
is 10,000 direct labor hours and the actual number of direct labor hours worked was
10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate
of pay was $13 per direct labor hour, what was the actual rate of pay for direct labor?
a.$15 per direct labor hour
b.$12 per direct labor hour
c.$13 per direct labor hour
d.$14 per direct labor hour
29) During 2012, Alvarez Manufacturing expected Job No. 26 to cost $336,000 of
overhead, $400,000 of materials, and $240,000 in labor. Alvarez applied overhead
based on direct labor cost. Actual production required an overhead cost of $840,000,
$825,000 in materials used, and $330,000 in labor. All of the goods were completed.
What amount was transferred to Finished Goods?
a.$1,206,000
b.$976,000
c.$1,617,000
d.$1,500,000
30) Burnell, Inc. has 5,000 shares of 4%, $50 par value, cumulative preferred stock and
100,000 shares of $1 par value common stock outstanding at December 31, 2013, and
December 31, 2012 . The board of directors declared and paid a $8,000 dividend in
2013 . In 2014, $30,000 of dividends are declared and paid. What are the dividends
received by the preferred and common shareholders in 2014?
PreferredCommon
a.$18,000$12,000
b.$15,000$15,000
c.$12,000$18,000
d.$10,000$20,000
31) The declaration and distribution of a stock dividend will
a.increase total stockholders’ equity
b.increase total assets
c.decrease total assets
d.have no effect on total assets
32) The entry to record the acquisition of raw materials on account is
a.Work in Process Inventory
Accounts Payable
b.Manufacturing Overhead
Raw Materials Inventory
Accounts Payable
c.Accounts Payable
Raw Materials Inventory
d.Raw Materials Inventory
Accounts Payable
33) A corporation is not committed to a legal obligation when it declares
a.a cash dividend
b.either a cash dividend or a stock dividend
c.a stock dividend
d.a distribution date
34) As of April 30, 2014, Marcus Tools has assets of $90,000, and liabilities of $62,000.
How much is the owners equity for Marcus Tools as of April 30, 2014?
a.$152,000
b.$28,000
c.$90,000
d.$62,000
35) Instructions: Place a “D” (Debit) or “C” (Credit) in the space provided to indicate
whether the account would be debited or credited to close the account at yearend. Insert
an X in the space provided if the account is not closed.
1>Cash8>Interest Expense
2>Rent Expense9>Unearned Subscription Revenue
3>Depreciation Expense10>Interest Revenue
4>Equipment11> Interest Receivable
5>Owners Drawing12> Subscription Revenue
6>Accounts Receivable13>Prepaid Rent
7>Accumulated Depreciation14> Income Summary (assume Net Loss)
36) Hall Company uses flexible budgets. Items from the budget for March in which
4,000 units were produced and sold appear below:
Direct materials $36,000
Indirect materials – variable4,000
Supervisor salaries30,000
Depreciation on factory equipment8,000
Direct labor20,000
Property taxes on factory2,000
Instructions
If Hunter prepares a flexible budget at 5,000 units, compute its total variable cost.
37) Every sales transaction should be supported by a ________________ that provides
written evidence of the sale.
38) If a certain type of transaction occurs with great frequency, it is more efficient to
create a ______________ to record that type of transaction.
39) Indicate which of the following cash payments journal columns are posted only in
total, only daily, or both in total and daily.
1>Other Accounts_______________________
2>Accounts Payable_______________________
3>Inventory_______________________
4>Cash_______________________