On January 1, 2015, the Accounts Receivable of Linda, Inc. had a debit balance of
$180,000. During January, the company provided services for $700,000 on account.
The company collected $230,000 from its customers on account in January. What was
the ending balance in the Accounts Receivable account at the end of January?
A) $470,000
B) $880,000
C) $650,000
D) $700,000
Which of the following is an application of conservatism?
A) reporting inventory at the lower of cost or market
B) reporting only material amounts in the financial statements
C) reporting all relevant information in the financial statements
D) using the same depreciation method from period to period
Under the perpetual inventory system, the journal entries to record sales returns (the
original sale was on account) would be:
A)
B)
C)
D)
Revival Corporation provides the following information.
Based on the information provided above, compute the earnings per share of Revival
Corporation as of March 31, 2017. (Round any intermediate calculations and your final
answer to the nearest cent.)
A) $1.22
B) $2.18
C) $1.74
D) $1.46
When a division is operating at capacity, the transfer price should be ________.
A) based on opportunity cost
B) a market-based transfer price
C) a cost-based transfer price
D) the total manufacturing cost
Variable cost per unit, within the relevant range, will ________.
A) increase as production decreases
B) decrease as production decreases
C) remain the same as production levels change
D) decrease as production increases
Which of the following entries is necessary to close the appropriate depreciation
account at the end of the year?
A) debit Accumulated Depreciation and credit Income Summary
B) debit Depreciation Expense and credit Income Summary
C) debit Income Summary and credit Accumulated Depreciation
D) debit Income Summary and credit Depreciation Expense
Harris Landscaping Services incurred $500 as a labor expense and promised to pay the
labor agency within 30 days. Which of the following accounts will increase as a result
of this transaction?
A) Accounts Receivable
B) Cash
C) Accounts Payable
D) Retained Earnings
The amount of cash interest the borrower pays each year is based on the ________.
A) market conditions on the day of payment
B) market interest rate
C) stated interest rate
D) effective interest rate
The matching principle requires businesses to report Warranty Expense ________.
A) in the same period that the company records the revenue related to that warranty
B) in the period prior to which the company records the revenue related to that warranty
C) in the period after the related revenue is recorded
D) in the long-term assets section of the balance sheet
Which of the following amounts of a flexible budget changes, within the specified
relevant range, with changes in sales volume?
A) sales price per unit
B) total fixed costs
C) variable cost per unit
D) total contribution margin
A merchandiser uses a perpetual inventory system. The third step in the process of
closing the accounts of a merchandiser is to ________.
A) make the revenue accounts equal to zero via the Income Summary account
B) make the Income Summary account equal to zero via the Dividends account
C) make the expense accounts equal to zero via the Income Summary account
D) make the Income Summary account equal to zero via the Retained Earnings account
Which of the following is a part of manufacturing overhead?
A) cost of raw materials
B) wages of assembly line workers
C) factory insurance
D) depreciation on office furniture
On the ________, cash dividends become a liability of a corporation.
A) declaration date
B) date of record
C) last day of the fiscal year
D) payment date
The ________ system pulls materials, labor, and overhead costs into production under a
just-in-time management system.
A) purchase-push
B) demand-push
C) purchase-pull
D) demand-pull
Wallace Repair Corporation incurred $1,500 as a labor expense and promised to pay the
labor agency within 30 days. Which of the following will decrease as a result of this
transaction?
A) Assets
B) Stockholders’ equity
C) Liabilities
D) Revenues
Under the equity method, the investor ________.
A) must debit the Long-term Investments account when a dividend is received
B) must record its share of the investee’s net income
C) must use the LIFO method for tax purposes
D) debits the Revenue from Investments when the investee reports income
A cellphone service provider charges $5.00 per month and $0.20 per minute per call. If
a customer’s current bill is $55, how many minutes did the customer use? (Round any
intermediate calculations and your final answer to the nearest whole minute.)
A) 275 minutes
B) 300 minutes
C) 250 minutes
D) 225 minutes
The Public Company Accounting Oversight Board (PCAOB) was created ________.
A) by the Sarbanes-Oxley Act (SOX)
B) to perform audits of public companies
C) to make restitution to investors who were defrauded by the issuance of fraudulent
financial reports
D) to require auditors to take responsibility for the accuracy and completeness of
financial reports
One of the primary activities of Rex, Inc. is to purchase hats from Viva, Inc. in Texas
and sell them to its customers in Washington for a profit. It is likely that Rex is a
________.
A) manufacturing company
B) hybrid company
C) service company
D) merchandising company
For each user of accounting information, identify if the user would use financial
accounting (FA) or managerial accounting (MA).
Which of the following describes a secured bond?
A) a bond that matures in installments at regular intervals
B) a bond that is backed by issuer’s specific assets
C) a bond that matures at one specified time
D) a bond that is not backed by specific assets
Ropers, Inc. purchases 16,000 shares of its previously issued $2 par value common
stock for $460 per share. Which of the following is the correct journal entry to record
this transaction?
A) Debit Common Stock—$2 Par Value $7,360,000, and credit Cash $7,360,000.
B) Debit Cash $7,328,000, and credit Paid-In Capital in Excess of Par—Common
$7,328,000.
C) Debit Cash $7,328,000, and credit Treasury Stock—Common $7,328,000.
D) Debit Treasury Stock—Common $7,360,000, and credit Cash $7,360,000.
The purchases journal of a business that uses the periodic inventory system will include
a column titled ________.
A) Cost of Goods Sold DR
B) Purchases DR
C) Accounts Payable DR
D) Merchandise Inventory DR
Which of the following is included in the cost of a plant asset?
A) amounts paid to make the asset ready for its intended use
B) regular repair and maintenance costs
C) replacement of damaged parts of the asset
D) wages of workers who work use the asset in normal operations
Austin Brands Company uses standard costs for its manufacturing division. Standards
specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static
budget for variable overhead costs included the following data:
At the end of the year, actual data were as follows:
What is the variable overhead cost variance? (Round any intermediate calculations to the
nearest cent, and your final answer to the nearest dollar.)
A) $15,000 U
B) $15,000 F
C) $3,571 U
D) $4,687 F
Which of the following is considered an operating activity on the statement of cash
flows prepared using the direct method?
A) dividends paid to stockholders
B) sale of merchandise inventory for cash
C) payment to purchase equipment
D) the receipt of cash from sale of equipment
National Art is a new business. During its first year of operations, credit sales were
$50,000 and collections were credit sales of $32,000. One account, $625 was written
off. Management uses the percent-of-sales method to account for bad debts expense and
estimates 2% of credit sales to be uncollectible. The ending balance of Allowance for
Bad Debts account is ________.
A) $375
B) $1,000
C) $348
D) $1,628
Volplex, Inc. produces paper and office supplies and uses the just-in-time inventory
system. Currently, the company is using variable costing. Which of the following is true
of the effect of costing systems on the financial results of Volplex?
A) Its operating income will be significantly higher if the company uses absorption
costing instead of variable costing.
B) Its operating income will be significantly lower if the company uses absorption
costing instead of variable costing.
C) Its operating income will vary a little if the company uses absorption costing instead
of variable costing.
D) Its operating income will be negative if the company uses absorption costing instead
of variable costing.
Winslow, Inc., a tennis equipment manufacturer, has variable costs of $0.60 per unit of
product. In August, the volume of production was 27,000 units, and units sold were
21,800. The total production costs incurred were $30,600. What are the fixed costs per
month?
A) $14,400
B) $17,520
C) $3,600
D) $16,200
Which of the following journal entries would be recorded if Christy Jones, Inc. issued
stock and received $3,000?
A)
B)
C)
D)