1) The income statement for the year 2014 of Fugazi Co. contains the following
information:
Revenues$70,000
Expenses:
Salaries and Wages Expense$45,000
Rent Expense12,000
Advertising Expense10,000
Supplies Expense6,000
Utilities Expense2,500
Insurance Expense 2,000
Total expenses 77,500
Net income (loss)$ (7,500)
After all closing entries have been posted, the revenue account will have a balance of
a.$0
b.$70,000 credit
c.$70,000 debit
d.$7,500 credit
2) The following information was taken from Yen Companys cash budget for the month
of July:
Beginning cash balance$480,000
Cash receipts304,000
Cash disbursements544,000
If the company has a policy of maintaining a minimum end of the month cash balance
of $350,000, the amount the company would have to borrow is
a.$110,000
b.$130,000
c.$240,000
d.$46,000
3) The cost of goods available for sale is allocated between:
a.beginning inventory and ending inventory
b.beginning inventory and cost of goods on hand
c.ending inventory and cost of goods sold
d.beginning inventory and cost of goods purchased
4) Reporting investments at fair value is
a.applicable to stock securities only
b.applicable to debt securities only
c.applicable to both debt and stock securities
d.a conservative approach because only losses are recognized
5) The CVP income statement
a.is distributed internally and externally
b.classifies costs by functions
c.discloses contribution margin in the body of the statement
d.will reflect a different net income than the traditional income statement
6) In the first month of operations for Gallowsbird Industries, the total of the debit
entries to the cash account amounted to $36,000 ($16,000 investment by the owner and
revenues of $20,000). The total of the credit entries to the cash account amounted to
$22,000 (purchase of equipment $8,000 and payment of expenses $14,000). At the end
of the month, the cash account has a(n)
a.$6,000 credit balance
b.$6,000 debit balance
c.$14,000 debit balance
d.$14,000 credit balance
7) The direct materials quantity standard should
a.exclude unavoidable waste
b.exclude quality considerations
c.allow for normal spoilage
d.always be expressed as an ideal standard
8) Materials costs of $500,000 and conversion costs of $535,500 were charged to a
processing department in the month of September. Materials are added at the beginning
of the process, while conversion costs are incurred uniformly throughout the process.
There were no units in beginning work in process, 100,000 units were started into
production in September, and there were 8,000 units in ending work in process that
were 40% complete at the end of September.
What was the total amount of manufacturing costs assigned to the 8,000 units in the
ending work in process?
a.$40,000
b.$18,000
c.$34,000
d.$58,000
9) Capital balances in the OPA partnership are O $150,000, P $90,000, and A $45,000,
and income ratios are 5:3:2, respectively. The OPAC partnership is formed by admitting
C to the firm with a cash investment of $50,000 for a 10% capital interest. The bonus to
be credited to A Capital in admitting C is:
a.$6,700
b.$4,300
c.$3,300
d.$4,500
10) Which would be an appropriate cost driver for the ordering activity?
a.Machine setups
b.Purchase orders
c.Machine hours
d.Inspections
11) In the final step of the liquidation process, remaining cash is distributed to partners
a.on an equal basis
b.on the basis of the income ratios
c.on the basis of the remaining capital balances
d.regardless of capital deficiencies
12) Shown below is a page from a special journal.
1>What is the name of this journal?
2>Give an explanation for each of the transactions in this journal.
3>Explain the following:
(a)the numbers under the bottom lines.
(b)the checks entered into the Post. Ref. column.
(c)the numbers 113 and 416 in the Post. Ref. column.
(d)the (x) below the Other Accounts column.
SalesAccountsSalesOtherC. of G. S.
AccountsPostCashDiscountsReceivableRevenueAccountsDr.
DateCreditedRef.Dr.Dr.Cr.Cr.Cr.Inventory Cr.
May27Tony Karr1,960402,000
28Notes Receivable1135,4805,000
Interest Revenue416480
29425425250
31Jim Borke 500 500
8,365402,5004255,480250
(101)(414)(112)(401)(x)(505)(120)
13) Which of the following is the correct matching concerning an investor’s influence
on the operations and financial affairs of an investee?
% of Investor OwnershipPresumed Influence
a.Less than 20%Short-term
b.Between 20%-50%Significant
c.More than 50%Long-term
d.Between 20%-50%Controlling
14) On January 1, 2014, Superfuzz Company purchased equipment for $40,000. The
company is depreciating the equipment at the rate of $800 per month. The book value
of the equipment at December 31, 2014 is
a.$0
b.$9,600
c.$30,400
d.$40,000
15) The following financial statement information is available for Buil Corporation:
2014 2013
Inventory$ 44,000$ 43,000
Current assets80,000106,000
Total assets432,000358,000
Current liabilities25,00036,000
Total liabilities102,00088,000
The current ratio for 2014 is
a..31:1
b.3.2:1
c.1.5:1
d.4.24:1
16) If expenses are paid in cash, then
a.assets will increase
b.liabilities will decrease
c.owner’s equity will increase
d.assets will decrease
17) Which of the following steps is not required in preparing the statement of cash
flows?
a.Determine the net change in cash
b.Determine the net cash provided by operating activities
c.Determine cash from investing and financing activities
d.Determine the change in current assets
18) The inventory turnover is computed by dividing cost of goods sold by
a.beginning inventory
b.ending inventory
c.average inventory
d.365 days
19) If preferred stock is cumulative, the
a.preferred dividends not declared in a given year are called dividends in arrears
b.preferred stockholders and the common stockholders receive equal dividends
c.preferred stockholders and the common stockholders receive the same total dollar
amount of dividends
d.common stockholders will share in the preferred dividends
20) The statement of cash flows is a(n):
a.required basic financial statement
b.required supplemental financial statement
c.optional basic financial statement
d.optional supplementary statement
21) The difference between a budget and a standard is that
a.a budget expresses what costs were, while a standard expresses what costs should be
b.a budget expresses management’s plans, while a standard reflects what actually
happened
c.a budget expresses a total amount, while a standard expresses a unit amount
d.standards are excluded from the cost accounting system, whereas budgets are
generally incorporated into the cost accounting system
22) Uerrera Co. produces a product requiring 8 pounds of material at $1.50 per pound.
Uerrera produced 10,000 units of this product during 2014 resulting in a $30,000
unfavorable materials quantity variance. How many pounds of direct material did
Uerrrera use during 2014?
a.80,000 pounds
b.100,000 pounds
c.160,000 pounds
d.125,000 pounds
23) The entry to record patent amortization usually includes a credit to
a.Amortization Expense
b.Accumulated Amortization
c.Accumulated Depreciation
d.Patents
24) To qualify as natural resources in the accounting sense, assets must be
a.underground
b.replaceable
c.of a mineral nature
d.physically extracted in operations
25) Sanclus Winery has fixed costs of $16,000 per year. Its warehouse sells wine with
variable costs of 80% of its unit selling price. How much in sales does Sanclus need to
break even per year?
a.$12,800
b.$3,200
c.$20,000
d.$80,000
26) If the purchasing agent buys materials at a price significantly below the standard
price, but in doing so acquires materials that are significantly below grade in terms of
quality, what direct materials price and quantity variances are likely?
QuantityPrice
a.FavorableFavorable
b.UnfavorableUnfavorable
c.FavorableUnfavorable
d.UnfavorableFavorable
27) The sale of equipment at less than its book value is a(n) ______________ of cash
that is reported in the ______________ activities section.
28) The ledger accounts given below, with an identification number for each, are used
by Tune Toys, which uses a perpetual inventory system.
Instructions: Prepare appropriate entries for the month of August by placing the
appropriate identification number(s) in the debit and credit columns provided and the
dollar amounts pertaining to each account in the adjoining columns.
29) The two discounted cash flow techniques used in capital budgeting are (1) the
_______________________ method and (2) the ______________________ method.
30) Dressler Manufacturing produces men’s ties. The following budgeted and actual
amounts are for 2014:
CostBudget at 5,000 UnitsActual Amounts at 5,800 Units
Direct materials$60,000$71,000
Direct labor75,00086,500
Equipment depreciation5,0005,000
Indirect labor7,5008,600
Indirect materials9,0009,600
Rent and insurance13,00012,000
Instructions
Prepare a performance budget report for Dressler Manufacturing for the year.
31) Expressing each item within a financial statement as a percentage of a base amount
is called ______________ analysis.
32) Additions and improvements are costs incurred to increase the operating efficiency,
productive capacity, or expected useful life and are referred to as
__________________.
33) Compute the lower-of-cost-or-market valuation for Gantner Company’s total
inventory based on the following:
Inventory CategoriesCost DataMarket Data
A$18,000$16,900
B 13,900 14,600
C 21,000 20,500
34) In preparing a bank reconciliation, outstanding checks are ______________ from
the cash balance per ______________.
35) King Company issued bonds with a face amount of $1,600,000 in 2009. As of
January 1, 2014, the balance in Discount on Bonds Payable is $4,800. At that time,
King redeemed the bonds at 102 .
Instructions
Assuming that no interest is payable, make the entry to record the redemption.