Extra compensation items that are not paid directly to an employee are called
________.
A) bonuses
B) benefits
C) wages
D) commissions
Lightfoot Company sells its product for $55 and has variable cost of $30 per unit. The
total fixed costs are $25,000. What will be the effect on the breakeven point in units if
variable cost increases by $10 due to an increase in the cost of direct materials?
A) It will increase by 667 units.
B) It will decrease by 667 units.
C) It will decrease by 175 units.
D) It will increase by 175 units.
Which of the following would be included in the entry by the payee to record a
dishonored note receivable?
A) a debit to Accounts Receivable
B) a debit to Interest Revenue
C) a debit to Notes Receivable
D) a credit to Interest Expense
Saber Promotional Services uses a job order system for costing and billing promotional
services for dance and ballet performances. Saber has four public relations specialists
and office staff. At the beginning of the year, Saber estimated the total cost of salaries
and benefits for the public relations specialists at $404,000 and a total of 7,100 billable
hours for the year. The office and administrative costs were estimated at $676,000. The
allocation base for office and administrative costs is billable hours. What rate would
Saber use for allocating the cost of its office and administrative staff? (Round your
answer to the nearest cent.)
A) $95.21 per hour
B) $152.11 per hour
C) $38.31 per hour
D) $56.90 per hour
General, Inc. has prepared the following direct materials purchases budget:
All purchases are paid for as follows: 40% in the month of purchase, 50% in the following
month, and 10% two months after purchase. Calculate budgeted balance of accounts
payable at the end of October.
A) $46,920
B) $54,520
C) $7,600
D) $15,420
A company is considering an iron ore extraction project that requires an initial
investment of $1,400,000 and will yield annual cash flows of $613,228 for three years.
The company’s discount rate is 9%. Calculate IRR.
Present value of ordinary annuity of $1:
A) 15%
B) 17%
C) 14%
D) 13%
The following is summary of information presented on the financial statements of a
company on December 31, 2017.
With respect to current liabilities, a horizontal analysis reveals ________. (Round your
answer to two decimal places.)
A) that current liabilities are 37.93% of total equity
B) a 45.28% increase in current liabilities
C) a current ratio of 0.88
D) a 31.17% increase in current liabilities
The Assembly Department of Smart, Inc., a manufacturer of computers, had a
beginning inventory of 5,000 units. During November, it assembled 2,000 units and
transferred them to the Packaging Department. It incurred $250,000 in direct materials
and $75,000 in conversion costs. The ending inventory in November was 6,000 units,
which were 100% and 60% complete with respect to materials and conversion costs,
respectively. Calculate the total equivalent units of production for conversion costs for
November.
A) 2,000 units
B) 8,000 units
C) 5,600 units
D) 3,600 units
Regarding accounting entries for debt securities, which of the following is true?
A) The receipt of interest revenue is recorded with a debit to Interest Revenue and a
credit to Cash.
B) Investments in debt securities are recorded at cost, including any brokerage fees
paid.
C) The receipt of interest revenue is recorded with a debit to Cash and a credit to
Long-term Securities—Held-to-Maturity.
D) Debt securities disposed of at maturity are recorded with a debit to the Short-term or
Long-term Investments account and a credit to Cash.
Harris, Inc. had the following balances and transactions during 2017:
What would be reported for Cost of Goods Sold on the income statement for the year
ending December 31, 2017 if the perpetual inventory system and the last-in, first-out
inventory costing method are used?
A) $19,075
B) $13,475
C) $5,600
D) $17,850
Ellie’s Candies, Inc. produces gummy bears. The company purchases raw materials,
stores them in a warehouse, and then runs them through two processes: production and
packaging. During September, the production process incurred the following costs in
processing 20,000 gummy bears:
Use the FIFO method to compute the September conversion costs in the Production
Department.
A) $58,500
B) $268,500
C) $50,500
D) $8,000
Which of the following is a characteristic of a limited-liability company (LLC)?
A) An LLC’s life is terminated at any member’s choice or death.
B) Each member of an LLC is liable only for his or her own actions.
C) An LLC must have more than five members.
D) The income of members from an LLC is not taxed.
Arabica Manufacturing uses a predetermined overhead allocation rate based on the
number of machine hours. At the beginning of the year, it estimated total manufacturing
overhead costs to be $1,050,000, total number of direct labor hours to be 4,000, and
total number of machine hours to be 20,000 hours. What was the predetermined
overhead allocation rate? (Round your answer to the nearest cent.)
A) $262.50 per machine hour
B) $43.75 per direct labor hour
C) $52.50 per machine hour
D) $65.63 per direct labor hour
Adjusting journal entries are prepared ________.
A) after preparing the adjusted trial balance
B) after preparing the unadjusted trial balance
C) after posting the closing entries
D) after preparing the financial statements
On January 1, Davidson Services has the following balances:
Accounts Receivable $23,000
Bad Debts Expense $0
Davidson has the following transactions during January: Credit sales of $120,000,
collections of credit sales of $84,000, and write-offs of $18,000. Davidson uses the
direct write-off method. The amount of Bad Debts Expense for January is ________.
A) $23,000
B) $25,714
C) $12,600
D) $18,000
Which of the following inventory costing methods yields the highest net income during
a period of rising inventory costs?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
A ________ groups cost by behavior; costs are classified as either variable costs or
fixed costs.
A) balance sheet
B) contribution margin income statement
C) traditional income statement
D) absorption costing income statement
On October 1, 2017, Ealys Jewelers accepted a 4-month, 11% note for $6,000 in
settlement of an overdue account receivable. The accounting period ends on December
31. Calculate the accrued interest on the note at December 31, 2017. (Round your
answer to the nearest dollar.)
A) $165
B) $220
C) $660
D) $330
The budgeted production of Taurus, Inc. is 13,000 units per month. Each unit requires
30 minutes of direct labor to complete. The direct labor rate is $80 per hour. Calculate
the budgeted cost of direct labor for the month. (Round any intermediate calculations to
the nearest cent and your final answer to the nearest dollar.)
A) $520,000
B) $195,000
C) $1,040,000
D) $34,667
Murphy, Inc. had the following balances and transactions during 2017.
The company maintains its records of inventory on a perpetual basis using the last-in,
first-out inventory costing method. Calculate the amount of ending Merchandise Inventory
at December 31, 2017 using the lower-of-cost-or-market rule.
A) $820
B) $1,260
C) $630
D) $1,890
Which of the following would appear as a line item on the income statements of both a
merchandiser and a manufacturer?
A) Direct Labor
B) Cost of Goods Manufactured
C) Direct Materials
D) Cost of Goods Sold
Morewell, Inc. used a predetermined overhead allocation rate to allocate $80,000 and
$50,000 of indirect costs to Coloring Department and Mixing Department, respectively.
The journal entry to record the allocation of overhead costs to the Coloring Department
is ________.
A) debit Manufacturing Overhead, $80,000; credit Work-in-Process Inventory—
Mixing, $80,000
B) debit Work-in-Process Inventory—Coloring, $80,000; credit Manufacturing
Overhead, $80,000
C) debit Work-in-Process Inventory—Coloring, $50,000; credit Manufacturing
Overhead, $50,000
D) debit Manufacturing Overhead, $50,000; credit Work-in-Process Inventory—
Mixing, $50,000
Beige Corporation pays $536,000 to acquire 40% of the equity securities of Olive
Technologies, Inc. on May 5, 2017. In the journal entry to record this transaction
________.
A) Long-term Investments—Trading Investments will be debited for $536,000
B) Long-term Investments—Olive Technologies, Inc. will be debited for $536,000
C) Long-term Investments—Available-for-Sale will be debited for $536,000
D) Long-term Investments—Available-for-Sale will be credited for $536,000
Moore Sales purchased equipment for $50,000 by issuing a six-month note payable. On
the statement of cash flows, this transaction would be shown in the ________.
A) non-cash financing and investing activities section
B) investing activities section
C) operating activities section
D) financing activities section
Based on the partial balance sheet of Marco Investments, Inc., compute the rate of
return on total assets.
A) 9.42%
B) 19.41%
C) 9.71%
D) 1.76%
Grady Corporation provides the following financial information:
Calculate the target rate of return. (Round your answer to two decimal places.)
A) 27.83%
B) 78.67%
C) 35.40%
D) 61.84%
Which of the following accounts would be used under the accrual basis of accounting,
but not under cash basis accounting?
A) Cash
B) Unearned Revenue
C) Service Revenue
D) Salaries Expense
The main expense of a merchandiser is usually ________.
A) cost of goods sold
B) current assets
C) selling and administrative expenses
D) production overhead
Alexander Corp. has the following balances as of December 31, 2017:
Calculate the debt to equity ratio. (Round your answer to two decimal points.)
A) 0.64
B) 0.92
C) 1.56
D) 2.56
Which of the following inventory costing methods uses the costs of the oldest purchases
to calculate the value of the ending inventory?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out