Which of the following decisions will most likely involve the use of activity-based
management?
A) decisions related to the financing of an investment using equity or debt
B) decisions related to the expansion operations in a particular geographic location
C) decisions related to the pricing of a product
D) decisions related to the payment of dividends
Which of the following is the proper treatment for a contingency that is probable but the
exact amount of which is not known? The amount can be estimated.
A) The liability should be doubled following conservatism.
B) The liability should be estimated and recorded.
C) The liability should be ignored.
D) The liability should be reported in the notes to the financial statements.
A depreciable asset’s cost minus accumulated depreciation is called ________.
A) book value
B) residual value
C) accrued revenue
D) accrued expense
Altec Designs makes fashion clothing and reports the following data for the month of
September:
What is the journal entry to record the total labor charges incurred during September?
A)
B)
C)
D)
The price/earnings ratio shows the ________.
A) dividend yield of the company
B) market price of $1 of earnings
C) proportion of total assets financed by debt
D) value that the stock market places on the dividends paid by the company
Which of the following statements is true of a sole proprietorship?
A) A sole proprietorship joins two or more individuals as co-owners.
B) The sole proprietor is personally liable for the liabilities of the business.
C) A sole proprietorship is taxed separately from the owner.
D) A sole proprietorship has to pay business income taxes.
The following information is from the December 31, 2017 balance sheet of Tudor
Corporation.
What was the total paid-in capital as of December 31, 2017?
A) $736,000
B) $996,900
C) $913,000
D) $888,000
The Maine Oyster Company completed the flexible budget analysis for the second
quarter, which is given below.
Which of the following statements would be a correct analysis of the flexible budget
variance for sales revenue?
A) decrease in sales price per unit
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs
A company that uses the perpetual inventory system sold goods to a customer for cash
for $3,500. The cost of the goods sold was $600. Which of the following journal entries
correctly records this transaction?
A)
B)
C)
D)
The relationship between total liabilities and total assets is the ________.
A) debt ratio
B) debt to equity ratio
C) current ratio
D) earnings per share
A company may invest in debt or equity securities of other companies to ________.
A) further enhance a business relationship with a key vendor
B) invest borrowed money in an effort to improve the company’s net income
C) to weaken the investing company’s supply chain source
D) to allow the company to use investment income to increase its annual dividend
The following Office Supplies account information is available for Able, Inc.
From the above information, calculate the amount of office supplies purchased.
A) $5,200
B) $5,000
C) $1,800
D) $2,000
Which of the following is not a way to accurately determine the financial performance
of a company?
A) carefully examining one year’s data
B) from year to year
C) with a competing company
D) with the same industry as a whole
Pastel Paints Company uses the direct method for preparing its statement of cash flow.
Pastel reports the following information regarding 2017:
From the income statement:
Sales Revenues, $267,000
Cost of Goods Sold, $210,000
Operating Expenses, $37,000
From the balance sheet:
What amount will be shown for collections from customers?
A) $263,200
B) $270,800
C) $267,000
D) $32,800
Which of the following transactions is recorded in the purchases journal?
A) purchase of furniture on account
B) cash purchase of merchandise inventory
C) sale of merchandise inventory on account
D) cash sales of merchandise inventory
Which of the following temporary accounts is typically used in just-in-time costing
systems to accumulate direct labor and manufacturing overhead costs?
A) Adjustments account
B) Conversion Costs account
C) Manufacturing Overhead account
D) Work-in-Process Inventory account
Which of the following is an accounting information system activity that can be
classified as a payroll business transaction?
A) approval of new employees
B) receipt of customer payment
C) processing of vendor invoices
D) payment for goods or services
On July 1, Alpha, Inc. prepaid rent for a small equipment storage area. Alpha paid
$20,000 to rent the area from July 1 through the end of the year. Provide the journal
entry needed on July 1 when the payment is made. (Ignore explanation). Assume the
deferred expense is initially recorded as an asset.
If a company retires preferred stock, ________.
A) total stockholders’ equity will decrease
B) total stockholders’ equity will increase
C) the company can record a gain or loss on retirement of stock
D) the number of outstanding shares will increase
The following is a summary of information presented on the financial statements of a
company on December 31, 2017.
With respect to long-term liabilities, a horizontal analysis reveals ________.
A) long-term liabilities decreased by $15,000
B) long-term liabilities decreased by 25.00%
C) long-term liabilities decreased by 11.11%
D) long-term liabilities decreased by $8,000
Cavalaris Products uses a standard cost system. Overhead costs are allocated based on
direct labor hours. In the first quarter, Cavalaris had an unfavorable cost variance for
variable overhead costs. Which of the following scenarios is a reasonable explanation
for this variance?
A) The actual number of direct labor hours was lower than the budgeted hours.
B) The actual variable overhead costs were higher than the budgeted costs.
C) The actual variable overhead costs were lower than the budgeted costs.
D) The actual number of direct labor hours was higher than the budgeted hours.
Which of the following is the primary objective of managerial accounting?
A) providing information that managers need to make operational decisions
B) providing historical data to investors and creditors
C) providing summarized results of operations
D) providing information to comply with laws and regulations of government bodies
The Assembling Department of Mat Liners, Inc. had 8,000 units in process on
December 1 and received 15,000 units from the Sewing Department. Calculate the
number of units to account for by the Assembling Department for December.
A) 23,000 units
B) 15,000 units
C) 8,000 units
D) 7,000 units
Which of the following statements is true of a corporation?
A) Corporations pay the same variety of taxes as other forms of business.
B) Although a corporation is a separate legal entity, it cannot be sued.
C) Any stockholder of a corporation can commit the corporation to a binding contract.
D) The owners of a corporation are called stockholders.
Stancil Enterprises prepaid four months of office rent totaling $9,000 on October 1,
2017. Assuming Stancil records deferred expenses using the alternative treatment, what
would be the adjusting entry recorded on December 31, 2017?
A) Debit Rent Expense and credit Prepaid Rent for $6,750
B) No entry is needed since Rent Expense was recorded on October 1, 2017
C) Debit Prepaid Rent and credit Rent Expense for $2,250
D) Debit Prepaid Rent and credit Rent Expense for $27,000
Gardner Sail Makers manufactures sails for sailboats. The company has the capacity to
produce 37,000 sails per year and is currently producing and selling 30,000 sails per
year. The following information relates to current production:
Assume that a special pricing order is accepted for 5,500 sails at a sales price of $150 per
unit. This special order requires both variable manufacturing and variable selling and
administrative costs, as well as incremental fixed costs of $400,000. What will be the
impact on operating income?
A) Operating income decreases by $363,000.
B) Operating income decreases by $37,000.
C) Operating income increases by $363,000.
D) Operating income increases by $37,000.
The three major categories included on the statement of cash flows are ________.
A) investing, operating, and financing activities
B) investing, capital, and financing activities
C) investing, operating, and contracting activities
D) financial, operating, and internal control activities
On December 1, 2017, Arthur, Inc. had 40,000 shares of $10 par value common stock
issued and outstanding. The next day it declared a 50% stock dividend. The market
value of the stock on that date was $9 per share. Which of the following is the correct
journal entry to record this transaction?
A) debit Stock Dividends $360,000 and credit Cash $360,000
B) debit Stock Dividends $360,000, credit Common Stock $400,000, and credit Paid-In
Capital in Excess of Par -$40,000
C) debit Common Stock $200,000 and credit Cash $200,000
D) debit Stock Dividends $200,000 and credit Common Stock Dividend Distributable
$200,000
A business makes a cash payment of $12,000 to a supplier for supplies purchased two
weeks earlier. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Supplies
D) Accounts Receivable
When the total fixed costs decrease, the breakeven point ________.
A) increases
B) decreases
C) remains the same
D) increases proportionately
Lack of mutual agency is best described as which of the following?
A) The liabilities of the corporation cannot be extended to the personal assets of the
stockholder.
B) Shares of stock can be readily purchased and sold by investors on an organized stock
exchange.
C) Stockholders are not authorized to sign contracts or make business commitments on
behalf of the corporation.
D) Corporations pay income tax on corporate earnings, and shareholders pay income
tax on corporate dividends.
The ________ account is credited to adjust for underallocated overhead costs.
A) Cost of Goods Sold
B) Sales Revenue
C) Manufacturing Overhead
D) Finished Goods Inventory