When a company is using the direct write-off method, and an account is written off, the
journal entry consists of a ________.
A) debit to Accounts Receivable and a credit to Cash
B) credit to Accounts Receivable and a debit to Bad Debts Expense
C) debit to the Allowance for Bad Debts and a credit to Accounts Receivable
D) credit to Accounts Receivable and a debit to Interest Expense
Which of the following is a characteristic of a plant asset, such as a building?
A) It is used in the operations of a business.
B) It is available for sale to customers in the ordinary course of business.
C) It has a short useful life.
D) It will have a negligible value at the end of its useful life.
Bricks, Inc. provides architectural services. The company provides the following
financial data:
Service Revenue $30,000
Salaries and Other Variable Costs 20,350
Rent Expense 4,500
Depreciation Expense 500
Requirements:
a) Calculate the contribution margin, contribution margin ratio, and operating income.
b) Bricks provided service to 150 customers during the month. Determine the average
amount the company charged each customer.
On January 1, Feldstein Manufacturing had a beginning balance in Work-in-Process
Inventory of $81,100 and a beginning balance in Finished Goods Inventory of $22,000.
During the year, Feldstein incurred manufacturing costs of $351,000.
During the year, the following transactions occurred:
Job A-12 was completed for a total cost of $121,100 and was sold for $126,700.
Job A-13 was completed for a total cost of $201,800 and was sold for $211,000.
Job A-15 was completed for a total cost $60,000 but was not sold as of year-end.
What was the balance in Finished Goods Inventory at the end of the year?
A) $404,900 debit balance
B) $82,000 credit balance
C) $82,000 debit balance
D) $382,900 debit balance
The performance evaluation system should provide incentives to segment managers for
coordinating the activities of the subunits and directing them toward the overall
company goals. Which of the following performance measurement goals has been
described by this statement?
A) motivating segment managers
B) promoting goal congruence
C) providing feedback
D) benchmarking
A ________ is a document explaining the reasons for the difference between a
depositor’s Cash account in the ledger and the depositor’s cash balance in its bank
account.
A) bank statement
B) deposit receipt
C) bank reconciliation
D) remittance advice
One part of the balanced scorecard helps management answer the question, “How do
we look to investors and creditors?” Which of the four perspectives is being described
with this statement?
A) financial
B) customer
C) internal business
D) learning and growth
The contribution of equipment by a stockholder in exchange for common stock is an
example of ________.
A) investing activity
B) financing activity
C) operating activity
D) non-cash investing and financing activity
Which of the following inventory costing methods yields the lowest cost of goods sold
during a period of rising inventory costs?
A) specific identification
B) weighted-average
C) last-in, first-out
D) first-in, first-out
Which of the following statements regarding vacation benefits is correct?
A) No entry is needed until the employee takes paid vacation.
B) The account, Vacation Expense is debited when the employee takes paid vacation.
C) Health and pension benefits are recorded in the same manner as vacation benefits.
D) When an employee takes paid vacation, the account, Vacation Benefits Payable is
credited.
The following details are provided by a manufacturing company:
Calculate the payback period for the investment. (Round your answer to two decimal
places.)
A) 2.75 years
B) 2.82 years
C) 2.55 years
D) 2.77 years
Blandings Glassware Company issues $1,150,000 of 15%, 10-year bonds at 95 on
February 28, 2017. The bonds pay interest on February 28 and August 31. The journal
entry to record the issuance includes a ________.
A) debit to Cash for $1,150,000
B) credit to Bonds Payable for $1,092,500
C) credit to Discount on Bonds Payable for $57,500
D) debit to Cash for $1,092,500
The production manager is responsible for ________.
A) all product costs
B) decisions to acquire new equipment
C) his or her own salary
D) efficiently and effectively producing quality products
Dartis Tools Co. is considering investing in specialized equipment costing $610,000.
The equipment has a useful life of five years and a residual value of $69,000.
Depreciation is calculated using the straight-line method. The expected net cash inflows
from the investment are given below:
What is the accounting rate of return on the investment? (Round your answer to two
decimal places.)
A) 14.36%
B) 16.19%
C) 12.90%
D) 6.45%
The high-low method is used to ________.
A) determine the highest price that can be charged for a product
B) separate mixed costs into their variable and fixed components
C) identify the relevant and irrelevant costs of a business
D) determine the sales level at highest capacity
Which of the following is the first step in the purchasing and payment process?
A) The purchaser receives an invoice for the goods shipped by the supplier.
B) The purchaser sends a check to the supplier.
C) The purchaser sends a purchase order to the supplier.
D) The purchase receives the inventory and prepares a receiving report.
Boylan Company manufactures two products—toaster ovens and bread machines. The
following data are available:
Boylan can manufacture six toaster ovens per machine hour and four bread machines per
machine hour. Boylan’s production capacity is 1,800 machine hours per month. Marketing
limitations indicate that Boylan can sell a maximum of 5,100 toasters and 4,100 bread
machines per month. Which product and how many units should the company produce in a
month to maximize profits? (Round machine hour per unit to two decimal places and your
final answer to the nearest whole dollar.)
A) 7,200 bread machines
B) 4,650 toaster ovens and 4,100 bread machines
C) 5,400 toaster ovens and 3,600 bread machines
D) 10,800 toaster ovens
On December 31, 2017, Lopez Sales has a Bonds Payable balance of $72,000 and a
Premium on Bonds Payable balance of $4,000. On the balance sheet, how will this
information be shown?
A) $72,000 less premium of $4,000 for a net balance of $68,000
B) $72,000 less one-tenth of $4,000 for a net balance of $71,600
C) $72,000
D) $72,000 plus a premium of $4,000 for a net balance of $76,000
When goods are transferred from the Work-in-Process Inventory account to the
Finished Goods Inventory account, ________.
A) total assets and total liabilities increase by the same amount
B) total assets of the company remain constant
C) total equity and total assets increase by the same amount
D) total liabilities increase and total equity decreases by the same amount
The just-in-time management system is a(n) ________.
A) labor management system
B) overhead management system
C) cost management system
D) debt management system
The Merchandise Inventory account balance is $50,000. An physical count of inventory
reveals that actual inventory balance is $47,000. Which of the following would be
included in the adjusting entry? (Assume a perpetual inventory system.)
A) a $47,000 credit to Merchandise Inventory
B) a $50,000 debit to Cost of Goods Sold
C) a $3,000 credit to Cost of Goods Sold
D) a $3,000 credit to Merchandise Inventory
The accountant of Barnes Architectural Services failed to make an adjusting entry to
record $7,000 of depreciation expense. Which of the following statements is true?
A) The total revenue will be overstated.
B) The total revenue will be understated.
C) The total expenses will be overstated.
D) The total expenses will be understated.
Revenue is earned when the business has ________.
A) entered into an agreement with the customer about the goods or services to be
delivered
B) prepared a journal entry to record revenue
C) received cash from the customer before goods or services are delivered
D) delivered a good or service to the customer
Route Two Tire Company makes a special kind of racing tire. Variable costs are $200
per unit, and fixed costs are $32,000 per month. Route Two sells 500 units per month at
a sales price of $300. The company believes that it can increase the price if the tire
quality is upgraded. If so, the variable cost will increase to $240 per unit, and the fixed
costs will rise by 50%. The CEO wishes to increase the company’s operating income by
15%. Which sales price level would give the desired results? (Round your answer to the
nearest cent.)
A) $1,020.00 per unit
B) $264.00 per unit
C) $336.00 per unit
D) $377.40 per unit
Which of the following best describes trend analysis?
A) calculating key ratios to evaluate performance
B) expressing each financial statement amount as a percentage of a budgeted amount
C) comparing a company’s financial statements with that of other companies
D) expressing each year’s financial statement amounts as a percentage of the base year
amounts
Swanson, Inc. uses a periodic inventory system. From the following details, calculate
the cost of goods sold.
A) $24,200
B) $19,800
C) $23,700
D) $26,000
Which of the following is true of a completed worksheet?
A) The total debits in the unadjusted trial balance column equal the total debits in the
adjusted trial balance column.
B) The total debits in the income statement column equal the total credits in the balance
sheet column.
C) The total debits in the income statement column equal the total debits in the balance
sheet column.
D) The total of all the debit columns is equal to the total of all the credit columns.
Cash dividends and treasury stock purchases ________.
A) represent cash payments that are made to ensure higher reported profits
B) may be limited by creditors to ensure that the company maintains a minimum level
of stockholders’ equity
C) may be restricted as a way to lower federal income tax expense
D) make more resources available to pay liabilities
The following information was obtained from Fizz, Inc.:
How much were Fizz’s period costs?
A) $462,540
B) $506,010
C) $13,710
D) $503,900
Which of the following is used to calculate the number of units to account for under the
first-in, first-out (FIFO) method of inventory valuation of process costing?
A) To account for = Beginning balance + Started and completed + In process
B) To account for = Beginning balance + Amount transferred in
C) To account for = Beginning balance + In process
D) To account for = Beginning balance + Started and completed
On January 21, 2016, Bessant, Inc. received merchandise from Mullies, Inc. On that
date, it found a few of these goods to be damaged. On January 22, it returned the
damaged goods to the seller. Such returns will be treated as ________ by Bessant.
A) purchase returns
B) sales returns
C) purchase allowances
D) sales allowances
Jeremy Corporation estimated manufacturing overhead costs for the year to be
$510,000. Jeremy also estimated 9,000 machine hours and 3,000 direct labor hours for
the year. It bases the predetermined overhead allocation rate on machine hours. On
January 31, Job 25 was completed. It required 4 machine hours and 4 direct labor hours.
What is the amount of manufacturing overhead allocated to the completed job? (Round
your answer to the nearest dollar.)
A) $57
B) $453
C) $228
D) $680