1) If a firm has a quick ratio of 1, the subsequent payment of an account payable will
cause the ratio to increase.
2) The underlying principle of allocating operating expenses to departments is to assign
to each department an amount of expense proportional to the revenues of that
department.
3) Under the direct method of reporting cash flows from operations, the major source of
cash is cash received from customers.
4) Receiving payment prior to delivering goods or services causes a current liability to
be incurred.
5) If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid
freight costs of $125, is paid within 10 days, the amount of the purchases discount is
$70.
6) If Division Inc. expects to sell 200,000 units in 2012, desires ending inventory of
24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted
volume of production for 2012 is 202,000 units.
7) If 10,000 units which were 50% completed are in process at November 1, 90,000
units were completed during November, and 20,000 were 20% completed at November
30, the number of equivalent units of production for November was 90,000. (Assume
no loss of units in production and that inventories are costed by the first-in, first-out
method.)
8) In most businesses, cost standards are established principally by accountants.
9) Allowance for Doubtful Accounts is a liability account.
10) When an account receivable is collected in cash, the total assets of the business
increase.
11)
Which of the following is not a short-cut in finding errors on the trial balance?
A.Determine the difference between debits and credits and look for the amount
B.Determine the amount and change any account to make the trial balance correct
C.Determine the difference between debits and credits, divide the amount by 2, look for
the amount
D.Determine the difference between debits and credits, divide the amount by 9, if it
divides evenly, look for a transposition or slide error
12) Abby and Bailey are partners who share income in the ratio of 2:1 and have capital
balances of $60,000 and $30,000 respectively. With the consent of Bailey, Sandra buys
one half of Abby’s interest for $35,000. For what amount will Abby’s capital account be
debited to record admission of Sandra to the partnership?
A.$40,000
B.$15,000
C.$35,000
D.$30,000
13) Rent expense on a factory building would be treated as a(n):
A.period cost
B.product cost
C.direct cost
D.both A and C are correct
14) When a company discards machinery that is fully depreciated, this transaction
would be recorded with the following entry
A.debit Accumulated Depreciation; credit Machinery
B.debit Machinery; credit Accumulated Depreciation
C.debit Cash; credit Accumulated Depreciation
D.debit Depreciation Expense; credit Accumulated Depreciation
15) Assuming a 360-day year, when a $40,000, 90-day, 9% interest-bearing note
payable matures, total payment will amount to:
A.$40,900
B.$43,600
C.$900
D.$3,600
16) Sinking Fund Income is reported in the income statement as
A.income from operations
B.extraordinary
C.gain on sinking fund transactions
D.other income
17) Mandy Corporation sells a single product. Budgeted sales for the year are
anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and
desired ending inventory is 80,000 units. The quantities of direct materials expected to
be used for each unit of finished product are given below.
Material A .50 lb. per unit @ $ .60 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of direct material B used in production during the year is:
A.$1,057,400
B.$1,193,400
C.$1,026,800
D.$1,224,000
18) Accounts receivable from sales transactions were $51,000 at the beginning of the
year and $64,000 at the end of the year. Net income reported on the income statement
for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows
from operating activities to be reported on the statement of cash flows prepared by the
indirect method is
A.$105,000
B.$118,000
C.$92,000
D.$169,000
19)
Based on the above data, what is the quick ratio, rounded to one decimal point?
A.2.7
B.2.6
C.1.7
D.0.9
20) The following data relate to direct labor costs for February:
What is the direct labor time variance?
A.$7,700 favorable
B.$7,700 unfavorable
C.$11,200 unfavorable
D.$11,200 favorable
21) The contribution margin ratio is:
A.the same as the variable cost ratio
B.the same as profit
C.the portion of equity contributed by the stockholders
D.the same as the profit-volume ratio
22) The balance in Discount on Bonds Payable that is applicable to bonds due in 2015
would be reported on the balance sheet in the section entitled
A.investments
B.long-term liabilities
C.current assets
D.intangible assets
23) The journal entry to record the conversion of an $4,700 accounts payable to a notes
payable would be:
A.Cash 4,700
Notes Payable 4,700
B.Notes Receivable 4,700
Notes Payable 4,700
C.Notes Payable 4,700
Cash 4,700
D.Accounts Payable 4,700
Notes Payable 4,700
24) The following information pertains to Carlton Company. Assume that all balance
sheet amounts represent both average and ending balance figures. Assume that all sales
were on credit.
Assets
Liabilities and Stockholders Equity
Income Statement
What is the price earnings ratio for this company? Round your answer to one decimal
point.
A.8.0 times
B.2.5 times
C.4.0 times
D.6.0 times
25) Mallard Corporation uses the product cost concept of product pricing. Below is cost
information for the production and sale of 45,000 units of its sole product. Mallard
desires a profit equal to a 12% rate of return on invested assets of $800,000.
The unit selling price for the company’s product is:
A.$19.35
B.$15.75
C.$22.05
D.$21.26
26) In which journal would an adjustment for an overcharge by a creditor be recorded?
A.General journal
B.Purchases journal
C.Cash Payments journal
D.Cash Receipts journal
27) Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. The records further indicate that direct materials, direct labor,
and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000,
respectively. In addition, work in process at the beginning of the period for Department
1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs into Department 1 during the period for
direct labor is:
A.Work in Process–Department 165,000
Wages Payable65,000
B.Wages Payable125,000
Work in Process–Department 1125,000
C.Work in Process–Department 1125,000
Wages Payable125,000
D.Wages Payable65,000
Work in Process–Department 165,000
28) On April 2nd a corporation purchased for cash 5,000 shares of its own $10 par
common stock at $16 a share. They sold 3,000 of the treasury shares at $19 a share on
June 15th. The remaining 2,000 shares were sold on November 10th for $12 a share.
29) If the company can not cut costs any lower than they already are what would the
profit margin on sales be if they meet the market selling price?
A.9.3%
B.7.3%
C.10.3%
D.8.3%
30) Two divisions of Central Company (Divisions X and Y) have the same profit
margins. Division X’s investment turnover is larger than that of Division Y (1.2 to 1.0).
Income from operations for Division X is $55,000, and income from operations for
Division Y is $43,000. Division X has a higher return on investment than Division Y
by:
A.using income from operations as a performance measure
B.comparing the profit margins
C.applying a negotiated price measure
D.using its assets more efficiently in generating sales
31) Determine the missing amount X for each of the following:
Assets Liabilities Owners Equity
a. $78,500 $37,600 X
b. X $53,280 $145,000
c. $49,500 X $34,000
32) A disadvantage of the corporate form of business entity is
A.mutual agency for stockholders
B.unlimited liability for stockholders
C.corporations are subject to more governmental regulations
D.the ease of transfer of ownership
33) Accompanying the bank statement was a credit memo for a short-term note
collected by the bank for the company. This item is a(n)
A.deduction from the balance per company’s records
B.addition to the balance per bank statement
C.deduction from the balance per bank statement
D.addition to the balance per company’s records
34) The Statement of Owners Equity should be prepared
A.before the income statement and after the balance sheet
B.before the income statement and balance sheet
C.after the income statement and balance sheet
D.after the income statement and before the balance sheet
35) Which of the following statements is false?
A.Most computerized accounting systems use principles from manual systems
B.Subsidiary ledgers and special journals are only useful when a business doesnt have a
large number of similar transactions
C.Even small companies use computerized accounting systems
D.Large companies often integrate their accounting system with their automated
business systems
36) Which of the following is the correct flow of manufacturing costs?
A.Raw materials, work in process, finished goods, cost of goods sold
B.Raw materials, finished goods, cost of goods sold, work in process
C.Work in process, finished goods, raw materials, cost of goods sold
D.Cost of goods sold, raw materials, work in process, finished goods
37) The present value of $30,000 to be received in two years, at 12% compounded
annually, is (rounded to nearest dollar)
A.$23,916
B.$37,632
C.$23,700
D.$30,000
38) All of the following are ways that managers use managerial information except
A.to evaluate the companys stock performance
B.to evaluate the performance of a companys operations
C.to support long-term planning decisions
D.to determine the cost of manufacturing a product
39) Machinery acquired at a cost of $80,000 and on which there is accumulated
depreciation of $55,000 (including depreciation for the current year to date) is
exchanged for similar machinery. For financial reporting purposes, present entries to
record the disposition of the old machinery and the acquisition of new machinery under
each of the following assumptions:
40) Randomly listed below are the steps for preparing a trial balance:
What is the proper order of these steps?
A.(3), (2), (4), (1)
B.(2), (3), (4), (1)
C.(3), (2), (1), (4)
D.(4), (3), (2), (1)
41) Crystal Company manufactures two models of microcassette recorders, VCH and
MTV. Based on the following production data for April of the current year, prepare a
production budget for April.
42) At the beginning of the period, the Cutting Department budgeted direct labor of
$30,000 and supervisor salaries of $20,000 for 3,000 hours of production. The
department actually completed 5,000 hours of production. Determine the budget for the
department assuming that it uses flexible budgeting?
43) Prior to adjustment at the end of the year, the balance in Trucks is $300,900 and the
balance in Accumulated Depreciation-Trucks is $88,200. Details of the subsidiary
ledger are as follows:
Required:
44) Jamison Company produces and sells Product X at a total cost of $25 per unit, of
which $15 is product cost and $10 is selling and administrative expenses. In addition,
the total cost of $25 is made up of $14 variable cost and $11 fixed cost. The desired
profit is $5 per unit. Determine the mark up percentage on total cost.
45) You are trying to explain debit and credit memos that appear on bank statements
and whether these will increase or decrease your companys bank account balance.
Complete the following table to help your new staff understand.
46) Journalize the following transactions using the direct write-off method of
accounting for uncollectible receivables.
April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the
merchandise is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote
off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs for and received cash in full payment.
47) The balance sheet for Borglum Company at the end of the current fiscal year
indicated the following:
Income before income tax was $1,500,000 and income taxes were $200,000, for the
current year. Cash dividends paid on common stock during the current year totaled
$150,000. The common stock was selling for $70 per share at the end of the year.
Required:
Determine each of the following:
Round to one decimal place except earnings per share and dividends per share, which
should be rounded to two decimal places.
48) Morocco Inc. reported the following results for the year ending April 30, 2014:
Prepare a retained earnings statement for the fiscal year ended April 30, 2014.
49) Eagle Country Club has acquired a lot to construct a clubhouse. Eagle had the
following costs related to the construction:
Determine the cost of the Club House to be reported on the balance sheet.
50) On February 1 of the current year, Motor, Inc. issued 700 shares of $2 par common
stock to an attorney in return for preparing and filing the Articles of Incorporation. The
value of the services is $9,600. Journalize this transaction.