1) Factory overhead is often collected and summarized in a subsidiary factory overhead
ledger.
2) If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and
pays the partnership $5,000 out of personal assets to cover the deficiency, then that
partner is entitled to share in the final distribution of cash.
3) Factory overhead includes selling and administrative expenses because they are
indirect costs of a product.
4) The same four basic financial statements are prepared by both U.S. GAAP and IFRS.
5) Materials requisitions and time tickets are cost accounting source documents.
6) During April, the production department of a process operations system completed
and transferred to finished goods 18,000 units that were in process at the beginning of
April and 90,000 units that were started and completed in April. April’s beginning
inventory units were 100% complete with respect to materials and 40% complete with
respect to labor. At the end of April, 30,000 additional units were in process in the
production department and were 100% complete with respect to materials and 60%
complete with respect to labor. The beginning inventory included materials cost of
$107,000 and the production department incurred direct materials cost of $329,000
during the month. Compute the direct materials cost per equivalent unit for the
department using the weighted-average method.
A.$4.03.
B.$3.05.
C.$2.38.
D.$3.16.
E.$2.57.
7) Buffalo Company reported a December 31 ending inventory balance of $412,000.
The following additional information is also available:
ª The ending inventory balance of $412,000 did not include goods costing $48,000 that
were purchased by Buffalo on December 28 and shipped FOB destination on that date.
Buffalo did not receive the goods until January 2 of the following year.
ª The ending inventory balance of $412,000 included damaged goods at their original
cost of $38,000. The net realizable value of the damaged goods was $10,000.
Based on this information, the correct balance for ending inventory on December 31 is:
A.$374,000
B.$384,000
C.$460,000
D.$422,000
E.$438,000
8) In the process of reconciling its bank statement for January, Maxi’s Clothing’s
accountant compiles the following information:
The adjusted cash balance per the books on January 31 is:
A.$5,855
B.$5,335
C.$4,055
D.$4,815
E.$4,585
9) Zephyr Corporation has provided the following data from its activity-based costing
system:
Data concerning one of the company’s products, Product LM41, appear below:
According to the activity-based costing system, the product margin for product LM41
is:
A.$2,891.90
B.$5,931.30
C.$11,917.50
D.$2,236.90
E.$3,178.20
10) Bengal Co. provides the following sales forecast for the next three months:
The company wants to end each month with ending finished goods inventory equal to
25% of the next month’s sales. Finished goods inventory on June 30 is 1,250 units. The
budgeted production units for July are:
A.6,250 units.
B.3,750 units.
C.6,425 units.
D.2,500 units.
E.5,175 units.
11) In the process of reconciling its bank statement for April, Donahue Enterprises’
accountant compiles the following information:
The adjusted cash balance per the books on April 30 is:
A.$6,900
B.$8,160
C.$4,600
D.$6,520
E.$5,840
12) A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000
premium. On the interest date 5 years later, after the bond interest was paid and after
40% of the premium had been amortized, the corporation purchased the entire issue on
the open market at 99 and retired it. The gain or loss on this retirement is:
A.$0.
B.$10,000 gain.
C.$10,000 loss.
D.$22,000 gain.
E.$22,000 loss.
13) Which of the following is not part of the materials activity in the flow of
manufacturing activities?
A.Beginning raw materials
B.Beginning work in process
C.Raw materials purchases
D.Raw materials available for use
E.Ending raw materials
14) Franklin Company deposits all cash receipts on the day they are received and makes
all cash payments by check. At the close of business on August 31, its Cash account
shows a debit balance of $13,162. Franklin’s August bank statement shows $14,237 on
deposit in the bank. Determine the adjusted cash balance using the following
information:
The adjusted cash balance should be:
A.$18,737
B.$10,337
C.$14,887
D.$13,112
E.$14,837
15) Andrew Industries purchased $165,000 of raw materials on account during the
month of March. The beginning Raw Materials Inventory balance was $22,000, and the
materials used to complete jobs during the month were $141,000 direct materials and
$13,000 indirect materials. How should Andrews journalize the purchase of raw
materials for March?
A.Debit Raw Materials Inventory $165,000; credit Accounts Payable $165,000
B.Debit Work In Process Inventory $165,000; credit Raw Materials Inventory $165,000
C.Debit Raw Materials Inventory $187,000; credit Cash $187,000
D.Debit Accounts Payable $165,000; credit Raw Materials Inventory $165,000
E.Debit Accounts Payable $187,000; credit Raw Materials Inventory $187,000
16) A company purchased a weaving machine for $190,000. The machine has a useful
life of 8 years and a residual value of $10,000. It is estimated that the machine could
produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts
were produced. In the second year, production increased to 19,000 units. Using the
units-of-production method, what is the amount of depreciation expense that should be
recorded for the second year?
A.$48,133.
B.$45,600.
C.$22,500.
D.$23,750.
E.$81,600.
17) An accounts payable ledger:
A.Contains an account for each credit customer.
B.Lists the balances of selected accounts that are added to show the total amount of the
significant long-term creditors outstanding.
C.Is a book of original entry designed and used for recording only a specified type of
transaction.
D.Contains the financial statement accounts of a business.
E.Contains a separate account for each creditor (supplier) to the company.
18) Southland Company is preparing a cash budget for August. The company has
$17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and
$134,500 in cash disbursements during August. Southland Company wants to maintain
a minimum cash balance of $10,000. The preliminary cash balance at the end of August
before any loan activity is:
A.$13,300.
B.$137,800.
C.($13,700).
D.$3,300.
E.$27,000.
19) The following information comes from the records of Barney Co. for the current
period.
a. Compute the direct materials price and quantity variances, direct labor rate and
efficiency variances and state whether the variance is favorable or unfavorable.
b. Prepare the journal entries to charge direct materials and direct labor costs to work in
process and the materials and labor variances to their proper accounts.
20) Naples Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of resource consumption across activity cost pools:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products. How much indirect
factory wages and factory equipment depreciation cost would be assigned to the
Customer Orders activity cost pool?
A.$247,000
B.$390,000
C.$214,500
D.$780,000
E.$208,000
21) The internal document prepared by a department manager that informs the
purchasing department of its merchandise needs and requests that the merchandise be
purchased is the
A.Purchase requisition.
B.Purchase order.
C.Invoice.
D.Receiving report.
E.Invoice approval.
22) Mirkle Corporation uses the following activity rates from its activity-based costing
to assign overhead costs to products:
Data for one of the company’s products follow:
The company produced 4,000 units of product during the period. Direct materials cost
$7.30 per unit and direct labor cost $5.45 per unit. How much overhead cost would be
assigned to Product P59G using the activity-based costing system?
A.$54,482.56
B.$3,138.24
C.$10,014.40
D.$154.78
E.$5,301.76
23) A company’s inventory records indicate the following data for the month of April:
If the company uses the first-in, first-out (FIFO) method and the perpetual inventory
system, what is the amount of cost of goods sold for April?
24) Gershwin Company uses four special journals: purchases, sales, cash receipts, and
cash disbursements. The following sales and cash collections transactions were incurred
during October:
Record these transactions in the appropriate special journals below.
25) When the amount invested differs substantially across projects, NPV is of limited
value for comparison purposes. You have evaluated three projects of substantially
different investment amounts using the net present value (NPV) method. How would
you decide which one of the projects to select?
26) Describe employer responsibilities for reporting payroll taxes. (To the extent
possible, reference the form to be filed for each tax.)
27) Kramer and Feldman Company is organized as a partnership. At the prior year-end,
Kramer’s equity balance was $352,000 and Feldman’s was $256,000. For the current
year, partnership net income is $137,000 ($77,000 allocated to Kramer and $60,000
allocated to Feldman); withdrawals are $87,000 ($45,000 for Kramer and $42,000 for
Feldman). Compute the total partnership return on equity and the individual partner
return on equity ratios.
28) In process costing, factory overhead incurred does not usually equal that applied,
which yields either ____________________ or ___________________ overhead.
29) An ____________________________ refers to the policies and procedures
managers use to protect assets, ensure reliable accounting, promote efficient operations,
and urge adherence to company policies.
30) A company exchanged its used machine for a new machine in a transaction that had
commercial substance. The old machine cost $68,000, and the new one had a cash price
of $95,000. The company had taken $59,000 depreciation on the old machine and was
allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash. What
gain or loss should be recorded on the exchange?