1) U.S. standards are developed by the
a.IFRS
b.GAAP
c.IASB
d.FASB
2) As of December 31, 2014, Millen Industries had $1,600 of raw materials inventory.
At the beginning of 2014, there was $2,000 of materials on hand. During the year, the
company purchased $325,600 of materials; however it paid for only $316,000. How
much inventory was requisitioned for use on jobs during 2014?
a.$326,000
b.$317,600
c.$317,200
d.$325,200
3) Reisner Company prepared the following adjusting entries at year end on December
31, 2014:
(a)Interest Expense150
Interest Payable150
(b)Unearned Revenue1,500
Service Revenue1,500
(c)Insurance Expense1,200
Prepaid Insurance1,200
(d)Interest Receivable100
Interest Revenue100
(e)Supplies Expense250
Supplies250
(f)Salaries and Wages Expense3,000
Salaries and Wages Payable3,000
In an effort to minimize errors in recording transactions, Reisner Company utilizes
reversing entries.
Instructions
Prepare reversing entries on January 1, 2015, for the adjusting entries given where
appropriate.
4) At October 1, Arcade Fire Enterprises reported owners equity of $72,000. During
October, no additional investments were made and the company posted a net loss of
$8,000. If owners equity at October 31 totals $64,000, what amount of owner drawings
were made during the month?
a.$0
b.$4,000
c.$8,000
d.$16,000
5) Cule Manufacturing is trying to determine the equivalent units for conversion costs
with 5,000 units of ending work in process at 80% completion and 40,000 physical
units that are 100% complete as to materials. There are no beginning units in the
department. Materials are added at the beginning of the process, and conversion costs
occur evenly throughout the entire production period. What is the equivalent units for
conversion costs for the current period?
a.45,000
b.44,000
c.4,000
d.36,000
6) Under the ABC philosophy
a.all inventories should be reduced or eliminated
b.the push approach should be used in the first department of a process and the pull
approach should be used in all subsequent departments
c.the cost of a product is equal to the sum of the costs of all activities performed to
manufacture it
d.only one cost driver can be used
7) IFRS, compared to GAAP, tends to be more
a.detailed
b.rules-based
c.principles-based
d.full of disclosures requirements
8) Black Keys Company began the year with owners equity of $280,000. During the
year, the company recorded revenues of $375,000, expenses of $285,000, and had
owner drawings of $30,000. What was Black Keys owners equity at the end of the
year?
a.$280,000
b.$340,000
c.$370,000
d.$400,000
9) The first step in the recording process is to
a.prepare financial statements
b.analyze each transaction for its effect on the accounts
c.post to a journal
d.prepare a trial balance
10) Winter Gloves Company had checks outstanding totaling $12,800 on its May bank
reconciliation. In June, Winter Gloves Company issued checks totaling $79,800. The
July bank statement shows that $71,400 in checks cleared the bank in July. A check
from one of Winter Gloves Company’s customers in the amount of $2,000 was also
returned marked “NSF.” The amount of outstanding checks on Winter Gloves
Company’s July bank reconciliation should be
a.$8,400
b.$19,200
c.$21,200
d.$23,200
11) A stockholder is interested in the ability of a firm to
a.pay consistent dividends
b.appreciate in share price
c.survive over a long period
d.All of these answer choices are correct
12) Goodwill
a.is only recorded when generated internally
b.can be subdivided and sold in parts
c.can only be identified with the business as a whole
d.can be defined as normal earnings less accumulated amortization
13) LaCrema Company publishes a monthly decorating magazine, Remodelista.
Subscriptions to the magazine cost $25 per year. During October 2014, LaCrema sells
18,000 subscriptions beginning with the November issue. LaCrema prepares financial
statements quarterly and recognizes subscription revenue earned at the end of the
quarter. The company uses the accounts Unearned Subscriptions and Subscription
Revenue.
Instructions
(a)Prepare the entry in October for the receipt of the subscriptions.
(b)Prepare the adjusting entry at December 31, 2014, to record subscription revenue
earned in December 2014 .
(c)Prepare the adjusting entry at March 31, 2015, to record subscription revenue earned
in the first quarter of 2015 .
14) Within the relevant range of activity, the behavior of total costs is assumed to be
a.linear and upward sloping
b.linear and downward sloping
c.curvilinear and upward sloping
d.linear to a point and then level off
15) If a single future amount of $7,000 is to be received in 4 years and discounted at
10%, its present value is
a.$4,346
b.$4,781
c.$5,861
d.$4,200
16) Correcting entries
a.always affect at least one balance sheet account and one income statement account
b.affect income statement accounts only
c.affect balance sheet accounts only
d.may involve any combination of accounts in need of correction
17) Yocum Company purchased equipment on January 1 at a list price of $120,000,
with credit terms 2/10, n/30. Payment was made within the discount period and Yocum
was given a $2,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and
paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a
concrete slab on which to place the equipment. What is the total cost of the new
equipment?
a.$125,360
b.$129,360
c.$131,760
d.$123,600
18) When the selling price of treasury stock is greater than its cost, the company credits
the difference to
a.Gain on Sale of Treasury Stock
b.Paid-in Capital from Treasury Stock
c.Paid-in Capital in Excess of Par
d.Treasury Stock
19) If liabilities increased by $20,000 and owners equity increased by $8,000 during a
period of time, then total assets must change by what amount and direction during that
same period?
a.$28,000 increase
b.$28,000 decrease
c.$12,000 increase
d.$20,000 increase
20) Which one of the following would not be classified as a component of conversion
costs?
a.Indirect labor
b.Direct labor
c.Indirect materials
d.Direct materials
21) Which is part of IFRS accounting for financial instruments?
Disclosure of fair value informationOptional recording of some financial
for receivables in the notesinstruments at fair value
a.YesYes
b.YesNo
c.NoYes
d.NoNo
22) In a manufacturing company, the cost of factory labor consists of all of the
following except
a.employer payroll taxes
b.fringe benefits incurred by the employer
c.net earnings of factory workers
d.gross earnings of factory workers
23) The liquidation of a partnership
a.cannot be a voluntary act of the partners
b.terminates the business
c.eliminates those partners with a capital deficiency
d.cannot occur unless all partners approve
24) Lincoln Manufacturing has the following labor costs:
FactoryGross wages$450,000
FactoryNet wages420,000
Employer Payroll Taxes Payable40,000
The entry to record the cost of factory labor and the associated payroll tax expense will
include a debit to Factory Labor for
a.$450,000
b.$490,000
c.$460,000
d.$420,000
25) Sutton Company produced 98,000 units in 46,000 direct labor hours. Production for
the period was estimated at 100,000 units and 50,000 direct labor hours. A flexible
budget would compare budgeted costs and actual costs, respectively, at:
a.46,000 hours and 46,000 hours
b.49,000 hours and 50,000 hours
c.50,000 hours and 46,000 hours
d.49,000 hours and 46,000 hours
26) The following items were shown on the balance sheet of Westwind Corporation on
December 31, 2014:
Stockholders equity
Paid-in capital
Capital stock
Common stock, $5 par value, 400,000 shares
authorized; ______ shares issued and ______ outstanding$1,850,000
Additional paid-in capital
In excess of par 165,000
Total paid-in capital2,015,000
Retained earnings 750,000
Total paid-in capital and retained earnings2,765,000
Less: Treasury stock (18,000 shares) 180,000
Total stockholders’ equity$2,585,000
Instructions
Complete the following statements and show your computations.
(a)The number of shares of common stock issued was _______________.
(b)The number of shares of common stock outstanding was ____________.
(c)The sales price of the common stock when issued was $____________.
(d)The cost per share of the treasury stock was $_______________.
(e)The average issue price of the common stock was $______________.
(f)Assuming that 25% of the treasury stock is sold at $20 per share, the balance in the
Treasury Stock account would be $_______________.
27) The formula for the materials price variance is
a.(AQ SP) (SQ SP)
b.(AQ AP) (AQ SP)
c.(AQ AP) (SQ SP)
d.(AQ SP) (SQ AP)
28) An error in the physical count of goods on hand at the end of a period resulted in a
$15,000 overstatement of the ending inventory. The effect of this error in the current
period is
Cost of Goods SoldNet Income
a.UnderstatedUnderstated
b.OverstatedOverstated
c.UnderstatedOverstated
d.OverstatedUnderstated
29) The allocation of the cost of an asset to expense over its useful life is called
_________________ for tangible plant assets, ________________ for natural
resources, and _________________ for intangible assets.
30) Capital Company issued $600,000, 10%, 20-year bonds on January 1, 2014, at 103 .
Interest is payable semiannually on July 1 and January 1 . Capital uses the straight-line
method of amortization and has a calendar year end.
Instructions
Prepare all journal entries made in 2014 related to the bond issue.
31) Zeller Company requires its marketing managers to submit estimated
cost-volume-profit data on all requests for new products, or expansions of a product
line.
Jean Lamb is a new manager. Her calculations show a fixed cost for a new project at
$100,000 and a variable cost of $5. Since the selling price is only $15 for the proposed
product, 10,000 would need to be sold to break even. That is approximately twice the
volume estimate for the first year. She shares her dismay with Anne Smythe, another
manager.
Anne strongly advises her to revise her estimates. She points out that several of the
costs that had been classified as fixed costs could be considered variable, since they are
step costs and mixed costs. When the data has been revised classifying those costs as
variable costs, the project appears viable.
Required:
1>Who are the stakeholders in this decision?
2>Is it ethical for Jean to revise the costs as indicated? Briefly explain.
3>What should Jean do?
32) When vacant land is acquired, expenditures for clearing, draining, filling, and
grading should be charged to the ______________ account.
33) In January, Toomey, Inc. production supervisor requisitioned raw materials for
production as follows: Job 1 $700, Job 2 $800, Job 3 $300, and general factory use,
$650.
Instructions
Prepare a summary journal entry to record raw materials used.
34) Brick Company reported the following:
Beginning of year operating assets$4,400,000
End of year operating assets4,200,000
Contribution margin2,000,000
Sales revenue10,000,000
Controllable fixed costs1,286,000
Its required return is 10%.
Instructions
Compute the companys ROI.
35) Analyze the transactions of a business organized as a proprietorship described
below and indicate their effect on the basic accounting equation. Use a plus sign (+) to
indicate an increase and a minus sign () to indicate a decrease.
Assets=Liabilities+Owner’s Equity
1>Received cash for services rendered.
2>Purchased office equipment on credit.
3>Paid employees’ salaries.
4>Received cash from customer in payment
on account.
5>Paid telephone bill for the month.
6>Paid for office equipment purchased in
transaction 2.
7>Purchased office supplies on credit.
8>Owner withdrew cash for personal
expenses.
9>Obtained a loan from the bank.
10>Billed customers for services rendered.
36) A cost-volume-profit graph is frequently used in business meetings because it
presents a picture of cost relationships within a company. Briefly describe the type of
information and data that you would need in order to prepare a CVP graph. After a CVP
graph is prepared, what are the major points that could be made from the graph that
would be of interest to management?
37) Income from operations is determined by subtracting total operating expenses from
________________.
38) An accounting record where transactions are initially recorded in chronological
order is called a ________________.