ACC 34930 | Course Paper

Important control features provided by a voucher system:

A) assure only approved invoices are paid.

B) centralize the recording of all expenditures in one placethe voucher register.

C) include using the check register along with the voucher register.

D) All of these answers are correct.

Of the following, which has a positive effect on the computation of cash flow from

operations using the indirect method?

A) Decrease in Accounts Payable

B) Increase in Inventory

C) Decrease in Notes Payable

D) Depreciation Expense

Which of the following would be shown on the statement of retained earnings?

A) Purchase of treasury stock

B) Sale of common stock

C) Sale of preferred stock

D) Declaration of a cash dividend

List and discuss the (a) advantages and (b) disadvantages of the corporation form of

business.

When revenue is closed:

A) Owner’s Capital will be debited.

B) Income Summary will be debited.

C) Income Summary will be credited.

D) None of these is correct.

If the music department in a department store is 8,000 square feet and the total square

feet is 40,000, how much of the total building cost of $50,000 will be allocated to

music?

A) $8,000

B) $1,000

C) $32,000

D) $10,000

Tyler returned $500 of merchandise within the discount period. The entry to record the

return is to:

A) debit Purchases for $500; credit Accounts Payable for $500.

B) debit Purchases for $500; credit Purchases Returns and Allowances for $500.

C) debit Accounts Payable/Suppliers Name for $500; credit Purchases Returns and

Allowances for $500.

D) debit to Accounts Payable for $500; credit Purchases Discount for $500.

The petty cash overage was not recorded. This would cause:

A) revenues to be overstated.

B) revenues to be understated.

C) expenses to be overstated.

D) expenses to be understated.

If beginning inventory is $6,000, ending inventory is $3,000, net purchases are $12,000

and Freight-in is $400, what is the Cost of Goods Sold?

A) $17,400

B) $17,000

C) $15,400

D) $14,000

A long term investment established to pay off bondholders at maturity is called a(n):

A) discount fund.

B) maturity fund.

C) bond sinking fund.

D) annuity fund.

Construct the bank reconciliation for Mitter Company as of July 31, from the following

information:

a. Balance per bank statement $9,150

b. Deposit in transit 705

c. Checkbook balance 9,250

d. Outstanding checks 800

e. NSF check (debit memo) 220

f. Service charges 115

g. Interest earned on account 140

The principal ledger containing all the balance sheet and income statement accounts is

the:

A) general ledger.

B) creditors’ ledger.

C) customers’ ledger.

D) subsidiary ledger.

Mid-West Tutoring had the following payroll information on January 31:

Assume:

FICA tax rates are: OASDI 6.2% on a limit of $117,000 and Medicare 1.45%.

State Unemployment tax rate is 2% on the first $7,000.

Federal Unemployment tax rate is 0.8% on the first $7,000.

Using the information above, the journal entry to record the employee’s withholding

taxes would include:

A) a debit to Payroll Tax Expense in the amount of $6,000.

B) a debit to Wages and Salaries Expense in the amount of $6,000.

C) a credit to Cash in the amount of $6,000.

D) a credit to FUTA Payable for $48.

The correct order for closing accounts is:

A) revenue, expenses, income summary, withdrawals.

B) revenue, income summary, expenses, withdrawals.

C) revenue, expenses, capital, withdrawals.

D) revenue, capital, expenses, withdrawals.

Which of the following is considered a contra-stockholders’ equity account?

A) Common Stock

B) Accumulated Depreciation

C) Treasury Stock

D) Preferred Stock

An account that would be increased by a debit is:

A) Cash.

B) Fees Earned.

C) Capital.

D) Accounts Payable.

Which of the following statements is true?

A) Payroll Tax Expense increases on the debit side of the account.

B) FICA-OASDI Payable is a liability.

C) Payroll Tax Expense has a debit normal balance.

D) All of these answers are correct.

Cash Short and Over is:

A) a Misc. Expense account.

B) a Misc. Revenue account.

C) a Misc. Expense or Misc. Revenue account depending on the balance in the account.

D) an asset or liability depending on the balance in the account.

The partnership of Brandon and Ryan is being liquidated. All gains and losses are

shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as

follows:

Cash $10,000

Other Assets 7,000

Liabilities 3,000

Brandon, Capital 7,000

Ryan, Capital 7,000

a) If the Other Assets are sold for $10,000, how much capital will each partner receive

have before paying liabilities and distributing the remaining assets?

b) If the Other Assets are sold for $7,000, how much capital will each partner have

before paying liabilities and distributing remaining assets?

The credit recorded in the journal to replenish the petty cash fund is to:

A) Cash.

B) Petty Cash.

C) Accounts Receivable.

D) Miscellaneous Expense

Under the Fair Labor Standards Act, for any hours that an employee works over 40

during a work week:

A) the employee must be paid double.

B) the employee is paid time and a half.

C) the employee must receive the minimum wage.

D) the employee must be paid at straight-time pay.

What is the book value per share of common stock if total stockholders’ equity is

$800,000 with 20,000 shares of common stock outstanding? (Assume no preferred

stock is outstanding)

A) $40.00

B) $4.00

C) $400.00

D) $20.00

Partners Brian, Josh, and Chad have average capital balances of $7,000, $3,000, and

$90,000, respectively. Net income for the year is $12,000. Salary allowances are

$14,000 for Brian and $5,000 for Josh. Chad gets 10% interest on his capital balance

with the remainder being divided at a 1:1:2 ratio for Brian, Josh, and Chad,

respectively. What is Brian’s capital balance after distributing the net income? (Assume

no change in capital balances during the year.)

A) $17,000 credit balance

B) $3,000 debit balance

C) $10,000 debit balance

D) $7,000 debit balance

What is the name of the revenue account used by merchandise companies?

A) Sales

B) Interest Income

C) Merchandise Inventory

D) Capital

What inventories are included in determining total manufacturing costs?

A) Beginning and ending finished goods

B) Beginning and ending raw materials

C) Beginning and ending work-in-process

D) None of the above answers is correct.

Allison and Josh are partners in a business. Allison’s capital is $60,000 and Josh’s

capital is $100,000. Profits for the year are $80,000. They agree to share profits and

losses as follows:

Allison’s share of the profits before paying salaries and interest on capital is:

A) $48,000.

B) $22,000.

C) $28,000.

D) $28,400.

Advertising totaled $10,000; $3,000 was indirect. What would be the best choice to use

to allocate the indirect cost?

A) Allocate the indirect expense based on square feet.

B) Allocate the indirect expense based on gross sales.

C) Charge indirect expense to administrative expense.

D) Allocate the indirect expense based on goods shipped.

The entry to close the revenue account(s) was entered in reverseIncome Summary was

debited and the revenue account(s) was/were credited. The result of this error is that:

A) before closing it, Income Summary will have a credit balance.

B) before closing it, Income Summary will have a debit balance.

C) the assets will be overstated.

D) the liabilities will be overstated.

When manufacturing a product, direct labor includes the wages of:

A) an hourly worker producing the product.

B) the shop foreman.

C) maintenance workers.

D) administrators.

Goods that are consigned to another party:

A) belong to the other party because title has passed.

B) belong to the company that has consigned them.

C) belong to the consignee.

D) Both B and C are correct.

Assuming a useful life of five years, which of the following GAAP methods would

most likely result in the most depreciation in the first year?

A) Straight-line

B) MACRS

C) Double declining-balance

D) None of these answers is correct.

The beginning capital balance is $1,000; there are no additional investments or

withdrawals by the owner during the accounting period. The period’s revenue is $600

and expenses total $550. What is the ending capital balance (after closing entries)?

A) $1,050

B) $1,500

C) $1,450

D) $50

If total liabilities are $20,000 and owner’s equity is $32,000, the total assets must be:

A) $52,000.

B) $12,000.

C) $15,000.

D) $8,000.

Bob’s Auction House’s payroll for April includes the following data:

What is the employee’s portion of the taxes?

A) $1,057.60

B) $1,001.60

C) $257.60

D) $800.00

Discuss the benefits of the worksheet. Explain how the financial reports are prepared

from the worksheet.

For each of the following, identify in Column 1 the category to which the account

belongs, in Column 2 the normal balance for the account, in Column 3 the financial

statement on which the account balance is reported, and in Column 4 the nature of the

account (permanent/temporary).

Example:

Given the following accounts:

[1] Cash

[2] Accounts receivable

[3] Merchandise inventory

[4] Supplies

[5] Accounts payable

[6] Sales

[7] Sales returns and allowances

[8] Sales discounts

[9] Cost of goods sold

[10] Purchases

[11] Purchase returns and allowances

[12] Purchase discounts

[13] Freight-in

Indicate the account(s) to be debited and credited to record the following transactions.

Sold merchandise on account. – Periodic

Debit ________ Credit ________

Explain the difference between a “cost center” and a “profit center.”

Identify the normal balance for each of the following accounts by placing a Dr. (debit)

or a Cr. (credit) in the space provided.

________ 1. Computer

________ 2. M. Bryant, Withdrawals

________ 3. M. Bryant, Capital

________ 4. Legal Fees Earned

________ 5. Cash

________ 6. Accounts Receivable

________ 7. Accounts Payable

________ 8. Rent Expense

________ 9. Office Equipment

________ 10. Supplies

For each of the following, identify in column 1 the category to which the account

belongs, in column 2 the normal balance for the account, in column 3 the financial

statement that the account in which the account balance is reported, and in column 4 the

account’s nature (permanent/temporary).

Prepare the following journal entries for Complex Company.

March 15 Declared the stated dividend on 7,000 shares of $10 par, 10% preferred stock.

April 15 Paid the dividend.

Describe the three elements of manufacturing cost.

For each of the following, identify in Column 1 the category to which the account

belongs, in Column 2 the normal balance for the account, in Column 3 the financial

statement on which the account balance is reported, and in Column 4 the nature of the

account (permanent/temporary).

Example:

For each account listed, identify the category it belongs to, the normal balance (debit or

credit), and the financial statement in which the account appears.

For each of the following, identify in Column 1 the category to which the account

belongs, in Column 2 the normal balance for the account, in Column 3 the financial

statement that the account in which the account balance is reported, and in Column 4

the account’s nature (temporary/permanent).

The following data applies to the July 15 payroll for the Woodard Research Firm

(overtime is paid at 1 1/2)

Assume:

FICA-OASDI is 6.2% based on a limit of $117,000.

FICA-Medicare is 1.45%.

FUTA is .8% based on a limit of $7,000.

SUTA is 5.6% based on a limit of $7,000.

State income tax is 2.8%.

Compute the total overtime earnings.

Prepare the general journal entry to record the payroll.

___________________________________________ _________ _________

Island Corporation issued $500,000 of 6%, 10-year bonds at 104 on May 1, 2009.

Interest is paid semiannually on October 31 and April 30. Journalize the entries for the

issuance of the bond on May 1, the first interest payment on October 31 using

straight-line method, and the adjusting entry on December 31.

A computer server system, which had cost $250,000 and had accumulated depreciation

of $170,000, was traded for a new system with a fair market value of $245,000. The old

system and cash of $210,000 were given for the new system. Prepare the journal entry

for the exchange of these similar assets assuming the income tax method is used to

record the exchange.

For each of the following, identify in Column 1 the category to which the account

belongs, in Column 2 the normal balance for the account, in Column 3 the financial

statement on which the account balance is reported, and in Column 4 the account’s

nature (permanent/temporary).