When preparing the report to analyze a proposed quality improvement program, which
of the following are included in the costs to continue without the quality improvement
program?
A) prevention and appraisal
B) prevention and internal failure
C) internal and external failure
D) appraisal and external failure
Which of the following is an example of an estimable probable contingency?
A) FICA Taxes Payable
B) Income Taxes Payable
C) Warranty Payable
D) Accounts Payable
On January 1, 2017, Zing Services issued $168,000 of six-year, 12% bonds when the
market interest rate was 11%. The issue price of the bonds was $177,110. Zing uses the
effective-interest method to amortize the bond premium. Semiannual interest payments
are made on June 30 and December 31 of each year. How much interest expense will be
recorded when the first interest payment is made?
A) $10,627
B) $9,741
C) $10,080
D) $9,240
Which of the following is the result of the maker of a promissory note failing to pay the
note on the due date?
A) a discounted note
B) a depreciated note
C) an amortized note
D) a dishonored note
The final step in the process of creating the master budget is the preparation of the
________.
A) operating budget
B) budgeted balance sheet
C) budgeted statement of cash flows
D) cash budget
Speedy Bikes Couriers Company prepared the following static budget for the year:
If a flexible budget is prepared at a volume of 8,400, calculate the amount of operating
income. The production level is within the relevant range.
A) $23,500
B) $12,600
C) $42,200
D) $4,000
Carbon, Inc. reports the following information for April:
What is the contribution margin of Alpha?
A) $124,000
B) $644,000
C) $400,000
D) $344,000
Scotch, Inc. has prepared the operating budget for the first quarter of the year. The
company forecast sales of $50,000 in January, $60,000 in February, and $70,000 in
March. Variable and fixed expenses are as follows:
Variable Expenses:
Power cost (20% of sales)
Miscellaneous expenses: (5% of sales)
Fixed Expenses:
Salaries expense: $8,000 per month
Rent expense: $5,000 per month
Depreciation expense: $1,400 per month
Power cost/fixed portion: $500 per month
Miscellaneous expenses/fixed portion: $1,000 per month
Using the information above, calculate the amount of selling and administrative
expenses for the month of February.
A) $28,400
B) $33,400
C) $15,000
D) $30,900
New Hope, Inc. is a merchandiser of stone ornaments. It sold 15,000 units during the
year. The company has provided the following information:
How much is the gross profit for the year?
A) $212,500
B) $349,000
C) $176,000
D) $178,000
The allocation of a plant asset’s cost to expense over its useful life is called ________.
A) residual value
B) book value
C) accrued revenue
D) depreciation
McAfee Automobiles Manufacturing is considering two alternative investment
proposals with the following data:
Calculate the accounting rate of return for Proposal Y. (Round any intermediate
calculations and your final answer to two decimal places.)
A) 13.87%
B) 12.63%
C) 4.29%
D) 9.52%
The Allowance for Bad Debts account has a debit balance of $6,000 before the
adjusting entry for bad debts expense. After analyzing the accounts in the accounts
receivable subsidiary ledger, the company’s management estimates that uncollectible
accounts will be $11,000. What will be the amount of the adjustment in the Allowance
for Bad Debts account?
A) $16,250
B) $11,000
C) $15,900
D) $17,000
The journal entry to record allocation of manufacturing overhead to a particular job
includes a ________.
A) debit to the Finished Goods Inventory account and credit to the Manufacturing
Overhead account
B) debit to the Work-in-Process Inventory account and credit to the Cash account
C) debit to the Manufacturing Overhead account and credit to the Finished Goods
Inventory account
D) debit to the Work-in-Process Inventory account and credit to the Manufacturing
Overhead account
Which of the following is a reason why many companies require a photo ID when
employees pick up their paychecks?
A) to make sure an employee’s work hours have been accurately reported
B) to avoid writing a paycheck to a fictitious person
C) to improve efficiency of the payroll disbursement process
D) to make sure all employees are legal adults
At the end of a month, a business shows the following balances in its ledger.
Use this data to prepare a trial balance.
The revenue recognition principle guides accountants in ________.
A) ensuring only revenues received in cash are recorded
B) determining when to record expenses
C) determining when to record revenues
D) ensuring expenses are deducted from revenues
The management of Chung Fire Alarms has calculated the following variances:
What is the total direct labor variance of the company?
A) $15,000 F
B) $12,000 F
C) $28,500 F
D) $1,500 F
Which of the following can be an effect of a transaction that increased an asset of a
corporation for the accounting equation to balance?
A) there is an equal decrease in another asset
B) there is an equal decrease in equity
C) there is an equal decrease in a liability account
D) both liabilities and equity decrease
Classic Artists’ Services signed a contract with a maintenance service company to
maintain a building that Classic will use for office purposes. The contract states that the
work will begin work on February 1 and end on May 31. Classic Artists’ will pay the
maintenance service company $2,000 at the end of May. It accrues Maintenance
Expense at the end of every month. What is the balance in the Accounts Payable
account for amounts owed to the maintenance service company at the end of March?
A) Debit balance of $2,000
B) Credit balance of $1,000
C) Debit balance of $1,000
D) Credit balance of $2,000
A company produces 1,000 packages of chicken feed per month. The sales price is
$4.00 per pack. Variable cost is $1.50 per unit, and fixed costs are $1,700 per month.
Management is considering adding a vitamin supplement to improve the value of the
product. The variable cost will increase from $1.50 to $1.90 per unit, and fixed costs
will increase by 20%. The company will price the new product at $5 per pack. How will
this affect operating income?
A) Operating income will decrease by $260 per month.
B) Operating income will remain unchanged.
C) Operating income will decrease by $1,240 per month.
D) Operating income will increase by $260 per month.
Which of the following actions will decrease the amount of Total Stockholders’ Equity?
A) cash dividend declared
B) stock split
C) stock dividend declared
D) repayment of bond principal
Candela Cable Company is considering investing $450,000 in telecommunications
equipment that has an estimated life of five years with no residual value. The cash flows
are as shown below:
The present value of $1:
The IRR of the project would be ________.
A) between 12% and 13%
B) more than 13%
C) less than 10%
D) between 9% and 10%
Costs incurred in customer service are categorized as ________.
A) prevention costs
B) appraisal costs
C) internal failure costs
D) external failure costs
A corporation has 18,000 shares of 13%, $50 par cumulative preferred stock
outstanding and 34,000 shares of no-par common stock outstanding. Dividends of
$22,000 are in arrears. At the end of the current year, the corporation declares a
dividend of $208,000. What is the dividend per share for preferred stock and for
common stock? (Round your answer to the nearest cent.)
A) The dividend per share is $5.00 to preferred stock and $6.65 per share to common
stock.
B) The dividend per share is $11.56 to preferred stock and $0 per share to common
stock.
C) The dividend per share is $7.72 to preferred stock and $2.03 per share to common
stock.
D) The dividend per share is $11.56 to preferred stock and $2.03 per share to common
stock.
Viva, Inc. has provided the following information for the year:
How much is the cost of goods sold?
A) $184,000
B) $1,275,000
C) $1,261,000
D) $1,247,000
Which of the following financial statements reports an increase or decrease in net cash
during the time period covered?
A) Income statement
B) Statement of retained earnings
C) Statement of cash flows
D) Cash budget
Which of the following financial statements reports expenses in decreasing order of
their amounts, by stating the largest expense first?
A) Statement of cash flows
B) Income statement
C) Statement of retained earnings
D) Balance sheet
Which of the following is true of an accounts receivable subsidiary ledger?
A) It does not include a receivable account for each customer, but includes a cumulative
account for all customers.
B) It contains information about the amount each customer purchased on credit, but
excludes the customer name.
C) The total of the accounts in the accounts receivable subsidiary ledger must equal the
accounts receivable balance in the general ledger.
D) Companies keep an accounts payable subsidiary ledger that is entirely different from
the accounts receivable subsidiary ledger.
What is the acid-test ratio for a merchant with the following account balances? (Round
your answer to two decimal places.)
A) 0.75
B) 0.41
C) 0.60
D) 0.81
Peterson, Inc. issued 4,000 shares of preferred stock for $240,000. The stock has a par
value of $60 per share. The journal entry to record this transaction would ________.
A) credit Cash $240,000, debit Preferred Stock—$60 Par Value $4,000, and debit
Paid-In Capital in Excess of Par—Preferred $236,000
B) debit Cash $240,000, credit Preferred Stock—$60 Par Value $4,000, and credit
Paid-In Capital in Excess of Par—Preferred $236,000
C) credit Cash $240,000 and debit Preferred Stock—$60 Par Value $240,000
D) debit Cash $240,000 and credit Preferred Stock—$60 Par Value $240,000
The production line of a manufacturing company is most likely to be considered as a(n)
________.
A) cost center
B) profit center
C) revenue center
D) investment center
Companies invest in trading investments with the intent of ________.
A) increasing the amount of long-term assets
B) gaining the controlling rights of the investee
C) holding the investment until maturity
D) generating a profit on a quick sale
Which one of the following account groups normally has a debit balance?
A) assets and expenses
B) revenues and expenses
C) liabilities and revenues
D) assets and liabilities
The financial statements of Clearwater Furniture Company include the following items:
What is 2017 cash ratio? (Round your answer to two decimal places)
A) 0.19
B) 0.10
C) 0.35
D) 0.24
