1) A debit is abbreviated as Db and a credit is abbreviated as Cr.
2) The plant managers salary in a manufacturing business would be considered an
indirect cost.
3) The two main sources of stockholders’ equity are investments contributed by
stockholders and net income retained in the business.
4) The main reason that the bank statement cash balance and the company’s cash
balance do not initially balance is due to timing differences.
5) Ratios and various other analytical measures are
6) A service organization will not use the job order costing method because it has no
direct materials.
7) Sales Returns and Allowances is a contra-revenue account.
8) The unamortized Discount on Bonds Payable account is a contra-liability account.
9) The revenue journal is to make it more efficient to record sales transactions made for
cash.
10) The issue price of zero-coupon bonds is the present value of their face amount.
11) Budgets are normally used only by profit-making businesses.
12) Organizational expenses are classified as intangible assets on the balance sheet.
13) By matching revenues and expenses in the same period in which they incur
A.net income or loss will always be underestimated
B.net income or loss will always be overestimated
C.net income or loss will be properly reported on the income statement
D.net income or loss will not be determined
14) The balanced scorecard measures
A.only financial information
B.only nonfinancial information
C.both financial and nonfinancial information
D.external and internal information
15) If the merchandise costs $3,500, insurance in transit costs $250, tariff costs $75,
processing the purchase order by the purchasing department costs $50, and the
company receiving dock personnel cost $25, what is the total cost charged to the
merchandise?
A.$3,825
B.$3,850
C.$3,875
D.$3,500
16) Prepare entries to record the following:
(a) Issued 1,000 shares of $10 par common stock at $59 for cash.
(b) Issued 1,400 shares of common stock in exchange for equipment with a fair market
price of $60,000.
(c) Purchased 100 shares of treasury stock at $32.
(d) Sold 100 shares of treasury stock at $42.
17) If the company meets the new target cost number, how much will they have to cut
costs per unit, if any?
A.$1
B.$3
C.$2
D.$0
18) In a profit center, the department manager has responsibility for and the authority to
make decisions that affect:
A.not only costs and revenues, but also assets invested in the center
B.the assets invested in the center, but not costs and revenues
C.both costs and revenues for the department or division
D.costs and assets invested in the center, but not revenues
19) What is the purpose of the adjusted trial balance?
A.to verify that all of the adjusting entries have been posted
B.to verify that the net income (loss) is correctly reported
C.to verify that no adjusting journal entry has been omitted
D.to verify that the debits and credits balance
20) Which of the following is an example of a cost that varies in total as the number of
units produced changes?
A.Salary of a production supervisor
B.Direct materials cost
C.Property taxes on factory buildings
D.Straight-line depreciation on factory equipment
21) Gavin invested $45,000 in the Jason and Kelly partnership for ownership equity of
$45,000. Prior to the investment land was revalued to a market value of $320,000 from
a book value of $200,000. Jason and Kelly share net income in a 1:2 ratio.
a. Provide the journal entry for the revaluation of land.
b. Provide the journal entry to admit Gavin.
22) A company with 100,000 authorized shares of $4 par common stock issued 40,000
shares at $8. Subsequently, the company declared a 4% stock dividend on a date when
the market price was $12 a share. What is the amount transferred from the Retained
Earnings account to Paid-in Capital accounts as a result of the stock dividend?
A.$12,800
B.$19,200
C.$32,000
D.$48,800
23) A business borrowed $40,000 on March 1 of the current year by signing a 60-day,
9% interest bearing note. Assuming a 360-day year, when the note is paid on April 30,
the entry to record the payment should include a
A.debit to Interest Payable $600
B.debit to Interest Expense $600
C.credit to Cash for $40,000
D.credit to Cash for $46,300
24) Tennessee Corporation is analyzing a capital expenditure that will involve a cash
outlay of $109,332. Estimated cash flows are expected to be $36,000 annually for four
years. The present value factors for an annuity of $1 for 4 years at interest of 10%, 12%,
14%, and 15% are 3.170, 3.037, 2.914, and 2.855, respectively. The internal rate of
return for this investment is:
A.9%
B.10%
C.12%
D.3%
25) Kim Hsu is the owner of Hsus Financial Services. At the end of its accounting
period, December 31, 2011, Hsus has assets of $575,000 and owners equity of
$335,000. Using the accounting equation and considering each case independently,
determine the following amounts.
a. Hsus liabilities as of December 31, 2011.
b. Hsus liabilities as of December 31, 2012, assuming that assets increased by $56,000
and owners equity decreased by $32,000.
c. Net income or net loss during 2012, assuming that as of December 31, 2012, assets
were $592,000, liabilities were $450,000, and there were no additional investments or
withdrawals.
26) Which of the following group of companies are all examples of a merchandising
business?
A.Delta Airlines, Marriott, Gap
B.Gap, Amazon, NIKE
C.GameStop, Sony, Dell
D.GameStop, Best Buy, Gap
27) A debit may signify a(n)
A.decrease in asset accounts
B.decrease in liability accounts
C.increase in the capital account
D.decrease in the drawing account
28) The cash basis of accounting records revenues and expenses when the cash is
exchanged while the accrual basis of accounting
A.records revenues when they are earned and expenses when they are paid
B.records revenues and expenses when they are incurred
C.records revenues when cash is received and expenses when they are incurred
D.records revenues and expenses when the company needs to apply for a loan
29) During the period, labor costs incurred on account amounted to $275,000 including
$200,000 for production orders and $75,000 for general factory use. In addition, factory
overhead applied to production was $32,000. From the following, select the entry to
record the actual factory overhead costs incurred.
A.Accounts Payable75,000
Factory Overhead75,000
B.Factory Overhead32,000
Accounts Payable32,000
C.Work in Process75,000
Wages Payable 75,000
D.Factory Overhead75,000
Wages Payable75,000
30) Most employers are required to withhold from employees which of the following
employment taxes?
A.FICA tax
B.FICA tax, state and federal unemployment compensation tax
C.only state unemployment compensation tax
D.only federal unemployment compensation tax
31) On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable on an overdue
account payable to Seller Co. Assume that the fiscal year of Alton Co. ends June 30.
Which of the following relationships is true?
A.Alton is the creditor and credits Accounts Receivable
B.Seller is the creditor and debits Accounts Receivable
C.Seller is the borrower and credits Accounts Payable
D.Alton is the borrower and debits Accounts Payable
32) A withdrawal of cash made by the owner will be found in the
A.cash receipts journal
B.cash payments journal
C.revenue journal
D.purchases journal
33) The amount of federal income taxes withheld from an employee’s gross pay is
recorded as a(n)
A.payroll expense
B.contra account
C.asset
D.liability
34) Using accrual accounting, expenses are recorded and reported only
A.when they are incurred, whether or not cash is paid
B.when they are incurred and paid at the same time
C.if they are paid before they are incurred
D.if they are paid after they are incurred
35) Which of the following describes the classification and normal balance of the fees
earned account?
A.asset, credit
B.liability, credit
C.owner’s equity, debit
D.revenue, credit
36) Division A of Mocha Company has sales of $155,000, cost of goods sold of
$83,000, operating expenses of $43,000, and invested assets of $150,000.
What is the rate of return on investment for Division A?
A.19.3%
B.48.0%
C.18.7%
D.5.47%
37) On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that
has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000
hours.
Using straight line depreciation, calculate depreciation expense for the first year.
A.$17,500
B.$30,000
C.$12,500
D.$40,000
38) The rate of earnings is 10% and the cash to be received in three years is $10,000.
Determine the present value amount, using the following partial table of present value
of $1 at compound interest:
A.$13,316
B.$6,830
C.$7,510
D.$8,260
39) Which type of accountant typically practices as an individual or as a member of a
public accounting firm?
A.Certified Public Accountant
B.Certified Payroll Professional
C.Certified Internal Auditor
D.Certified Management Accountant
40) Which account is not classified as a selling expense?
A.Sales Salaries
B.Freight-Out
C.Freight-In
D.Advertising Expense
41) Which of the following would be considered an Other Comprehensive Income
item?
A.net income
B.extraordinary loss related to flood
C.gain on disposal of discontinued operations
D.unrealized loss on available-for-sale securities
42) Zennia Company provides its employees with varying amount of vacation per year,
depending on the length of employment. The estimated amount of the current years
vacation cost is $135,000. The journal entry to record the adjusting entry required on
December 31, the end of the current year, to record the current months accrued vacation
pay is
A.$135,000
B.$67,500
C.$0
D.$11,250
43) Describe three inventory cost flow assumptions and how they impact the financial
statements.
44) Reconstruct adjusting and closing entries for the month ended September 30, 2010
from the T-accounts below.
45) On January 1, 2011 a company had the following data:
– issued 10,000 shares of $2.00 par value common stock for $12.00 per share
– issued 3,000 shares of $50 par value 6% cumulative preferred stock for $70 per share
– purchased 1,000 shares of previously issued common stock for $15.00 per share
The company had the following dividend information available:
2011 – No dividend paid
2012 – Paid a $2,000 total dividend
2013 – Paid a $17,000 total dividend
2014 – paid a $32,000 total dividend
Using the following format, fill in the correct values for each year;
2011 2012 2013 2014
Common stock dividend
Preferred stock dividend
Dividends in arrears
46) Williams Company acquired machinery on July 1, 2009, at a cost of $130,000. The
estimated useful life of the machinery was 10 years and the estimated residual value
was $10,000. Williams uses the double-declining-balance method of depreciation. On
October 1, 2012, Williams sold the equipment for $75,000.
1) Record the journal entry for the depreciation on this machinery for 2012
2) Record the journal entry for the sale of the machinery.
47) The inventory at April 1, 2012, and the costs charged to Work in
Process–Department B during April for Zarley Company are as follows:
During April, all direct materials are transferred from Department A, the units in
process at April 1 were completed, and of the 26,000 units entering the department, all
were completed except 1,000 units which were 70% completed as to conversion costs.
Inventories are costed by the first-in, first-out method.
Prepare a cost of production report for April.
48) Prepare a journal entry for the purchase of a truck on April 4 for $85,700, paying
$15,000 cash and the remainder on account.
49) The prepaid insurance account had a beginning balance of $6,600 and was debited
for $2,300 of premiums paid during the year. Journalize the adjusting entry required at
the end of the year assuming the amount of unexpired insurance related to future
periods is $4,100.
50) For the following, mark a D if the following account normally has a debit balance
and mark a C if the following account normally has a credit balance.
1> Notes Payable
2> Mortgage Payable
3> Drawing
4> Accounts Receivable
5> Capital
6> Rent Revenue
7> Unearned Income
8> Utility Expense
9> Automobiles
51) Journalize the entries to record the following:
Journal
