Use the following information to answer the following questions.
Assuming no employees are subject to ceilings for their earnings, Jensen Company has
the following information for the pay period of January 15 – 31, 20xx.
Salaries Payable would be recorded in the amount of:
A.$8,200
B.$6,830
C.$8,630
D.$7,450
Answer:
Donner Company is selling a piece of land adjacent to their business premises. An
appraisal reported the market value of the land to be $220,000. The Focus Company
initially offered to buy the land for $177,000. The companies settled on a purchase price
of $212,000. On the same day, another piece of land on the same block sold for
$232,000. Under the cost concept, at what amount should the land be recorded in the
accounting records of Focus Company?
A.$177,000
B.$212,000
C.$220,000
D.$232,000
Answer:
The Tom Company reports the following data.
Determine Tom Company’s operating leverage.
Answer:
A pension plan which promises employees a fixed annual pension benefit, based on
years of service and compensation, is called a(n)
A.defined contribution plan
B.defined benefit plan
C.unfunded plan
D.compensation plan
Answer:
Which side of the account increases a cash account?
A.credit
B.neither a debit or a credit
C.debit
D.either a debit or a credit
Answer:
Which of the following would be most likely to use process costing?
A.A custom furniture manufacturer.
B.An auto body repair shop.
C.A law firm
D.A lawn fertilizer manufacturer.
Answer:
Which of the following pairs of accounts could not appear in the same adjusting entry?
A.Service Revenue and Unearned Revenue
B.Interest Income and Interest Expense
C.Rent Expense and Prepaid Rent
D.Salaries Payable and Salaries Expense
Answer:
When the perpetual inventory system is used, the inventory sold is shown on the
income statement as
A.cost of merchandise sold
B.purchases
C.purchases returns and allowances
D.net purchases
Answer:
If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are
$20, what is the break-even sales (units) if fixed costs are reduced by $40,000?
A.32,667 units
B.14,000 units
C.30,000 units
D.24,500 units
Answer:
The current portion of long-term debt should
A.be classified as a long-term liability.
B.not be separated from the long-term portion of debt.
C.be paid immediately.
D.be reclassified as a current liability.
Answer:
A formal written statement of management’s plans for the future, expressed in financial
terms, is a:
A.gross profit report
B.responsibility report
C.budget
D.performance report
Answer:
Magpie Corporation uses the total cost concept of product pricing. Below is cost
information for the production and sale of 60,000 units of its sole product. Magpie
desires a profit equal to a 25% rate of return on invested assets of $700,000.
The markup percentage on total cost for the company’s product is:
A.21.0%
B.22.7%
C.15.8%
D.24.0%
Answer:
A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and
$114,000 in factory overhead costs during the period. If beginning and ending work in
process inventories were $28,000 and $32,000 respectively, the cost of goods
manufactured was:
A.$218,000
B.$226,000
C.$190,000
D.$222,000
Answer:
Financial statements in which financial data for two or more companies are combined
as a single entity are called
A.conventional statements
B.consolidated statements
C.audited statements
D.constitutional statements
Answer:
Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a
customer for $25,000. The seller paid freight costs of $2,000 and issued a credit memo
for $10,000 prior to payment. What is the amount of the cash discount allowable?
A.$170
B.$150
C.$130
D.$250
Answer:
Merchandise is ordered on December 1; the merchandise is shipped by the seller and
the invoice is prepared, dated, and mailed by the seller on December 3; the merchandise
is received by the buyer on December 8; the entry is made in the buyer’s accounts on
December 10. The credit period begins with what date?
A.December 1
B.December 3
C.December 8
D.December 10
Answer:
Division X reported income from operations of $975,000 and total service department
charges of $575,000. Therefore:
A.net income was $400,000
B.the gross profit margin was $400,000
C.income from operations before service department charges was $1,550,000
D.consolidated net income was $400,000
Answer:
If the maker of a promissory note fails to pay the note on the due date, the note is said
to be
A.displaced
B.disallowed
C.dishonored
D.discounted
Answer:
Immediately prior to the process of liquidation, partners Micco, Niccum, and Orwell
have capital balances of $70,000, $20,000, and $30,000 respectively. There is a cash
balance of $10,000, noncash assets total $160,000, and liabilities total $50,000. The
partners share net income and losses in the ratio of 2:2:1.
Journalize the entries to record the liquidation outlined below, using Assets as the
account title for the noncash assets and Liabilities as the account title for all creditors’
claims.
(a) Sold the noncash assets for $80,000 in cash.
(b) Divided the loss on realization.
(c) Paid the liabilities.
(d) Received cash from the partner with the deficiency.
(e) Distributed the cash to the partners.
Answer:
The inventory method that assigns the most recent costs to cost of goods sold is
A.FIFO
B.LIFO
C.average
D.specific identification
Answer:
Avey Corporation had $275,000 in invested assets, sales of $330,000, income from
operations amounting to $49,500 and a desired minimum rate of return of 7.5%. The
rate of return on investment for Avey Corporation is:
A.8%
B.10%
C.18%
D.7.5%
Answer:
Compute conversion costs given the following data: Direct Materials, $347,500; Direct
Labor, $186,300; Factory Overhead, $187,900; and Selling Expenses, $45,290.
A.$533,800
B.$187,900
C.$721,700
D.$374,200
Answer:
Which method of evaluating capital investment proposals uses the concept of present
value to compute a rate of return?
A.Average rate of return
B.Accounting rate of return
C.Cash payback period
D.Internal rate of return
Answer:
Short-term liabilities are those liabilities that
A.will be paid in less than one year
B.are due to be paid in 5 to 10 years
C.are due to be paid in more than one year
D.are owed to the owner and will never be paid
Answer:
The Crafter Company had the following assets and liabilities as of December 31, 2012:
Determine the quick ratio for the end of the year (rounded to one decimal point).
A.6.7
B.13.0
C.4.2
D.3.5
Answer:
The following is an example of:
A.product analysis
B.vertical analysis
C.horizontal analysis
D.percentage analysis
Answer:
Which group of accounts is comprised of only assets?
A.Cash, Accounts Payable, Buildings
B.Accounts Receivable, Revenue, Cash
C.Prepaid Expenses, Buildings, Patents
D.Unearned Revenues, Prepaid Expenses, Cash
Answer:
Data for an adjusting entry described as “accrued wages, $2,020” means to debit
A.Wages Expense and credit Wages Payable
B.Wages Payable and credit Wages Expense
C.Accounts Receivable and credit Wages Expense
D.Drawing and credit Wages Payable
Answer:
Which of the following are the two main types of cost accounting systems for
manufacturing operations?
A.Process cost and general accounting systems
B.Job order cost and process cost systems
C.Job order and general accounting systems
D.Process cost and replacement cost systems
Answer:
Which of the following are included in the employer’s payroll taxes?
A.SUTA taxes
B.FUTA taxes
C.FICA taxes
D.all of the above
Answer:
The estimated total factory overhead cost and total machine hours for Department 40
for the current year are $250,000 and 56,250 respectively. During January, the first
month of the current year, actual machine hours used totaled 5,100 and factory
overhead cost incurred totaled $22,000.
(a) Determine the factory overhead rate based on machine hours.
(b) Present the entry to apply factory overhead to production in Department 40 for
January.
(c) What is the balance of Factory Overhead – Department 40 at January 31?
(d) Does the balance of Factory Overhead – Department 40 at January 31 represent
overapplied or underapplied factory overhead?
Round total cost to nearest dollar value.
Answer:
Which of the following accounts has a normal credit balance?
A.Sales Returns and Allowances
B.Sales
C.Merchandise Inventory
D.Delivery Expense
Answer: