Parris Corporation purchased 40% of Samitz Corporation for $100,000 on January 1.
On November 17 of the same year, Samitz Corporation declared total cash dividends of
$12,000. At year-end, Samitz Corporation reported net income of $60,000. The balance
in the Parris Corporation’s Long-Term Investment in Samitz Corporation at December
31 should be:
A. $80,800
B. $100,000
C. $95,200
D. $119,200
E. $124,000
Answer:
In horizontal analysis the percent change is computed by:
A. Subtracting the analysis period amount from the base period amount.
B. Subtracting the base period amount from the analysis period amount.
C. Subtracting the analysis period amount from the base period amount, dividing the
result by the base period amount, then multiplying that amount by
D. Subtracting the base period amount from the analysis period amount, dividing the
result by the base period amount, then multiplying that amount by 100.
E. Subtracting the base period amount from the analysis amount, then dividing the
result by the analysis period amount.
Answer:
When a company uses special journals, the general journal is used for selected
transactions and events including:
A. Recording adjusting transactions.
B. Posting transactions to special journals.
C. Accumulating debits and credits.
D. Collecting detailed listings of amounts.
E. Recording cash receipts.
Answer:
Acme Company has an agreement with a major credit card company that calls for cash
to be received immediately upon deposit of Acme customers’ credit card sales receipts.
The credit card company receives 3.5% of card sales as its fee. If Acme has $2,000 in
credit card sales, which of the following statements are true?
A. Acme debits Cash $2,000.
B. Acme debits Cash $1,930.
C. Acme debits Accounts Receivable – Credit Card Co $2,000.
D. Acme debits Accounts Receivable – Credit Card Co $1,930.
E. Acme credits Sales $1,930.
Answer:
Reference: 18_01
Willco Inc. manufactures electronic parts. They are analyzing their monthly
maintenance costs to determine the best way to budget these costs in the future. They
have collected the following data for the last six months:
Using the high-low method and the Willco data, calculate the variable maintenance cost
per machine hour (round to three decimal places).
A. $1.016/hr.
B. $0.976/hr.
C. $1.863/hr.
D. $1.250/hr.
E. $0.907/hr.
Answer:
An investment that is readily convertible to a known amount of cash and that is
sufficiently close to its maturity date so that its market value is relatively insensitive to
interest rate changes is a(n):
A. Short-term marketable equity security.
B. Operating activity.
C. Common stock.
D. Cash equivalent.
E. Financing activity.
Answer:
The wage and tax statement is:
A. Form 940
B. Form 941
C. Form 1040
D. Form W-2
E. Form W-4
Answer:
Treasury stock is classified as:
A. An asset account.
B. A contra asset account.
C. A revenue account.
D. A contra equity account.
E. A liability account.
Answer:
A company sold $12,000 worth of trampolines with an extended warranty. It estimates
that 2% of these sales will result in warranty work. The company should:
A. Consider the warranty expense a remote liability since the rate is only 2%.
B. Recognize warranty expense at the time the warranty work is performed.
C. Recognize warranty expense and liability in the year of the sale.
D. Consider the warranty expense a contingent liability.
E. Recognize warranty liability when the company purchases the trampolines.
Answer:
Under the alternative method for recording prepaid expenses, which is the correct set
of journal entries?
A.
B.
C.
D.
E.
A. Option A
B. Option B
C. Option C
D. Option D
E. Option E
Answer:
Prenumbered printed checks are an example of which internal control principle?
A. Technological controls. B. Maintain adequate records.
C. Perform regular and independent reviews.
D. Establish responsibilities.
E. Divide responsibility for related transactions.
Answer:
The following data relates to All-Out Companys estimated amounts for next year.
What is the companys plantwide overhead rate if machine hours are the allocation base?
(Round to two decimal places.)
A. $200.00 per MH
B. $150.00 per MH
C. $100.00 per MH
D. $4.29 per MH
E. $5.00 per MH
Answer:
Investments in debt and equity securities that the company actively manages and trades
for profit are referred to as short-term investments in:
A. Available-for-sale securities.
B. Held-to-maturity securities.
C. Trading securities.
D. Realizable securities.
E. Liquid securities.
Answer:
Departmental contribution to overhead is calculated as revenues of the department less:
A. Controllable costs.
B. Product and period costs.
C. Direct costs and expenses.
D. Direct and indirect costs.
E. Joint costs.
Answer:
A company purchased $6,000 of merchandise on credit with terms 4/15, n/30. How
much will be debited to Accounts Payable if the company pays $800 cash on this
account within 10 days?
A. $833.33
B. $800
C. Nothing will debited to Accounts Payable; the account should be credited in this
situation.
D. $5,760
E. $5,333.33
Answer:
Reference: 20_03
Berkley Co.’s sales are 10% for cash and 90% on credit. Credit sales are collected as
follows: 30% in the month of sale, 50% in the next month, and 20% in the following
month. On December 31, the accounts receivable balance includes $12,000 from
November sales and $42,000 from December sales.
Assume that total sales for January are budgeted to be $50,000. What are the expected
cash receipts for January from the current and past sales? Round all calculations to full
dollar amounts.
A. $18,500
B. $51,500
C. $51,900
D. $55,500
E. $60,500
Answer:
A company has 5,000 shares of $1 par value common stock and 6,000 shares of 2%,
$98 par, noncumulative preferred stock outstanding. The balance in Retained Earnings
at the beginning of the year was $750,000. Net income for the current year was
$400,000. If the company paid a dividend of $3 per share on its common stock, what is
the balance in Retained Earnings at the end of the year?
A. $1,123,240
B. $1,135,000
C. $1,150,000
D. $735,000
E. $723,240
Answer:
A depreciation method in which a plant asset’s depreciation expense for a period is
determined by applying a constant depreciation rate each period to the asset’s beginning
book value is called:
A. Book value depreciation.
B. Declining-balance depreciation.
C. Straight-line depreciation.
D. Units-of-production depreciation.
E. Modified accelerated cost recovery system (MACRS) depreciation.
Answer:
Accounting standards:
A. Allow companies to omit the statement of cash flows from a complete set of
financial statements if cash is an insignificant asset.
B. Require that companies omit the statement of cash flows from a complete set of
financial statements if the company has no investing activities.
C. Require that companies include a statement of cash flows in a complete set of
financial statements.
D. Allow companies to include the statement of cash flows in a complete set of
financial statements if the cash balance makes up more than 50% of the current assets.
E. Allow companies to omit the statement of cash flows from a complete set of
financial statements if the company has no financing activities.
Answer:
Temper Company has credit sales of $3.10 million for year 2013. Accounts Receivable
total $947,360 and the company estimates that 2% of accounts receivable will remain
uncollectible. Historically, .9% of sales have been uncollectible. On December 31,
2013, the companys Allowance for Doubtful Accounts has an unadjusted debit balance
of $2,575. Temper prepared a schedule of its December 31, 2013, accounts receivable
by age. Based on past experience, it estimates the percent of receivables in each age
category that will become uncollectible. This information is summarized here:
Assuming the company uses the percent of accounts receivable method, what is the
amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting
journal entry?
A. $18,947.20
B. $16,372.20
C. $23,024.40
D. $27,900.00
E. $21,522.20
Answer:
Using the following accounts and an overhead rate of 90% of direct labor cost,
determine the amount of applied overhead.
A. $79,200
B. $167,200
C. $34,320
D. $88,000
E. $35,376
Answer:
In comparing the canceled checks on the bank statement with the entries in the
accounting records, it is found that check number 4239 for November’s rent was
correctly written and drawn for $3,790 but was erroneously entered in the accounting
records as $7,390. When reconciling the November bank statement, the company
should:
A. Deduct $3,600 from the book balance of cash.
B. Add $3,700 to the bank statement balance.
C. Add $7,390 to the book balance of cash.
D. Deduct $3,600 from the bank statement balance.
E. Add 3,600 to the book balance of cash.
Answer:
A graph used to analyze past cost behaviors by displaying costs and volume levels for
each period as points on the diagram is called a:
A. Least-squares diagram.
B. Step-wise diagram.
C. Scatter diagram.
D. Break-even diagram.
E. Composite diagram.
Answer:
Which of the following cash flows is not considered when using the net present value
method?
A. Future cash inflows.
B. Future cash outflows.
C. Past cash outflows.
D. Nonuniform cash inflows.
E. Cash inflow from the sale of the asset.
Answer:
A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error?
A. $150 understated
B. $135 overstated
C. $150 overstated
D. $15 understated
E. $135 understated
Answer:
Elaine Valero is a limited partner in a marketing and design firm. During the previous
year her return on partnership equity was 14%. During this time, the beginning and
ending balances in her capital account were $210,000 and $230,000 respectively. What
was Elaine’s partnership net income for this year?
A. $29,400.00
B. $30,800.00
C. $32,200.00
D. $1,500,000.00
E. $1,642,857.14
Answer:
Assume the following information was available for the current year’s operations of the
shoe company founded by Blake Mycoskie, TOMS. Use these data to calculate the cash
paid for merchandise.
A. $218,000
B. $223,200
C. $220,000
D. $228,800
E. $234,000
Answer:
A company purchases merchandise on November 2 at a $2,400 invoice price (terms
3/10, n/30) and then pays all amounts owed on December 2. Using perpetual inventory
and net purchases methods, what are the proper entries to record these two transactions?
A.
nventoryDiscounts Lostecord these two transactions.thod, what are the proper entries to
record the pury purchases
B.
C.
D.
E.
Answer:
Listed below are a number of accounts. Use the table below to classify each account.
Indicate whether it is a temporary or permanent account, whether it is included in the
income statement or balance sheet, and if it is closed at the end of the accounting period
and, if so, how it is closed. The first one is done as an example.
Answer:
Western Company has an annual reporting period that runs from July 1 through
June 30. Based on this information, which of the following is a true statement?
A. Western probably has little seasonal variation in their sales.
B. Western has violated the time period principle.
C. Western must prepare financial statements as of December 31 each year.
D. Western has adopted a fiscal year.
E. Western does not have an accountant.
Answer:
Interim financial statements refer to financial reports:
A. That cover less than one year, usually spanning one, three, or six-month periods.
B. That are prepared before any adjustments have been recorded.
C. That show the assets above the liabilities and the liabilities above the equity.
D. Where revenues are reported on the income statement when cash is received and
expenses are reported when cash is paid.
E. That are prepared on the last day of the calendar year.
Answer:
Advance ticket sales totaling $6,000,000 cash would be recognized as follows:
A. Debit Sales, credit Unearned Revenue.
B. Debit Unearned Revenue, credit Sales.
C. Debit Cash, credit Unearned Revenue.
D. Debit Unearned Revenue, credit Cash.
E. Debit Cash, credit Revenue Payable.
Answer:
Wisconsin Rentals purchased office supplies on credit. The journal entry made by
Wisconsin Rentals to record this transaction will include a:
A. Debit to Accounts Payable.
B. Debit to Accounts Receivable.
C. Credit to Cash.
D. Credit to Accounts Payable.
E. Credit to Retained Earnings.
Answer:
Answer:
How is the current ratio calculated? How is it used to evaluate a company?
Answer:
At year-end, Harris Cleaning Service noted the following errors in its trial balance:
1) It understated the total debits to the Cash account by $500 when computing the
account
balance.
2) A credit sale for $311 was recorded as a credit to the revenue account, but the
offsetting
debit was not posted.
3) A cash payment to a creditor for $2,600 was never recorded.
4) The $680 balance of the Prepaid Insurance account was listed in the credit column of
the
trial balance.
5) A $24,900 truck purchase for cash was recorded as a $24,090 debit to Vehicles and a
$24,090 credit to Notes Payable.
6) A purchase of office supplies for $150 was recorded as a debit to Office Equipment.
The
offsetting credit entry was correct.
7) An additional investment of $4,000 by Del Harris was recorded as a debit to
Common
Stock and as a credit to Cash.
8) The cash payment of the $510 utility bill for December was recorded (but not paid)
twice.
9) A revenue account balance of $79,817 was listed on the trial balance as $97,817.
10) A $1,000 cash dividend was recorded as a $100 debit to Dividends and $100 credit
to cash.
Using the form below, indicate whether each error would cause the trial balance to be
out of balance, the amount of any imbalance and whether a correcting journal entry is
required.
Answer:
Increases in assets are _______________, while increases in liabilities are
_______________.
Answer:
The __________________ principle requires that the benefits from an activity in an
accounting information system outweigh the costs of that activity.
Answer:
The following information is available for the McCartney Corporation:
Calculate the company’s inventory turnover and its days’ sales in inventory.
Answer:
What is a hybrid costing system? When is a hybrid costing system appropriate for a
manufacturer?
Answer:
Explain the options a company has when converting its receivables to cash.
Answer:
A _____________ account is an account linked with another account, having an
opposite normal balance and reported as a subtraction from that other account’s
balance.
Answer:
What is the main difference between a cost center and a profit center?
Answer:
What is the overhead volume variance? What would be the cause of a favorable volume
variance?
Answer:
In process costing, factory overhead incurred does not usually equal that applied, which
yields either ____________________ or ___________________ overhead.
Answer:
When using the high-low method for estimating cost behavior, the slope, or variable
cost per sales dollar, is calculated by ___________________________________.
Answer:
What is interest?
Answer:
Stock that is not assigned a value per share by the corporate charter is called
__________________.
Answer:
The cost of an inventory item includes the _____________, plus ______________
costs necessary to put it in a place and condition for sale.
Answer:
The master budget process nearly always begins with the preparation of the
___________________ and usually finishes with the preparation of the
______________________, the ________________, and the
______________________.
Answer:
The balances for the accounts of Lances Consulting Firm, Inc. for the year ended
December 31 are shown below. Each account shown had a normal balance.
Calculate ending retained earnings.
Answer:
On a contribution margin income statement, expenses are grouped according to
_______________.
Answer:
What is the purpose of a departmental accounting system?
Answer: