1) The number of shares that a corporation’s charter allows it to sell is referred to as:
A.Issued stock.
B.Outstanding stock.
C.Common stock.
D.Preferred stock.
E.Authorized stock.
2) Basic bank services do not include:
A.Bank accounts.
B.Bank deposits.
C.Checking.
D.Electronic funds transfer.
E.Petty cash management.
3) Alliance Company’s budgets production of 24,000 units in January and 28,000 units
in the February. Each finished unit requires 4 pounds of raw material K that costs $2.50
per pound. Each month’s ending raw materials inventory should equal 40% of the
following month’s budgeted materials. The January 1 inventory for this material is
38,400 pounds. What is the budgeted materials need in pounds for January?
A.102,400 pounds.
B.96,000 pounds.
C.57,600 pounds.
D.140,800 pounds.
E.83,200 pounds.
4) Bengal Co. provides the following sales forecast for the next three months:
The company wants to end each month with ending finished goods inventory equal to
25% of the next month’s sales. Finished goods inventory on June 30 is 1,250 units. The
budgeted production units for August are:
A.6,950 units.
B.4,310 units.
C.7,090 units.
D.5,665 units.
E.4,135 units.
5) The ability to generate positive market expectations is called:
A.Liquidity and efficiency.
B.Liquidity and solvency.
C.Profitability.
D.Market prospects.
E.Creditworthiness.
6) Zhang Industries sells a product for $700. Unit sales for May were 400 and each
month’s sales are expected to exceed the prior month’s results by 3%. Zhang pays a
sales manager a monthly salary of $3,000 and a commission of 2% of sales in dollars.
Assume 30% of Zhang’s sales are for cash. The remaining 70% are credit sales; these
customers pay in the month following the sale. Compute the budgeted cash receipts for
June.
A.$282,520.
B.$196,000.
C.$201,880.
D.$280,000.
E.$285,880.
7) Match the following terms with the appropriate definition.
8) Match the followingterms with the definitions.
A. A department or unit that generates revenues and incurs costs, in which the manager
is also responsible for investments made in operating assets.
B. Compares actual and budgeted costs and expenses under the control of a manager.
C. A department whose manager is judged on the ability to control costs by keeping
them within a satisfactory range.
D. A measure of departmental sales less direct expenses.
E. A department whose manager is judged on the ability to generate revenues in excess
of the department’s costs.
F. Set up to control costs and evaluate managers’ performances by assigning costs to the
managers responsible for controlling them.
9) Havermill Co. establishes a $250 petty cash fund on September 1. On September 30,
the fund is replenished. The accumulated receipts on that date represent $73 for Office
Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The
fund has a balance of $18. On October 1, the accountant determines that the fund
should be increased by $50. The journal entry to record the increase in the fund balance
on October 1 is:
A.Debit Petty Cash $300; credit Cash $300.
B.Debit Cash $50; credit Petty Cash $50.
C.Debit Miscellaneous Expense $50; credit Cash $50.
D.Debit Petty Cash $50; credit Accounts Payable $50.
E.Debit Petty Cash $50; credit Cash $50.
10) Childers Company has an established petty cash fund in the amount of $400. The
fund was last reimbursed on November 30. At the end of December, the fund contained
the following petty cash receipts:
If, in addition to these receipts, the petty cash fund contains $201 of cash, the journal
entry to reimburse the fund on December 31 will include:
A.A debit to Transportation-In of $73.
B.A debit to Petty Cash of $189.
C.A credit to Office Supplies of $66.
D.A credit to Cash Over and Short of $10.
E.A credit to Cash of $199.
11) Jamison Company uses special journals to record transactions. All of the companies
listed below supply inventory to Jamison except McGarry Co. that supplies equipment.
Use the purchases journal given below to answer the following questions:
a. Foot and crossfoot the journal for accuracy.
b. An error was made in the journal. Identify the error and indicate how to correct it.
c. When Jamison compares the general ledger Accounts Payable account to the
Accounts Payable ledger, it notices that the general ledger control account is $10,000
more than the schedule of Accounts Payable. What is the most likely cause and how
should it be corrected?
12) Minstrel Manufacturing uses a job order costing system. During one month
Minstrel purchased $198,000 of raw materials on credit; issued materials to production
of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of
$150,000, paid in cash, of which $40,000 was indirect labor. Minstrel uses a
predetermined overhead application rate of 150% of direct labor cost. Minstrel’s
beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively.
Compute the cost of product transferred to Finished Goods Inventory:
A.$558,500.
B.$440,000.
C.$413,000.
D.$428,500.
E.$415,000.
13) Match each of the following terms a through j with the appropriate definitions 1 –
10.
14) What is an investment center and how is its performance evaluated?
15) Match each of the following terms with the appropriate definitions.
16) Marsha Hansen, the manager of the Flint Plant of the Michigan Company is
responsible for all of the plant’s costs except her own salary. There are two operating
departments within the plant, Departments A and B. Each department has its own
manager. There is also a maintenance department that provides services equally to the
two operating departments. The following information is available.
Department managers are responsible for the wages and supplies in their department.
They are not responsible for their own salary. Building rent, utilities, and maintenance
are allocated to each department based on square footage.
Required:
Complete the responsibility accounting performance reports below that list costs
controllable by the manager of Department A, the manager of Department B, and the
manager of the Flint plant.
17) A company reports the following results in its financial statements:
Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare
these two results and give a possible explanation for any significant change.