On June 30, Caroline, Inc. finished Job 750 with total job costs of $4,400 and
transferred the costs to Finished Goods Inventory. On July 6, Caroline completed the
sale of the goods from Job 750 to a customer for $6,000 cash. Which of the following is
the correct entry needed to record the revenue earned?
A) debit Finished Goods Inventory $4,400 and credit Sales Revenue $4,400
B) debit Cash $6,000 and credit Sales Revenue $6,000
C) debit Sales Revenue $6,000 and credit Cash $6,000
D) debit Cost of Goods Sold $4,400 and credit Sales Revenue $4,400
Get Out of Town Vacations signed a 14%, 10-year note for $157,000. The company
paid an installment of $2,100 for the first month. What portion of the first monthly
payment is interest expense? (Round your answer to the nearest whole number.)
A) $268
B) $35,063
C) $15,183
D) $1,832
Which of the following is true of data processing and storage in a computerized
information system?
A) In a computerized accounting information system, processing includes manually
journalizing transactions and posting to the accounts.
B) In a computerized accounting information system, there will be a main centralized
computer where data is stored, which cannot be accessed from any other computers.
C) In both computerized and manual systems, all data are contained in paper documents
and are often stored in filing cabinets and off-site document warehouses.
D) In a computerized accounting information system, companies need to spend large
amounts of cash to ensure that their data and information are secure.
Which of the following is a contra account?
A) Depreciation Expense
B) Accumulated Depreciation
C) Unearned Revenue
D) Earned Revenue
The balanced scorecard system requires management to consider ________.
A) both financial and operational performance measures
B) only performance measures
C) only leading indicators
D) only financial and customer perspectives
A company received a bank statement with a balance of $6,200. Reconciling items
included a bookkeeper error of $400—a $400 check recorded as $500—two
outstanding checks totaling $840, a service charge of $24, a deposit in transit of $260,
and interest revenue of $19. What is the adjusted bank balance?
A) $5,563
B) $5,220
C) $5,115
D) $5,620
Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct
labor hours. It has provided the following information for the year:
Based on the above information, calculate Q-dot’s predetermined overhead allocation rate.
(Round your answer to two decimal places.)
A) $1.05 per machine hour
B) 7.71% of direct labor cost
C) 35.00% of direct materials cost
D) $20.11 per direct labor hour
Martin Sales provides the following information:
Net credit sales: $800,000
Beginning net accounts receivable: $40,000
Ending net accounts receivable: $22,000
Calculate the accounts receivable turnover ratio. (Round your answer to the nearest
whole number.)
A) 20 times
B) 26 times
C) 36 times
D) 35 times
Which of the following accounts would appear in the income statement debit column?
A) Unearned Revenue
B) Service Revenue
C) Depreciation Expense
D) Prepaid Insurance
Cake Lady Bakery is famous for its frosted fruit cake. The main ingredient of the cake
is dried fruit, which Cake Lady purchases by the pound. In addition, the production
requires a certain amount of direct labor. Cake Lady uses a standard cost system, and at
the end of the first quarter, there was an unfavorable direct labor cost variance. Which
of the following is a logical explanation for that variance?
A) The cost of workers’ medical insurance plans jumped up dramatically during the
quarter.
B) The factory lost two experienced workers at the beginning of the quarter, and their
replacements wasted a large amount of direct materials during their training period.
C) The purchasing manager was able to secure a volume discount on dried fruit,
purchasing the fruit for less than the amount set by standard.
D) The production staff changed the work flow process so that production required
fewer direct labor hours.
Jupiter, Inc. incurred fixed costs of $300,000. Total costs, both fixed and variable, are
$500,000 when 59,000 units are produced. It sold 35,000 units during the year.
Calculate the variable cost per unit. (Round your answer to the nearest cent.)
A) $8.47
B) $14.29
C) $5.08
D) $3.39
For a pharmaceutical company, the most suitable base for allocating research and
development costs to the finished products would be the ________.
A) direct labor hours
B) cost of raw materials purchased
C) number of new patents filed
D) number of set ups
A business has the following transactions:
• The business receives $25,000 cash and issues common stock to stockholders.
• The business purchases $800 of office supplies on account.
• The business purchases $4,000 of furniture on account.
• The business renders services to various clients totaling $17,000 on account.
• The business pays $2,000 for salaries expense and $5,000 for rent expense.
• The business pays $800 to a supplier for the office supplies purchased earlier.
• The business collects $3,000 from one of its clients for services rendered earlier in the
month.
At the end of the month, all journal entries are posted to the ledger. Accounts
Receivable will appear as which of the following?
A)
B)
C)
D)
Regarding the profit margin ratio, which of the following statements is incorrect?
A) The higher the profit margin ratio, the more sales dollars end up as profit.
B) The profit margin ratio is computed by dividing net sales by net income.
C) The profit margin ratio shows how much net income a business earns on every $1.00
of sales.
D) The profit margin ratio focuses on the profitability of a company and is often
reported in the business press.
The Assembly Department of Intuitive, Inc., manufacturer of computers, had 4,500
units of beginning inventory in September, and 3,000 units were transferred to it by the
Production Department. The Assembly Department completed 1,500 units during the
month and transferred them to the Packaging Department. Calculate the total number of
units accounted for by the Assembly Department if it had 6,000 units in ending
inventory. The weighted-average method is used.
A) 6,000 units
B) 3,000 units
C) 4,500 units
D) 7,500 units
Which of the following accounts will be included in a post-closing trial balance?
A) Service Revenue
B) Interest Payable
C) Interest Expense
D) Utilities Expense
Which of the following is true of comprehensive income?
A) All items included in comprehensive income enter into the determination of net
income.
B) Dividend payments are not included in the determination of comprehensive income,
even though it results in a decrease in total stockholders’ equity.
C) Comprehensive income includes company changes in total stockholders’ equity from
all sources, including owners’ investments.
D) Comprehensive income cannot be combined with a traditional income statement into
a combined statement of comprehensive income.
Health Resources expects to sell 490 units of Product A and 420 units of Product B each
day at an average price of $16 for Product A and $27 for Product B. The expected cost
for Product A is 41% of its selling price and the expected cost for Product B is 63% of
its selling price. Health Resources has no beginning inventory, but it wants to have a
four-day supply of ending inventory for each product. Compute the company’s
budgeted sales for the next (seven-day) week. (Round the answer to the nearest dollar.)
A) $10,359
B) $76,720
C) $134,260
D) $19,180
The costs incurred in training employees is an example of a(n) ________.
A) external failure cost
B) internal failure cost
C) prevention cost
D) appraisal cost
Bendas Company, a manufacturer of small appliances, had the following activities,
allocated costs, and allocation bases:
The above activities are carried out at two of its regional offices.
How much of the account verification costs will be assigned to the Northeast Office?
(Round any intermediate calculations to the nearest cent and your final answer to the
nearest dollar.)
A) $371
B) $86
C) $627
D) $68
A sales journal is ________.
A) a special journal used to record all the cash sales
B) used to record the sales of assets other than merchandise inventory
C) a special journal used to record credit sales
D) a general journal used to record the adjustments in revenue account
Doric Agricultural Corporation uses a predetermined overhead allocation rate based on
the direct labor cost. The manufacturing overhead cost allocated during the year is
$300,000. The details of production and costs incurred during the year are as follows:
What is the predetermined overhead allocation rate applied by the corporation? (Round
your answer to two decimal places.)
A) 88.00%
B) 64.39 %
C) 176.47%
D) 36.95%
The following information relates to Webster, Inc.:
How much were Webster’s period costs?
A) $87,700
B) $21,700
C) $534,700
D) $7,200
During the month, Diamond Manufacturing incurred $45,000 in direct labor costs in
Department 1, $22,000 direct labor costs in Department 2, and $3,500 of indirect labor
costs. Which of the following is not part of the summary journal entry to record these
transactions?
A) debit to Manufacturing Overhead for $3,500
B) debit to Work-in-Process Inventory for $70,500
C) credit to Wages Payable for $70,500
D) debit to Work-in-Process Inventory—Department 1 for $45,000
A manufacturing company’s budgeted income statement includes the following data:
The budget assumes that 60% of commission expenses are paid in the month they are
incurred and the remaining 40% are paid one month later. In addition, 50% of salaries
expenses are paid in the same month, and the remaining 50% are paid one month later.
Miscellaneous expenses, rent expense, and utilities expenses are assumed to be paid in the
same month in which they are incurred. Insurance has been paid in advance for the year on
January 1.
Calculate total budgeted cash payments for selling and administrative expenses for the
month of April.
A) $52,000
B) $60,500
C) $57,900
D) $64,700
Gatto Production Services started the year with total assets of $120,000 and total
liabilities of $65,000. The revenues and the expenses for the year amounted to $110,000
and $50,000, respectively. During the year, the company did not issue any common
stock, but it distributed dividends of $70,000. Calculate Gatto’s net income for the year.
A) $60,000
B) $110,000
C) $50,000
D) $120,000
Maywood, Inc. has 3,000 shares of common stock outstanding. A stockholder has 300
shares. If the company distributes a 25% stock dividend, the stockholder now holds
________ shares of Maywood stock.
A) 375
B) 750
C) 300
D) 75
On March 1, 2016, Mandau Services issued a 3% long-term notes payable for $15,000.
It is payable over a 3-year term in $5,000 principal installments on March 1 of each
year, beginning March 1, 2017. Each yearly installment will include both principal
repayment of $5,000 and interest payment for the preceding one-year period. What is
the amount of total cash payment that Mandau will make on March 1, 2017?
A) $5,000
B) $5,450
C) $15,000
D) $5,225
Which of the following statements is true of the capital expenditures budget?
A) It is a part of the financial budget.
B) It must be completed after the budgeted income statement is prepared.
C) It includes the sales budget.
D) It must be completed before the cash budget is prepared.
Calculate the current ratio using the following information: (Round your answer to two
decimals.)
Cash $6,000
Accounts Receivable 1,300
Prepaid Rent 1,100
Land 20,000
Equipment 6,000
Accumulated Depreciation 1,000
Accounts Payable 5,000
Salaries Payable 1,000
Notes Payable—long term 8,000
A) 1.40
B) 1.68
C) 1.44
D) 1.22
The phone bill for a company consists of both fixed and variable costs. Refer to the
four-month data below and apply the high-low method to answer the question.
What is the variable cost per minute? (Round your answer to the nearest cent.)
A) $1.17
B) $6.52
C) $0.85
D) $0.11
