1) In preparing a company’s statement of cash flows for the most recent year, the
following information is available:
Net cash flows from investing activities for the year were:
A.$234,000 of net cash used.
B.$120,000 of net cash provided.
C.$340,000 of net cash used.
D.$259,000 of net cash used.
E.$280,000 of net cash provided.
2) Chang Industries has bonds outstanding with a par value of $200,000 and a carrying
value of $203,000. If the company calls these bonds at a price of $201,000, the gain or
loss on retirement is:
A.$1,000 gain.
B.$2,000 loss.
C.$3,000 gain.
D.$1,000 loss.
E.$2,000 gain.
3) Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808
million; net income of $283 million; and average total assets of $2,136. Compute its
total asset turnover.
A.1.31.
B.2.02.
C..13.
D..76.
E..50.
4) Raleigh Co. has the following products in its ending inventory. Compute the lower of
cost or market total for inventory applied separately to each product.
A.$2,040.50.
B.$2,086.50.
C.$2,018.00.
D.$2,109.00.
E.$2,053.50.
5) A firm produces and sells two products, Plus and Max. The following information is
available relating to setup costs (a part of factory overhead):
With traditional two-stage allocation of overhead costs, using direct labor hours as the
allocation base, the setup cost portion of overhead that is allocated to each unit of
product for Plus and Max, respectively is:
A.$.80; $.80.
B.$3.20; $3.20.
C.$4.00; $4.00.
D.$160.00; $12,800.00.
E.$200.00; $16,000.00.
6) Clemmens Company applies overhead based on direct labor cost. Estimated
overhead and direct labor costs for the year were $112,500 and $125,000, respectively.
During the year, actual overhead was $107,400 and actual direct labor cost was
$120,000. The entry to close the over- or underapplied overhead at year-end, assuming
an immaterial amount, would include:
A.A debit to Cost of Goods Sold for $600.
B.A credit to Factory Overhead for $600.
C.A credit to Finished Goods Inventory for $600.
D.A debit to Work in Process Inventory for $600.
E.A credit to Cost of Goods Sold for $600.
7) Profit margin for an investment center measures:
A.Investment center income earned per dollar of sales.
B.How efficiently an investment center generates sales from its invested assets.
C.Investment center income compared to target investment center income.
D.Departmental contribution to overhead.
E.Investment center income generated from its invested assets.
8) Dazzle, Inc. produces beads for jewelry making use. The following information
summarizes production operations for June. The journal entry to record June production
activities for overhead allocation is:
A.Debit Factory Overhead $248,000; credit Cash $248,000.
B.Debit Work in Process Inventory $160,000; credit Factory Payroll $160,000.
C.Debit Work in Process Inventory $248,000; credit Factory Overhead $248,000.
D.Debit Work in Process Inventory $160,000; credit Factory Overhead $160,000.
E.Debit Work in Process Inventory $160,000; credit Cash $160,000.
9) Job order costing systems normally use:
A.Periodic inventory systems.
B.Perpetual inventory systems.
C.Real inventory systems.
D.General inventory systems.
E.Any inventory systems is acceptable.
10) Victory Company purchases office equipment at the beginning of the year at a cost
of $15,000. The machine’s useful life is estimated to be 7 years with a $1,000 salvage
value. The journal entry to record the first year depreciation is:
A.Debit Depreciation Expense $2,143, credit Accumulated Depreciation $2,143.
B.Debit Depreciation Expense $2,000, credit Office Equipment $2,000.
C.Debit Office Equipment $2,000, credit Accumulated Depreciation $2,000.
D.Debit Accumulated Depreciation $2,143; credit Office Equipment $2,143.
E.Debit Depreciation Expense $2,000, credit Accumulated Depreciation $2,000.
11) Compare the list of accounts below and choose the list that contains only accounts
that would be classified as asset accounts on the Chart of Accounts.
A.Accounts Payable; Cash; Supplies.
B.Unearned Revenue; Accounts Payable; Owner’s Withdrawals.
C.Building; Prepaid Insurance; Supplies Expense.
D.Cash; Prepaid Insurance; Equipment.
E.Notes Payable; Cash; Owner’s Withdrawals.
12) Explain the responsibilities of and the accounting by employers for deductions from
employee payroll.
13) A corporation reported net income of $2,730,000 and paid preferred cash dividends
of $120,000 during the current year. There were 600,000 weighted-average shares of
common stock outstanding and the market price per common share at year-end was
$58.30. Calculate the company’s price-earnings ratio.
14) Kelso had income before interest expense and income taxes of $570 million and
interest expense of $37 million. Calculate Kelso’ times interest earned.
15) _______________________ is the amount of income earned per share of a
company’s outstanding common stock.
16) Explain how the cash flows from operating activities section of the statement of
cash flows is prepared using the indirect method.