A single cost incurred in producing or purchasing two or more essentially different
products is a(n):
A. Product cost
B. Incremental cost
C. Differential cost
D. Joint cost
E. Fixed cost
Answer:
Classify each of the following items as a contingent liability, estimated liability, or
current liability:
A) Contingent liability
B) Estimated liability
C) Current liability
D) Estimated liability
E) Estimated liability
F) Current liability
G) Contingent liability
H) Estimated liability
I) Current liability
J) Current liability
Answer:
To determine the production budget for an accounting period, consideration is not given
to which of the following:
A. Budgeted ending inventory.
B. Budgeted beginning inventory.
C. Budgeted sales.
D. Budgeted overhead.
E. Required units of inventory available.
Answer:
The operating cycle for a merchandiser that sells only for cash moves from:
A. Purchases of merchandise to inventory to cash sales.
B. Purchases of merchandise to inventory to accounts receivable to cash sales.
C. Inventory to purchases of merchandise to cash sales.
D. Accounts receivable to purchases of merchandise to inventory to cash sales.
E. Accounts receivable to inventory to cash sales.
Answer:
A short-term note payable:
A. Is a written promise to pay a specified amount on a definite future date within one
year or the company’s operating cycle, whichever is longer.
B. Is a contingent liability.
C. Is an estimated liability.
D. Is not a liability until the due date.
E. Cannot be used to extend the payment period for an account payable.
Answer:
A company has an overhead application rate of 125% of direct labor costs. How much
overhead would be allocated to a job if it required total labor costing $20,000?
A. $5,000
B. $16,000
C. $25,000
D. $125,000
E. $250,000
Answer:
Match each of the following terms with the appropriate definitions 1 through 10.
A) Secured bonds
B) Annuity
C) Premium on bonds
D) Callable bonds
E) Contract rate
F) Bond indenture
G) Sinking fund bonds
H) Carrying value
I) Debt to equity ratio
J) Bond
Answer:
Which of the following five types of products is least likely to be produced in a process
manufacturing system?
A. Compact disks.
B. Slacks for casual wear.
C. Baseball hats.
D. Calculators.
E. Oil paintings.
Answer:
A company had wage expense of $750,000 during a given period. Compute cash paid
for wages during this period given the following data:
A. $750,000
B. $675,500
C. $824,500
D. $74,500
E. $125,500
Answer:
The following are all examples of product costs:
A. Direct material, direct labor and indirect labor.
B. Direct labor, VP of sales salary, and insurance on the factory.
C. Depreciation on the factory equipment, depreciation on the office building, and
depreciation on the factory building.
D. Factory insurance, interest expense, and property taxes on the factory.
E. Office supplies, sales commissions, and maintenance costs on office copier.
Answer:
On January 1, Acme College received $1,200,000 in Unearned Tuition Revenue from
its students for the spring semester, which spans four months beginning on January 2.
What amount of tuition revenue should the college recognize on January 31?
A. $300,000
B. $600,000
C. $800,000
D. $900,000
E. $1,200,000
Answer:
An attitude of constantly seeking ways to improve company operations, including
customer service, product quality, product features, the production process, and
employee interactions, is called:
A. Continuous improvement.
B. Customer orientation.
C. Just-in-time.
D. Theory of constraints.
E. Total quality measurement.
Answer:
Brown Company’s bank statement for September 30 showed a cash balance of $1,350.
The company’s Cash account in its general ledger showed a $995 debit balance. The
following information was also available as of September 30.
a. A customer’s check for $100 marked NSF was returned to Brown Company by the
bank. In addition, the bank charged the company’s account a $25 processing fee.
b. The September 30 cash receipts, $1,250, were placed in the bank’s night depository
after banking hours on that date and this amount did not appear on the September 30
bank statement.
c. A $15 debit memorandum for checks printed by the bank was included with the
canceled checks.
d. Outstanding checks amounted to $1,145.
e. A customer’s note for $900 was collected by the bank. A collection fee of $25 was
deducted by the bank and the difference was deposited in the account.
f. Included with the canceled checks was a check for $275, drawn on another company,
Browne Inc.
(a) Prepare a bank reconciliation as of September 30.
(b) Prepare any necessary adjusting journal entries necessary as a result of the bank
reconciliation.
Answer:
A company has bonds outstanding with a par value of $100,000. The unamortized
premium on these bonds is $2,700. If the company retired these bonds at a call price of
99, the gain or loss on this retirement is:
A. $1,000 gain
B. $1,000 loss
C. $2,700 loss
D. $2,700 gain
E. $3,700 gain
Answer:
The Unadjusted Trial Balance columns of a company’s work sheet show the balance in
the Office Supplies account as $750. The Adjustments columns show that $425 of these
supplies were used during the period. The amount shown as Office Supplies in the
Balance Sheet columns of the work sheet is:
A. $325 debit
B. $325 credit
C. $425 debit
D. $750 debit
E. $750 credit
Answer:
Match the following terms with the appropriate definitions:
A. Cash receipts journal
B. Compatibility principle
C. Cost-benefit principle
D. Purchases journal
E. Sales journal
F. Segment margin
G. Information storage
H. Special journal
I. Controlling account
J. Schedule of accounts receivable
Answer:
Beginning assets were $437,600, beginning liabilities were $262,560, common stock
issued during the year totaled $45,000, revenue for the year was $414,250, expenses for
the year were $280,000, dividends declared was $22,700, and ending liabilities is $
$350,000.
What is net income for the year?
A. $700,160
B. $331,590
C. $134,250
D. $612,560
E. $175,040
Answer:
A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A. Reflects an increase in amount due from a customer.
B. Recognizes that a customer returned merchandise and/or received an allowance.
C. Requires a debit memorandum to recognize the customer’s return.
D. Is recorded when a customer takes a discount.
E. Reflects an increase in net sales.
Answer:
During a period, Department A finished and transferred 50,000 units to Department B.
Of the 50,000 units, 20,000 were one-fifth complete with respect to direct labor at the
beginning of the period and 30,000 were started and completed during the period. Also,
during the period, 10,000 units were started but brought only to a stage of being
htree-fifths completed. Using the FIFO inventory valuation method, the number of
equivalent units produced by Department A during the period was:
A. 46,000 units.
B. 50,000 units.
C. 52,000 units.
D. 54,000 units.
E. 56,000 units.
Answer:
On October 29 of the current year, a company concluded that a customer’s $4,400
account receivable was uncollectible and that the account should be written off. What
effect will this write-off have on this company’s net income and total assets assuming
the allowance method is used to account for bad debts?
A. Decrease in net income; no effect on total assets.
B. No effect on net income; no effect on total assets.
C. Decrease in net income; decrease in total assets.
D. Increase in net income; no effect on total assets.
E. No effect on net income; decrease in total assets.
Answer:
Match each of the following transactions with the applicable internal control principle.
A) Establish responsibility. 9
B) Divide responsibility for related transactions. 5
C) Establish responsibility. 7
D) Separate recordkeeping from custody of assets. 10
E) Apply technological controls. 4
F) Perform regular and independent reviews. 6
G) Insure assets and bond employees. 3
H) Divide responsibility for related transactions. 2
I) Perform regular and independent reviews. 8
J) Apply technological controls. 1
Answer:
A company produces three different products that all require processing on the same
machines. There are only 17,000 machine hours available in each year. Production
information for each product is:
Required:
a. Determine the preferred sales mix if there are no market constraints on any of the
products.
b. Determine the preferred sales mix if the demand is limited to 7,000 units for each
product.
c. Determine the preferred sales mix if the demand is limited to 8,000 units for each
product.
Answer:
A $72,000 receipt of cash from a customer paying on their account was recorded as a
$72,000 debit to Accounts Receivable. Assuming this journal entry was posted, what
correcting entry (if any) is needed?
A. Debit Cash and credit Accounts Receivable for $72,000 each.
B. Debit Cash and credit Accounts Receivable for $144,000 each.
C. Credit Cash and debit Accounts Receivable for $72,000 each.
D. Credit Cash and debit Accounts Receivable for $144,000 each.
E. No correcting entry is needed for this transaction.
Answer:
Days sales in raw materials inventory is a measure of:
A. How much raw materials are needed for the company to earn a profit.
B. How long it takes the company to pay for raw materials..
C. How many times a company turns over its raw materials during a period.
D. How long it takes raw materials to be used in production.
E. The product costs a company has incurred during a period.
Answer:
Reference: 21_07
Montaigne Corp. has the following information about its standards and production
activity in November:
The controllable variance is:
A. $1,295U
B. $1,295F
C. $2,400U
D. $2,400F
E. $3,695U
Answer:
An example of a financing activity is:
A. Buying office supplies.
B. Obtaining a long-term loan.
C. Buying office equipment.
D. Selling inventory.
E. Buying land.
Answer:
The primary objective of financial accounting is:
A. To serve the decision-making needs of internal users.
B. To provide financial statements to help external users analyze and interpret an
organization’s activities.
C. To monitor and control company activities.
D. To provide information on both the costs and benefits of managing products and
services.
E. To know what, when and how much to produce.
Answer:
The objectivity principle:
A. Means that information is supported by independent, unbiased evidence.
B. Means that information can be based on what the preparer thinks is true.
C. Means that financial statement should contain information that is optimistic.
D. Means that a business may not recognize revenue until cash is received.
E. Means the assets acquired must be recorded at what the company paid for them.
Answer:
Vans purchased 40,000 shares of Skechers common stock for $232,000. This represents
40% of the outstanding stock. The entry to record the transaction includes a:
A. Debit to Long-Term Investments for $92,800.
B. Debit to Long-Term Investments for $232,000.
C. Credit to Long-Term Investments for $92,800.
D. Credit to Long-Term Investments for $232,000.
E. Debit to Long-Term Investment for $40,000.
Answer:
Liabilities:
A. Must be certain.
B. Must sometimes be estimated.
C. Must be for a specific amount.
D. Must always have a definite date for payment.
E. Must involve an outflow of cash.
Answer:
The financial statement that describes where a company’s cash came from and how it
was spent during the period is the:
A. Statement of financial position.
B. Statement of cash flows.
C. Balance sheet.
D. Income statement.
E. Statement of retained earnings.
Answer:
Direct material costs are recorded:
A. Indirectly to Goods in Process account.
B. Indirectly to a Finished Goods account.
C. Directly to a Goods in Process account.
D. Directly to a Finished Goods account.
E. Directly to a Cost of Goods Sold account.
Answer:
______________ bonds are bonds that are scheduled for maturity on one specified
date.
Answer:
Michael Inwald of CHEESEBOY maintains a system of internal controls and
managing cash. Identify some of these internal controls and explain how they contribute
to the success of the company.
Answer:
A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in
seven years. The fund will earn 7% interest, and the company intends to put away a
series of equal year-end amounts for seven years. What amount must the company
deposit annually?
Answer:
The FIFO method of process costing accounts for cost flow in a ______________
manner.
Answer:
The comparative balance sheet for Golden Co. is shown below. Express these amounts
in a comparative, common-size balance sheet.
Answer:
Superior Products Manufacturing identified the following data in its two production
departments:
Compute departmental overhead rates assuming the Assembly rate is based on machine
hours and the Finishing rate is based on direct labor hours.
Answer:
The production of one unit of Product BBB used $17.50 of direct materials and $21 of
direct labor. The unit sold for $56 and was assigned overhead at a rate of 30% of labor
costs. What is the gross profit per unit on its sale?
Answer:
Product costs consist of direct labor, direct materials, and ______________.
Answer:
___________________________ means that partners can commit or bind the
partnership to any contract within the scope of the partnership business.
Answer:
What is an adjusted trial balance? Why is it prepared?
Answer:
Compare and contrast the FIFO and weighted-average methods of process costing.
Answer:
In the analysis of variances, management commonly focuses on four categories of
production costs: __________________ cost, ___________________ cost;
_________________cost; and _________________ cost.
Answer:
Two sales clerks should not share the same cash register. This refers to the internal
control principle of _______________________.
Answer:
Short-term investments in held-to-maturity debt securities are accounted for using the
___________________________.
Answer:
The investment center return on total assets is __________________________ divided
by ______________________________.
Answer:
_____________________ preferred stock has a feature that allows preferred
stockholders to share with common stockholders in any dividends paid in excess of the
percent or dollar amount stated on the preferred stock.
Answer:
From the information given, prepare a November statement of retained earnings.
On November 1 of the current year, Lois Bell began Lois Bell, Interior Design as a
corporation with an initial investment of $50,000 cash. On November 30 her records
showed the following (alphabetically arranged) selected accounts and amounts:
Answer:
A company has sales of $2,530,000, sales discounts of $200,000, sales returns and
allowances of $323,000, shipping charges of $115,000, sales commissions of $234,000,
net income of $863,500, and cost of goods sold of $1,012,000. What is the gross
profit/margin ratio?
Answer: