A company owns $100,000 of 9% bonds that pay interest on October 1 and April 1.
The amount of interest accrued on December 31 (the company’s year-end) would be:
A. $750
B. $1,500
C. $2,250
D. $4,500
E. $9,000
Answer:
Profit margin is defined as:
A. Revenues divided by net sales.
B. Net sales divided by assets.
C. Net income divided by net sales.
D. Net income divided by assets.
E. Assets divided by net sales.
Answer:
On December 15, 2013, Myers Legal Services signed a $50,000 contract with a client
to provide legal services to the client in Which accounting principle would require
Myers Legal Services to record the legal fees revenue in 2014 and not 2013?
A. Monetary unit principle
B. Going-concern principle
C. Cost principle
D. Business entity principle
E. Revenue recognition principle
Answer:
Doherty Corporation had net income of $30,000, net sales of $1,000,000, and average
total assets of $500,000. Its return on total assets is equal to:
A. 3%
B. 200%
C. 6%
D. 17%
E. 1.5%
Answer:
A good system of internal control:
A. Urges adherence to prescribed managerial policies.
B. Insures profitable operations.
C. Eliminates the need for an audit.
D. Requires the use of noncomputerized systems.
E. Is not necessary if the company uses a computerized system.
Answer:
Sparks Company produces and distributes two types of garden sculptures, Plain and
Fancy. Budgeted cost and activity for each of its three activity cost pools are shown
below. The company plans to produce and sell 64,000 plain units and 49,150 fancy
units.
a. Compute the approximate overhead cost per unit of Plain under activity-based
costing.
b. Compute the approximate overhead cost per unit of Fancy under activity-based
costing.
Answer:
A job cost sheet includes:
A. Direct materials, direct labor, operating costs.
B. Direct materials, overhead, administrative costs.
C. Direct labor, overhead, selling costs.
D. Direct material, direct labor, overhead.
E. Direct materials, direct labor, selling costs.
Answer:
Presented below are the year-end balances at December 31 of Laura’s Laundry Service.
(All accounts have normal balances.)
a. Prepare the necessary closing entries at December 31.
b. Prepare a post-closing trial balance at December 31.
Answer:
Generally accepted accounting principles require that the inventory of a company be
reported at:
A. Market value
B. Historical cost
C. Lower of cost or market
D. Replacement cost
E. Retail value
Answer:
The controlling investor is referred to as the:
A. Owner
B. Subsidiary
C. Parent
D. Investee
E. Senior entity
Answer:
A corporation uses a FIFO perpetual inventory system.
August 2, 25 units were purchased at $12 per unit.
August 5, 10 units were purchased at $13 per unit.
August 15, 12 units were sold at $25 per unit.
August 18, 15 units were purchased at $14 per unit.
What was the amount of the ending inventory for the month of August?
A. $496.00
B. $486.00
C. $492.57
D. $300.00
E. $510.00
Answer:
Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct
material and direct labor costs are detailed below. Next year the company wishes to use
a plantwide overhead rate with direct labor hours as its allocation base. Next years
overhead is estimated to be $338,250. The direct labor and direct materials costs are
estimated to be consistent with the current year. Direct labor costs $28 per hour and the
company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next
year.
Compute the plantwide overhead rate for next year.
A. $28.00 per DLH.
B. $37.80 per DLH.
C. $1.35 per DLH.
D. $5.00 per DLH.
E. $.20 per DLH.
Answer:
What is the opportunity component of the fraud triangle?
A. A person thinks that there is a way to commit fraud without much chance of getting
caught.
B. A person has a really good reason to commit fraud.
C. A person does not think of the fraudulent activity as bad.
D. A person persuades two or more other people to assist with the fraud.
E. A person is concerned about the impact of their actions on society.
Answer:
Jimmy Hayes is a partner in Sports Promoters. His beginning partnership capital
balance for the current year $65,000 and his ending partnership capital balance for the
current year is $62,000. His share of this year’s partnership income was $5,250. What
were his withdrawals for the period?
A. $8,250
B. $3,000
C. $2,250
D. $0
E. $5,250
Answer:
When graphing cost-volume-profit data on a CVP chart:
A. Units are plotted on the horizontal axis; costs on the vertical axis.
B. Units are plotted on the vertical axis; costs on the horizontal axis.
C. Both units and costs are plotted on the horizontal axis.
D. Both units and cost are plotted on the vertical axis.
E. Data points always represent expected future points.
Answer:
In general journal form, record the December 31 adjusting entries for the following
transactions and events. Assume that December 31 is the end of the annual accounting
period.
a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost
of a three-year fire insurance policy that was purchased on October 1 of the current
year.
b. The Office Supplies account has a debit balance of $400; a year-end inventory count
reveals $80 of supplies still on hand.
c. On November 1 of the current year, Rent Earned was credited for $1,500. This
amount represented the rent earned for a three-month period beginning November 1.
d. Estimated depreciation on office equipment is $600.
e. Accrued salaries amount to $400.
Answer:
What is total debits on this trial balance?
A. $291,340
B. $106,964
C. $199,152
D. $193,390
E. $203.152
Answer:
Long-term investments include:
A. Investments in bonds and stocks that are not marketable.
B. Investments in marketable stocks that are intended to be converted into cash in the
short-term.
C. Investments in marketable bonds that are intended to be converted into cash in the
short-term.
D. Only investments readily convertible to cash.
E. Investments intended to be converted to cash within one year.
Answer:
The difference between the actual cost incurred and the standard cost is called the:
A. Flexible variance.
B. Price variance.
C. Cost variance.
D. Controllable variance.
E. Volume variance.
Answer:
Sinking fund bonds:
A. Require the issuer to set aside assets in order to retire the bonds at maturity.
B. Require equal payments of both principal and interest over the life of the bond issue.
C. Decline in value over time.
D. Are registered bonds.
E. Are bearer bonds.
Answer:
Beta Inc. can produce a unit of Zed for the following costs:
An outside supplier offers to provide Beta with all the Zed units it needs at $58 per unit.
If Beta buys from the supplier, it will still incur 40% of its overhead. Beta should:
A. Buy Zed since the relevant cost to make it is $60.
B. Make Zed since the relevant cost to make it is $60.
C. Buy Zed since the relevant cost to make it is $80.
D. Make Zed since the relevant cost to make it is $30.
E. Buy Zed since the relevant cost to make it is $30.
Answer:
Which one of the following methods considers the time value of money in evaluating
alternative capital expenditures?
A. Accounting rate of return.
B. Net present value.
C. Payback period.
D. Cash flow method.
E. Return on average investment.
Answer:
A company has total assets of $5,600,482, common stock of $2,111,111, retained
earnings of $1,058,473. What is the companys equity ratio?
A. 43.41%
B. 65.00%
C. 41.57%
D. 56.59%
E. 54.22%
Answer:
A report that specifies the expected and actual costs under the control of a manager is a:
A. Segmental accounting report.
B. Managerial cost report.
C. Controllable expense report.
D. Departmental accounting report.
E. Responsibility accounting report.
Answer:
If a company owns more than 20% of the stock of another company and the stock is
being held as a long-term investment, which method would the investor normally use to
account for this investment?
A. Equity method
B. Market value method
C. Historical cost method
D. Straight-line method
E. Effective method
Answer:
A manufacturing statement is also known as a schedule or listing of the:
A. Raw materials processed.
B. Factory supplies used.
C. Cost of goods manufactured.
D. Total finished goods.
E. Cost of goods sold.
Answer:
A company purchased a machine valued at $66,000. It traded in an old (similar)
machine for a $9,000 trade-in allowance, meaning the company paid $57,000 cash with
the trade-in. The old machine cost $44,000 and had accumulated depreciation of
$36,000. What is the recorded value of the new machine?
A. $8,000
B. $9,000
C. $57,000
D. $65,000
E. $66,000
Answer:
Argyle Company uses a cash receipts journal (periodic system) as shown below:
How would the following transactions be recorded in this cash receipt journal?
– 12/10 Sold merchandise to Sock Company for $9,260 cash (cost is $5,556)
– 12/11 Sold merchandise on credit to Gardner, Inc, invoice no. 873, for $7,000 (cost is
$4,200). Terms are 2/10, n/30.
A.
B.
C.
D.
E.
Answer:
Baker Company’s sales mix is 3 units of A, 2 units of B, and 1 unit of C. Selling prices
for each product are $20, $30, and $40, respectively. Variable costs per unit are $12,
$18, and $24, respectively. Fixed costs are $320,000. What is the break-even point in
units of A, B, and C?
A. A 15,000; B 10,000; C 5,000.
B. A 12,000; B 8,000; C 4,000.
C. A 18,000; B 12,000; C 6,000.
D. A 5,000; B 10,000; C 15,000.
E. A 4,000; B 8,000; C 12,000.
Answer:
Chiller Company has credit sales of $5.60 million for year 2013. Accounts Receivable
total $1,565,170 and the company estimates that 1.32% of the credit sales will not be
collected. Historically, 4% of outstanding accounts receivable is uncollectible. On
December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted
credit balance of $3,561. Chiller prepares 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 Chiller will enter as the Bad Debt Expense in the December 31 adjusting
journal entry?
A. $59,045.80
B. $51,878.41
C. $48,317.41
D. $62,606.80
E. $66,167.80
Answer:
Magenta Inc. reports the following information for the current year which is its first
year of operations:
If the companys cost per unit of finished goods using absorption costing is $39.75, what
is total variable overhead?
A. $925,000
B. $877,500
C. $937,500.
D. $865,800
E. $5,437,500
Answer:
When raw materials are used in production and are recorded in a job cost system:
A. Goods in Process is credited and Finished Goods is debited.
B. Direct Material and Indirect Material are debited and Goods in Process is credited.
C. Direct Material and Indirect Material are debited and Raw Materials Inventory is
credited.
D. Goods in Process is debited and Raw Materials Inventory is credited.
E. Goods in Process and Factory Overhead are debited and Raw Materials Inventory is
credited.
Answer:
Depreciation:
A. Measures the decline in market value of an asset.
B. Measures physical deterioration of an asset.
C. Is the process of allocating to expense the cost of a plant asset.
D. Is an outflow of cash from the use of a plant asset.
E. Is applied to land.
Answer:
A ___________________ is a record containing all accounts for a company along with
their balances.
Answer:
Discuss the relationship of risk to return.
Answer:
The ________________________________ is a system of performance measures,
including nonfinancial measures, used to assess company and division manager
performance.
Answer:
Hiller Co. anticipates total fixed costs of $120,000 and variable costs equal to 40% of
sales. What is the pretax income if sales are $650,000?
Answer:
_______________ is the process of transferring journal entry information to the
ledger.
Answer:
An advantage of the _________________ method of inventory valuation is that it tends
to smooth out the effect of erratic changes in costs.
Answer:
Reported income is identical under absorption costing and variable costing when the
units produced _______________ the units sold.
Answer:
The future value of an ________________ annuity is the accumulated value of each
annuity payment with interest as of the date of the final payment.
Answer:
The ____________________ of a note is the day the principle plus interest of a note
must be repaid.
Answer:
Plumley Ad Agency contracted with a company to prepare an ad campaign. Plumley
uses a job order costing system. Plumley estimates that the job will take 145 designer
hours at $90 per hour and 85 staff hours at $45 per hour. Plumley uses two overhead
rates in applying overhead to jobs: Designer-related at $100 per designer hour and
staff-related at $50 per staff hour. Determine the total estimated cost for this job.
Answer:
A company purchases a machine for $62,000. The machine has an expected life of 15
years and no salvage value. The company anticipates a yearly net income of $15,000
after taxes of 29% to be received uniformly throughout each year. What is the
accounting rate of return?
Answer:
The _____________________ principle requires that an accounting information
system aid managers in controlling and monitoring business activities.
Answer:
Information from a manufacturing company’s current year income statement follows:
Calculate the company’s times interest earned.
Answer:
Haladam Company had the following transactions relating to investments in trading
securities during the year. Prepare the required general journal entries for these
transactions.
Answer:
Define the break-even point of a company.
Answer:
Assume a company sells a given product for $83 per unit. Variable selling costs are
$20.75 per unit and variable production costs are $49.80 per unit. If the company breaks
even when selling 300,000 units, what are total fixed costs?
Answer:
Based on the adjusted trial balance, prepare a statement of retained earnings for Martin
Sky Taxi Services.
Answer:
A ________ is an internal document (or file) that is used to accumulate information to
control cash disbursements.
Answer:
Pantheon Company has prepared the following forecasts of monthly sales:
Pantheon has decided that the number of units in its inventory at the end of each month
should equal 25% of the next month’s sales. The budgeted cost per unit is $30.
(1) How many units should be in July’s beginning inventory?
(2) What amount should be budgeted for the cost of merchandise purchases in July?
(3) How many units should be purchased in September?
Answer:
