The natural business year
A.is a fiscal year that ends when business activities are at its lowest point.
B.is a calendar year that ends when business activities are at its lowest point.
C.is a fiscal year that ends when business activities are at its highest point.
D.is a calendar year that ends when business activities are at its highest point.
Answer:
Immediately prior to the admission of Abbott, the Smith-Jones Partnership assets had
been adjusted to current market prices, and the capital balances of Smith and Jones
were $40,000 and $60,000 respectively. If the parties agree that the business is worth
$120,000, what is the amount of bonus that should be recognized in the accounts at the
admission of Abbott?
A.$60,000
B.$80,000
C.$40,000
D.$20,000
Answer:
Using a perpetual inventory system, the entry to record the purchase of $30,000 of
merchandise on account would include a
A.debit to Accounts Payable
B.debit to Merchandise Inventory
C.credit to Merchandise Inventory
D.credit to Sales
Answer:
Champion Company purchased and installed carpet in its new general offices on March
30 for a total cost of $18,000. The carpet is estimated to have a 15-year useful life and
no residual value.
Answer:
In a lease contract, the party who legally owns the asset is the
A.lessee
B.lessor
C.operator
D.banker
Answer:
The systematic examination of the relationships among selling prices, volume of sales
and production, costs, and profits is termed:
A.contribution margin analysis
B.cost-volume-profit analysis
C.budgetary analysis
D.gross profit analysis
Answer:
Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances
are $90,000 and $130,000 respectively. Income Summary has a credit balance of
$50,000. What is Paul’s capital balance after closing Income Summary to Capital?
A.$108,000
B.$120,000
C.$115,000
D.$180,000
Answer:
A cash investment made by the owner should be recorded on the
A.cash receipts journal
B.purchases journal
C.cash payments journal
D.revenue journal
Answer:
Which one of the following is the authoritative body in the United States having the
primary responsibility for developing accounting principles?
A.FASB
B.IRS
C.SEC
D.AICPA
Answer:
The Thomlin Company forecasts that total overhead for the current year will be
$15,000,000 and that total machine hours will be 300,000 hours. Year to date, the actual
overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the
Thomlin Company uses a predetermined overhead rate based on machine hours for
applying overhead, what is that overhead rate?
A.$48 per machine hour
B.$53 per machine hour
C.$45 per machine hour
D.$50 per machine hour
Answer:
Using the following information, what is the amount of net sales?
A.$28,970
B.$63,130
C.$63,000
D.$62,090
Answer:
Which of the following is NOT an example of a cost that varies in total as the number
of units produced changes?
A.Electricity per KWH to operate factory equipment
B.Direct materials cost
C.Insurance premiums on factory building
D.Wages of assembly worker
Answer:
If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the
account
A.Common Stock will be credited for $75,000.
B.Paid-in Capital in excess of Par Value will be credited for $5,000.
C.Paid-in Capital in excess of Par Value will be credited for $70,000.
D.Cash will be debited for $70,000.
Answer:
The Eastern Division of Kentucky Company has a rate of return on investment of 28%
and a profit margin of 20%. What is the investment turnover?
A.3.6
B.1.4
C.5.0
D..7
Answer:
Which of the following does not represent an outflow of cash and therefore would not
be reported on the statement of cash flows as a use of cash?
A.purchase of noncurrent assets
B.purchase of treasury stock
C.discarding an asset that had been fully depreciated
D.payment of cash dividends
Answer:
Department A had 4,000 units in work in process that were 60% completed as to labor
and overhead at the beginning of the period, 29,000 units of direct materials were added
during the period, 31,000 units were completed during the period, and 2,000 units were
80% completed as to labor and overhead at the end of the period. All materials are
added at the beginning of the process. The first-in, first-out method is used to cost
inventories.
The number of equivalent units of production for conversion costs for the period was:
A.30,200
B.29,800
C.33,800
D.33,000
Answer:
On January 1, 2011, Zero Company obtained a $52,000, four-year, 6.5% installment
note from Regional Bank. The note requires annual payments of $15,179, beginning on
December 31, 2011. The December 31, 2013 carrying amount in the amortization table
for this installment note will be equal to:
A.$0
B.$13,000
C.$14,252
D.$16,603
Answer:
Based on the following information, compute (a) Inventory turnover; (b) Average daily
cost of merchandise sold using a 365 day year; and (c) Number of days’ sales in
inventory.
April 30, 2012
Cost of merchandise sold $195,640
Inventory:
Beginning 20,500
Ending 18,628
Answer:
Determine the missing amount “X” for each of the following:
Assets Liabilities Owner’s Equity
a. $78,500 $37,600 X
b. X $53,280 $145,000
c. $49,500 X $34,000
Answer:
The following data were gathered to use in reconciling the bank account of Savannah
Company:
What is the adjusted balance on the bank reconcilition?
A.$14,470
B.$10,705
C.$15,095
D.$15,720
Answer:
The collection of an account that had been previously written off under the allowance
method of accounting for uncollectibles
A.will increase net income in the period it is collected.
B.will decrease net income in the period it is collected.
C.does not affect net income in the period it is collected.
D.requires a correcting entry for the period in which the account was written off.
Answer:
The budgeted finished goods inventory and cost of goods sold for a manufacturing
company for the year 2012 are as follows: January 1 finished goods, $765,000;
December 31 finished goods, $540,000; cost of goods sold for the year, $2,560,000.
The budgeted costs of goods manufactured for the year is?
A.$1,255,000
B.$2,335,000
C.$2,785,000
D.$3100,000
Answer:
Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices
are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50;
and $15, respectively. Each product must go through the same processing in a machine
that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7
hours, and Wales take 1 hour.
Assume that Widgeon produced enough product with the highest contribution margin
per unit to use 1,000 hours of machine time. Product demand does not warrant any
more production of that product. What is the maximum additional contribution margin
that can be realized by utilizing the remaining 1,000 hours on the product with the
second highest contribution margin per hour?
A.$35,000
B.$7,000
C.$4,000
D.$28,000
Answer:
For accounting purposes, the method used to account for investments in common stock
is determined by
A.the amount paid for the stock by the investor.
B.whether the acquisition of the stock by the investor was “friendly” or “hostile.”
C.the extent of an investor’s influence over the operating and financial affairs of the
investee.
D.whether the stock has paid dividends in past years.
Answer:
Which of the following statements below is not a reason a company may purchase
another company’s stock?
A.earning a return on excess cash
B.sustain the other company’s stock price
C.gaining control of another company’s operations
D.developing or maintaining business relationships
Answer:
The balance in Allowance for Doubtful Accounts will directly impact the end of period
adjustment for the bad debt expense when using which of the following methods?
A.Allowance method
B.Direct write-off method
C.Accrual method
D.declining value method
Answer:
Which account will be included in both service and merchandising companies closing
entries?
A.Sales
B.Cost of Merchandise Sold
C.Purchase Discounts
D.Sales Returns and Allowances
Answer:
Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the
beginning and end of the year, respectively. Income reported on the income statement
for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows
from operating activities to be reported on the statement of cash flows is
A.$118,000.
B.$110,000.
C.$102,000.
D.$150,000.
Answer:
The standard costs and actual costs for direct materials, direct labor, and factory
overhead for the manufacture of 2,500 units of product are as follows:
The amount of the direct labor time variance is:
A.$1,180 favorable
B.$1,140 unfavorable
C.$1,180 unfavorable
D.$1,140 favorable
Answer:
Cash equivalents
A.are illegal in some states
B.will be converted to cash within two years
C.will be converted to cash within 90 days
D.will be converted to cash within 120 days
Answer:
What pricing concept is used if all costs are considered and a fair mark-up is added to
determine the selling price?
A.Total cost concept
B.Demand-based concept
C.Variable cost concept
D.Fixed cost concept
Answer:
Which of the following below is not one of the four major forms of business entities
that are discussed in this chapter?
A.Sole proprietorship
B.Corporation
C.Partnership
D.Subchapter S corporation
Answer: