Horizontal analysis of comparative financial statements includes the
A.development of common size statements.
B.calculation of liquidity ratios.
C.calculation of dollar amount changes and percentage changes from the previous to the
current year.
D.the evaluation of each component in a financial statement to a total within the
statement.
Answer:
Treasury stock that had been purchased for $5,600 last month was reissued this month
for $8,500. The journal entry to record the reissuance would include a credit to
A.Treasury Stock for $8,500
B.Paid-In Capital from Treasury Stock for $8,500
C.Paid-In Capital in Excess of Par/Common for $2,900
D.Paid-In Capital from Treasury Stock for $2,900
Answer:
Singer and McMann are partners in a business. Singer’s original capital was $40,000
and McMann’s was $60,000. They agree to salaries of $12,000 and $18,000 for Singer
and McMann respectively and 10% interest on original capital. If they agree to share
remaining profits and losses on a 3:2 ratio, what will McMann’s share of the income be
if the income for the year was $15,000?
A.$6,000
B.$9,400
C.$12,600
D.$14,000
Answer:
Which of the following budgets is not directly associated with the production budget?
A.Direct materials purchases budget
B.Factory overhead cost budget
C.Capital Expenditures budget
D.Direct labor cost budget
Answer:
Next year’s sales forecast shows that 20,000 units of Product A and 22,000 units of
Product B are going to be sold for prices of $10 and $12 per unit, respectively. The
desired ending inventory of Product A is 20% higher than its beginning inventory of
2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending
inventory of B is 3,000 units.
Budgeted purchases of Product B for the year would be:
A.24,500 units
B.22,500 units
C.26,500 units
D.23,200 units
Answer:
Austin, Inc. made a Prepaid Rent payment of $3,500 on January 1st. The company’s
monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31
balance sheet after adjustment is:
A.$2,800
B.$700
C.$3,500
D.$1,750
Answer:
Budgeting supports the planning process by encouraging all of the following activities
except:
A.requiring all organizational units to establish their goals for the upcoming period
B.increasing the motivation of managers and employees by providing agreed-upon
expectations
C.directing and coordinating operations during the period
D.improving overall decision making by considering all viewpoints, options, and cost
reduction possibilities
Answer:
During the period, labor costs incurred on account amounted to $275,000 including
$200,000 for production orders and $75,000 for general factory use. In addition, factory
overhead charged to production was $32,000. From the following, select the entry to
record the direct labor costs.
A.Work in Process200,000
Wages Payable200,000
B.Work in Process275,000
Wages Payable275,000
C.Wages Payable 275,000
Work in Process275,000
D.Wages Payable200,000
Work in Process200,000
Answer:
An aging of a company’s accounts receivable indicates the estimate of uncollectible
receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit
balance, the adjustment to record the bad debt expense for the period will require a
A.debit to Bad Debt Expense for $8,600.
B.debit to Bad Debt Expense for $7,900.
C.debit to Bad Debt Expense for $7,200.
D.credit to Allowance for Doubtful Accounts for $700.
Answer:
Gadget Palace is a retailer selling unique hardware. Gadget Palace uses perpetual
inventory. Use a General Journal to journalize the following four transactions during the
month of August:
(a) On July 5th, Gadget Palace purchases inventory for sale from Turbo Tools for
$11,400.00 with terms 2/10, n/30.
(b) On July 6th, Gadget Palace pays Fast Truck Transport $75 for freight-in on the July
5th order.
(c) Gadget Palace gets a credit memo from Turbo Tools for $215.00 for damaged
merchandise on July 8th.
(d) On July 15th, Gadget Palace pays Turbo Tools the balance due.
Answer:
When the market rate of interest was 11%, Valley Corporation issued $100,000, 8%,
10-year bonds that pay interest semiannually. Using the straight-line method, the
amount of discount or premium to be amortized each interest period would be
A.$4,000
B.$896
C.$17,926
D.$1,793
Answer:
Taking advantage of a 2/10, n/30 purchases discount is equal to a savings yearly rate of
approximately
A.2%
B.24%
C.20%
D.36%
Answer:
In which journal would an adjustment for an overcharge by a creditor be recorded?
A.General journal
B.Purchases journal
C.Cash Payments journal
D.Cash Receipts journal
Answer:
Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X’s and
35,000 units of Y’s. Related data are:
What was Rusty Co.’s sales mix last year?
A.58% X’s, 42% Y’s
B.60% X’s, 40% Y’s
C.30% X’s, 70% Y’s
D.12.5% X’s, 87.5% Y’s
Answer:
Cost of Materials Used $45,000
Direct Labor costs $48,000
Factory Overhead $39,000
Work in Process, beg. $28,000
Work in Process, end. $18,000
What is Cost of Goods Manufactured?
A.$178,000
B.$132,000
C.$122,000
D.$142,000
Answer:
The following financial information was summarized from the accounting records of
Train Corporation for the current year ended December 31:
The gross profit for the Rails Division is:
A.$60,800
B.$33,600
C.$8,700
D.$21,150
Answer:
In which journal would adjusting entries be found?
A.cash receipts journal
B.cash payments journal
C.general journal
D.purchases journal
Answer:
Standards that represent levels of operation that can be attained with reasonable effort
are called:
A.theoretical standards
B.ideal standards
C.variable standards
D.normal standards
Answer:
The journal entry will:
A.Increase Capital and decrease Cash
B.Increase Cash and decrease Capital
C.Increase Cash and increase Capital
D.Decrease Cash and decrease Capital
Answer:
The balanced scorecard measures
A.only financial information
B.only nonfinancial information
C.both financial and nonfinancial information
D.external and internal information
Answer:
A responsibility center in which the department manager has responsibility for and
authority over costs and revenues is called a(n):
A.profit center
B.investment center
C.volume center
D.cost center
Answer:
The following data relate to direct labor costs for the current period:
What is the direct labor rate variance?
A.$18,000 unfavorable
B.$ 4,500 favorable
C.$17,100 unfavorable
D.$ 3,600 favorable
Answer:
The direct write-off method of accounting for uncollectible accounts
A.emphasizes balance sheet relationships.
B.is often used by small companies and companies with few receivables.
C.emphasizes cash realizable value.
D.emphasizes the matching of expenses with revenues.
Answer:
If the cost of an item of inventory is $60 and the current replacement cost is $75, the
amount included in inventory according to the lower of cost or market is
A.$15
B.$60
C.$75
D.$135
Answer:
Under a periodic inventory system, closing entries will include
A.Dr. Sales, Purchases Returns and Allowances, Purchases Discounts
B.Cr. Purchases, Sales Discounts, Sales Returns and Allowances
C.Adjust Merchandise Inventory account to match physical inventory
D.All are correct
Answer:
Simpson Auto Body Repair purchased $20,000 of Machinery. The company paid
$8,000 in cash at the time of the purchase and signed a promissory note for the
remainder to be paid in four monthly installments.
(a) How will the purchase affect the accounting equation?
(b) How will the payment of the first monthly installment affect the accounting
equation?
Answer:
What ratio indicates the percentage of each sales dollar that is available to cover fixed
costs and to provide a profit?
A.Margin of safety ratio
B.Contribution margin ratio
C.Costs and expenses ratio
D.Profit ratio
Answer:
Which of the following is true about the revenue journal?
A.cash revenues and revenues on account are recorded in the revenue journal
B.only cash revenues are recorded in the revenue journal
C.only revenues on account are recorded in the revenue journal
D.unearned revenues are also recorded in the revenue journal
Answer:
The primary ledger containing all the balance sheet and income statement accounts is
the
A.general ledger
B.creditors ledger
C.customers ledger
D.subsidiary ledger
Answer:
Based on the following data for the current year, what is the number of days’ sales in
accounts receivable?
A.7.3
B.2.5
C.14.6
D.25
Answer:
Which of the following is the most desirable quick ratio?
A.2.20
B.1.80
C.1.95
D.1.50
Answer:
As part of the initial investment, a partner contributes equipment that had originally
cost $125,000 and on which accumulated depreciation of $100,000 has been recorded.
If similar equipment would cost $150,000 to replace and the partners agree on a
valuation of $38,000 for the contributed equipment, what amount should be debited to
the equipment account?
A.$38,000
B.$150,000
C.$125,000
D.$100,000
Answer:
Finch Company began its operations on March 31 of the current year. Finch Co. has the
following projected costs:
(1) 3/4 of the manufacturing costs are paid for in the month they are incurred. 1/4 is
paid in the following month.
(2) Insurance expense is $1,000 a month, however, the insurance is paid four times
yearly in the first month of the quarter, i.e. January, April, July, and October.
(3) Property tax is paid once a year in November.
The cash payments for Finch Company in the month of May are:
A.$185,600
B.$149,900
C.$187,600
D.$189,100
Answer: