1) The report on internal control required by the Sarbanes-Oxley Act of 2002 may be
prepared by either management or the companys auditors.
2) If ending inventory for the year is overstated, owner’s equity reported on the balance
sheet at the end of the year is understated.
3) A voucher is a form on which is recorded pertinent data about a liability and the
particulars of its payment.
4) All property, plant, and equipment assets are depreciated over time.
5) The amount of money a borrower receives from the lender is called discount rate.
6) Growth firms generally pay regular dividends to stockholders.
7) Accounts in the ledger are usually maintained in alphabetical order.
8) The seller may prepay the freight costs even though the terms are FOB shipping
point.
9) In preparing a bank reconciliation, the amount of outstanding checks is added to the
balance per bank statement.
10) The entry to transfer goods in process from Department X to Department Y includes
a debit to Work in Process-Department X.
11) When the terms of sale are FOB shipping point, the buyer should pay the freight
charges.
12) Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of
America can be organized as corporations.
13) An example of a nonfinancial measure is the number of customer complaints.
14) An estimate of the amount which an asset can be sold at the end of its useful life is
called residual value.
15) An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds
actual cost.
16) Investment in Bonds are reported on the balance sheet at lower of cost or market.
17) Using the following partial table of present value of $1 at compound interest,
determine the present value of $20,000 to be received four years hence, with earnings at
the rate of 10% a year:
A.$13,660
B.$12,720
C.$15,840
D.$10,400
18) Which of the following is a method of analyzing capital investment proposals that
ignores present value?
A.Internal rate of return
B.Net present value
C.Discounted cash flow
D.Average rate of return
19) Williams Company reports production costs for 2015 as follows:
Williams Companys product costs for 2015 amount to:
A.$995,000
B.$920,000
C.$825,000
D.$770,000
20) Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12
from a customer on account.
a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entry to record the receipt of the payment of the note at maturity.
21) As of January 1 of the current year, the Grackle Company had accounts receivables
of $50,000. The sales for January, February, and March were as follows: $120,000,
$140,000 and $150,000. 20% of each months sales are for cash. Of the remaining 80%
(the credit sales), 60% are collected in the month of sale, with remaining 40% collected
in the following month. What is the total cash collected (both from accounts receivable
and for cash sales) in the month of March?
A.$74,800
B.$146,800
C.$102,000
D.$116,800
22) The production department is proposing the purchase of an automatic insertion
machine. They have identified 3 machines and have asked the accountant to analyze
them to determine the best average rate of return.
A.Machine B
B.Machine C
C.Machine B or C
D.Machine A
23) Flyer Company sells a product in a competitive marketplace. Market analysis
indicates that their product would probably sell at $48 per unit. Flyer management
desires a 12.5% profit margin on sales. Their current full cost per unit for the product is
$44 per unit.
What is the desired profit per unit?
A.$6
B.$8
C.$5
D.$4
24) An Accounts Receivable Subsidiary Ledger report shows
A.revenues by customer for a specified date range
B.cash receipts by customer for a specified date range
C.cash payments to creditors for a specific date range
D.sales by customer as of a specific date
25) Zang Co. manufacturers its products in a continuous process involving two
departments, Machining and Assembly. Present entries to record the following selected
transactions related to production during June:
(a) Materials purchased on account, $180,000.
(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials;
Assembly, $4,900 indirect materials.
(c) Direct labor used by Machining, $23,000, Assembly, $47,000.
(d) Depreciation expenses: Machining, $4,500; Assembly, $7,800.
(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300.
(f) Machining Department transferred $98,300 to Assembly Department; Assembly
Department transferred $83,400 to finished goods.
(g) Sold goods on account, $100,000. Cost of goods sold, $68,000.
26) Consider the following budget information: materials to be used totals $64,750;
direct labor totals $198,400; factory overhead totals $394,800; work in process
inventory January 1, 2012, was expected to be $189,100; and work in progress
inventory on December 31, 2012, is expected to be $197,600. What is the budgeted cost
of goods manufactured?
A.$649,450
B.$657,950
C.$197,600
D.$1,044,650
27) When callable bonds are redeemed below carrying value
A.Gain on Redemption of Bonds is credited
B.Loss on Redemption of Bonds is debited
C.Retained Earnings is credited
D.Retained Earnings is debited
28) 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
29) The proper journal entry to purchase a computer costing $975 on account on
January 2 to be utilized within the business would be:
A.Jan 2 Office Supplies 975
Accounts Payable 975
B.Jan 2 Office Equipment 975
Accounts Payable 975
C.Jan 2 Office Supplies 975
Accounts Receivable 975
D.Jan 2 Office Equipment 975
Accounts Receivable 975
30) Discounts taken by a buyer because of early payment are recorded on the sellers
accounting records as
A.Purchases discount
B.Sales discount
C.Trade discount
D.Early payment discount
31) What is the total stockholders’ equity based on the following account balances?
A.$670,000
B.$655,000
C.$640,000
D.$565,000
32) Kramer Company started its production operations on August 1. During August, the
printing department completed 17,600 units. There were 4,400 units in ending inventory
which were 80% complete with respect to materials and 10% complete with respect to
conversion costs. During August, the department accumulated materials costs of
$45,408 and conversion costs of $76,670.
Required:
a. Calculate the cost of the goods transferred out.
b. What is the value of the ending inventory?
Round intermediate computation to nearest cent.
33) In which journal would adjusting entries be found?
A.cash receipts journal
B.cash payments journal
C.general journal
D.purchases journal
34) On November 1st, clients of Great Designs Company prepaid $4,250 for services to
be provided in the future at a rate of $85 per hour.
(a) Journalize the receipt of this cash.
(b) As of November 30th, Great Designs shows that 15 hours of services have been
provided on this agreement. Prepare the necessary journal entry to record this.
(c) Determine the total unearned fees in hours and dollars at November 30th.
35) What is the primary criterion for the preparation of managerial accounting reports?
A.Relevance of the reports
B.Meet the manager needs
C.Timing of the reports
D.Cost of the reports
36) The Reagan Corporation issues 1,000, 10-year, 8%, $1,000 bonds dated January 1,
2014, at 92. The journal entry to record the issuance will show a
A.credit to Discount on Bonds Payable for $80,000
B.debit to Cash of $1,000,000
C.credit to Bonds Payable for $1,000,000
D.credit to Cash for $920,000
37) A computerized accounting system will not allow which of the following type of
journalizing error?
A.Entering an amount in an incorrect account
B.Reversing the debit and credit account in a transaction
C.Processing a transaction that has unequal debits and credits
D.Entering a transaction with an incorrect date
38) Accompanying the bank statement was a credit memo for a short-term note
collected by the bank for the customer. What entry is required in the company’s
accounts?
A.debit Notes Receivable; credit Cash
B.debit Cash; credit Miscellaneous Income
C.debit Cash; credit Notes Receivable
D.debit Accounts Receivable; credit Cash
39) 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 Rogers capital balance after closing Income Summary to Capital?
A.$155,000
B.$150,000
C.$110,000
D.$115,000
40) Nuthatch Corporation began its operations on September 1 of the current year.
Budgeted sales for the first three months of business are $260,000, $375,000, and
$400,000, respectively, for September, October, and November. The company expects
to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be
collected in the month of the sale and 20% in the month following the sale.
The cash collections in September from accounts receivable are:
A.$223,600
B.$145,600
C.$182,000
D.$168,000
41) A company is contemplating investing in a new piece of manufacturing machinery.
The amount to be invested is $100,000. The present value of the future cash flows at the
companys desired rate of return is $100,000. The IRR on the project is 12%. Which of
the following statements is true?
A.The project should not be accepted because the net present value is negative
B.The desired rate of return used to calculate the present value of the future cash flows
is less than 12%
C.The desired rate of return used to calculate the present value of the future cash flows
is more than 12%
D.The desired rate of return used to calculate the present value of the future cash flows
is equal to 12%
42) Which of the following should be included in the acquisition cost of a piece of
equipment?
A.transportation costs
B.installation costs
C.testing costs prior to placing the equipment into production
D.all are correct
43) Which one of the following is not a characteristic generally evaluated in ratio
analysis?
A.liquidity
B.profitability
C.solvency
D.marketability
44) In the normal operation of business you receive a check from a customer and
deposit it into your checking account. With your bank statement you are advised that
this check for $775 is NSF. The bank also informs you that due to the amount of
activity on your business account the monthly service charge is $75. During a bank
reconciliation, you will:
A.subtract both values from balance according to bank
B.add both values from balance according to books
C.add both values from balance according to bank
D.subtract both values from balance according to books
45) Given the following:
Variable cost as a percentage of sales = 60%
Unit Variable cost = $30
Fixed costs = $200,000
What is the break-even point in units?
46) A company reports the following:
Determine the companys earnings per share on common stock.
47) On May 1, 2015, Chase Inc. purchases $60,000 of 10-year, 6% Manus Corporation
bonds dated March 1, 2015 at 100 plus accrued interest. What entry would Chase record
when purchasing the bonds?
48) Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000.
The project has an estimated life of four years and no salvage value. The estimated net
income and net cash flow from the project are as follows:
The company’s minimum desired rate of return is 12%. The present value of $1 at
compound interest of 12% for 1, 2, 3, and 4 years is .893, .797, .712, and .636,
respectively.
Required:
Determine the average rate of return on investment, including the effect of depreciation
on the investment.
49) On June 30th (the end of the period) Brown Company has a credit balance of
$2,275 in Allowance for Doubtful Accounts. An evaluation of accounts receivable
indicates that the proper balance should be $30,025. Journalize the appropriate
adjusting entry.
50) On the basis of the following data for Barker Industries as of December 31, 2011,
determine the value of the inventory at the lower of cost or market. Also, show how the
merchandise inventory would appear on the balance sheet (assume that the cost was
determined by the FIFO method). Apply lower of cost or market to each inventory item.
51) Calculate the gross profit for Jonas Company based on the data given below:
