Which of the following expressions is termed the investment turnover factor as used in
determining the rate of return on investment?
A.Invested Assets/Sales
B.Income From Operations/Invested Assets
C.Income From Operations/Sales
D.Sales/Invested Assets
Answer:
The finished goods account is the controlling account for the:
A.cost ledger
B.materials ledger
C.work in process ledger
D.stock ledger
Answer:
The cash account in the company’s ledger is a(n)
A.asset with a debit balance
B.asset with a credit balance
C.liability with a debit balance
D.liability with a credit balance
Answer:
If a company mistakenly counts less items during a physical inventory than actually
exist, how will the error affect the cost of merchandise sold?
A.Understated
B.Overstated
C.No change.
D.Only inventory is affected.
Answer:
Most manufacturing plants are considered cost centers because they have control over
A.sales and costs.
B.fixed assets and costs.
C.costs only.
D.fixed assets and sales.
Answer:
The process of recording a transaction in the journal is called
A.recording
B.journalizing
C.posting
D.summarizing
Answer:
Which of the following accounts will not be found on the Cost of Merchandise Sold
section on the Income Statement?
A.Purchases
B.Freight In
C.Sales Returns and Allowances
D.Merchandise Inventory
Answer:
Xavier and Yolanda have original investments of $50,000 and $100,000 respectively in
a partnership. The articles of partnership include the following provisions regarding the
division of net income: interest on original investment at 10%, salary allowances of
$38,000 and $28,000 respectively, and the remainder equally. How much of the net
income of $75,000 is allocated to Xavier?
A.$66,000
B.$40,000
C.$35,000
D.$43,000
Answer:
The Swan Company produces their product at a total cost of $43 per unit. Of this
amount $8 per unit is selling and administrative costs. The total variable cost is $30 per
unit The desired profit is $20 per unit.
Determine the mark up percentage on product cost.
A.80%
B.46.5%
C.70%
D.110%
Answer:
Principal components of a master budget include which of the following?
A.Production budget
B.Sales budget
C.Capital expenditures budget
D.All of the above
Answer:
Mighty Safe Fire Alarm is currently buying 50,000 motherboard from MotherBoard,
Inc. at a price of $65 per board. Mighty Safe is considering making its own boards. The
costs to make the board are as follows: Direct Materials $32 per unit, Direct labor $10
per unit, Variable Factory Overhead $16.00, Fixed Costs for the plant would increase by
$75,000. Which option should be selected and why?
A.Buy – $75,000 more in profits
B.Make – $275,000 increase in profits
C.Buy – $275,000 more in profits
D.Make – $350,000 increase in profits
Answer:
Variances from standard costs are usually reported to:
A.suppliers
B.stockholders
C.management
D.creditors
Answer:
Which equation better describes Target Costing?
A.Selling Price – Desired Profit = Target Costs
B.Selling Price + Profit = Target Costs
C.Target Variable Costs + Contribution Margin = Selling Price
D.Selling Price = Profit – Target Variable Costs
Answer:
Assuming no employees are subject to ceilings for their earnings, Moore Company has
the following information for the pay period of December 15 – 31, 20xx.
Salaries Payable would be recorded for
A.$16,000
B.$ 9,808
C.$10,800
D.$11,040
Answer:
A $150 petty cash fund has cash of $44 and receipts of $93. The journal entry to
replenish the account would include a
A.credit to Petty Cash for $49.
B.debit to Cash for $93.
C.debit to Cash Over and Short for $13.
D.credit to Cash for $44.
Answer:
The independent auditor’s report does which of the following?
A.describes which financial statements are covered by the audit
B.gives the auditor’s opinion regarding the fairness of the financial statements
C.summarizes what the auditor did
D.states that the financial statements were presented on time
Answer:
Tara Company’s budget includes the following credit sales for the current year:
September, $25,000; October, $36,000; November, $30,000; December, $32,000.
Experience has shown that payment for the credit sales is received as follows: 15% in
the month of sale, 60% in the first month after sale, 20% in the second month after sale,
and 5% is uncollectible. How much cash can Tara Company expect to collect in
November as a result of current and past credit sales?
A.$19,700
B.$28,400
C.$30,000
D.$31,100
Answer:
Hakik Enterprises offers rug cleaning services to business clients. Below are the
adjustments data for the year ended July 31, 2010. REQUIRED: Using this information
along with the spreadsheet below, record the adjusting entries in proper general journal
form.
Adjustments:
a) The equipment is estimated to last for 5 years with no salvage value. The asset will
be depreciated evenly over its useful life. Please record one month’s depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
Answer:
Simpson Designers began operations on April 1, 2011. The financial statements for
Simpson Designers are shown below for the month ended April 30, 2011 (the first
month of operations). Determine the missing amounts for letters (a) through (o).
Place your answers in the space provided below. Hint: Use the interrelationships among
the financial statements to solve this problem.
(a) ___________
(b) ___________
(c) ___________
(d) ___________
(e) ___________
(f) ___________
(g) ___________
(h) ___________
(i) ___________
(j) ___________
(k) ___________
(l) ___________
(m) ___________
(n) ___________
(o) ___________
Answer:
Materials used by Square Yard Products Inc. in producing Division 3’s product are
currently purchased from outside suppliers at a cost of $5 per unit. However, the same
materials are available from Division 6. Division 6 has unused capacity and can
produce the materials needed by Division 3 at a variable cost of $3 per unit. A transfer
price of $3.20 per unit is established, and 40,000 units of material are transferred, with
no reduction in Division 6’s current sales.
How much would Square Yard Products total income from operations increase?
A.$32,000
B.$112,000
C.$80,000
D.$150,000
Answer:
Equipment was acquired at the beginning of the year at a cost of $75,000. The
equipment was depreciated using the straight-line method based upon an estimated
useful life of 6 years and an estimated residual value of $7,500.
a) What was the depreciation expense for the first year?
b) Assuming the equipment was sold at the end of the second year for $59,000,
determine the gain or loss on sale of the equipment.
c) Journalize the entry to record the sale.
Answer:
Which of the accounting steps in the accounting process below would be completed
last?
A.preparing the adjusted trial balance
B.posting
C.preparing the financial statements
D.journalizing
Answer:
The balance in Premium on Bonds Payable
A.should be reported on the balance sheet as a deduction from the related bonds
payable
B.should be allocated to the remaining periods for the life of the bonds by the
straight-line method, if the results obtained by that method materially differ from the
results that would be obtained by the interest method
C.would be added to the related bonds payable on the balance sheet
D.should be reported in the paid-in capital section of the balance sheet
Answer:
The recording of the application of factory overhead costs to jobs would include a
credit to:
A.Factory Overhead
B.Wages Payable
C.Work in Process
D.Cost of Goods Sold
Answer:
In evaluating the profit center manager, the income from operations should be
compared:
A.across profit centers
B.to historical performance or budget
C.to the competitor’s net income
D.to the total company earnings per share
Answer:
Assuming that the Morocco Desk Co. purchases 6,000 feet of lumber at $6.00 per foot
and the standard price for direct materials is $5.00, the entry to record the purchase and
unfavorable direct materials price variance is:
A.Direct Materials 30,000
Direct Materials Price Variance 6,000
Accounts Payable36,000
B.Direct Materials30,000
Accounts Payable30,000
C.Direct Materials36,000
Direct Materials Price Variance 6,000
Accounts Payable 30,000
D.Work in Process36,000
Direct Materials Price Variance 6,000
Accounts Payable 30,000
Answer:
Leveraging implies that a company
A.contains debt financing.
B.contains equity financing.
C.has a high current ratio.
D.has a high earnings per share.
Answer:
In a process cost system, the amount of work in process inventory is valued by:
A.finding the sum of all open job costs
B.allocating departmental costs between completed and partially completed units
C.multiplying units in ending inventory by the direct materials cost per unit
D.all of the above
Answer:
All of the following should be considered in a make or buy decision except
A.cost savings
B.quality issues with the supplier
C.future growth in the plant and other production opportunities
D.whether the supplier will make a profit that would no longer belong to the business
Answer:
Nick is admitted to an existing partnership by investing cash. Nick agrees to pay a
bonus for his ownership interest because of the past success of the partnership. When
Nick’s investment in the partnership is recorded
A.his capital account will be credited for more than the cash he invested
B.his capital account will be credited for the amount of cash he invested
C.a bonus will be credited for the amount of cash he invested
D.a bonus will be distributed to the old partners’ capital accounts.
Answer:
The amount of the outstanding checks is included on the bank reconciliation as a(n)
A.deduction from the balance per company’s records
B.addition to the balance per bank statement
C.deduction from the balance per bank statement
D.addition to the balance per company’s records
Answer:
When a firm uses internal auditors, it is adhering to which one of the following internal
control elements?
A.risk assessment
B.monitoring
C.proofs and security measures
D.separating responsibilities for related operations
Answer:
Tough Hardware purchases raw materials and processes those purchases through a
receiving/inspection process prior to stocking for production. Tough places 3 purchase
orders for materials for production and receives the goods that day. The first PO is for
2,500 1/2″´ 96″ milling blanks at $2.75 each. The second is for 4,000 pieces of 48″ x96″
x 1″ sheet steel at $15.55 each. The third PO is for five 55 gallon drums of Milling
Lubrication Oil at $475.00 per barrel.
The receiving/inspection process is completed and the goods are transferred from
Receiving Inventory to Raw Materials. The Receiving/Inspection Department assigns
manufacturing overhead of $55.00 per purchase order as well as $2.75 per piece on
metal goods and $35.00 per container on fluids. All labor is allocated through overhead.
(a) Write the journal entry to purchase and receive these items to Receiving Inventory
on account.
(b) Assign overhead to the metal goods.
(c) Assign overhead to the fluid goods.
(d) Transfer all goods to Raw Materials Inventory.
Answer:
