When a borrower receives the face amount of a discounted note less discount, this
amount is known as:
A.the note proceeds
B.the note discount
C.the note deferred interest
D.the note principal
Answer:
Earnings per share
A.is the net income per common share
B.must be reported by publicly traded companies
C.helps compare companies of different sizes
D.all of the above
Answer:
All of the following statements regarding a horizontal analysis are true except:
A.A horizontal analysis is used to compare an item in a current statement with the same
item in prior statements.
B.A horizontal analysis can be performed on a balance sheet and income statement, but
not on a statement of cash flows.
C.If Fees Earned in 2013 is $125,000 and Fees Earned in 2014 is $143,750, a horizontal
analysis will indicate a 15% increase over this period.
D.When two statement are compared in horizontal analysis, the earlier statement is used
as the base for computing the amount and the percent of change.
Answer:
For the past year, Hornbostel Company had fixed costs of $6,552,000, a unit variable
cost of $444, and a unit selling price of $600. For the coming year, no changes are
expected in revenues and costs, except that a new wage contract will increase variable
costs by $6 per unit. Determine the break-even sales (units) for (a) the past year and (b)
the coming year.
Answer:
Managerial accountants would be responsible for providing the following information:
A.Tax reports to government agencies.
B.Profit reports to owners and management.
C.Expansion of a product line report to management.
D.Consumer reports to customers.
Answer:
Mason Corporation had $650,000 in invested assets, sales of $700,000, income from
operations amounting to $99,000, and a desired minimum rate of return of 15%.
The investment turnover for Mason is:
A.1.08
B..93
C.6.57
D.7.07
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 Yolanda?
A.$66,000
B.$40,000
C.$35,000
D.$43,000
Answer:
Which of the following expenses incurred by the sporting goods department of a
department store is a direct expense?
A.Depreciation expense–office equipment
B.Insurance on inventory of sporting goods
C.Uncollectible accounts expense
D.Office salaries
Answer:
The most widely used depreciation method is
A.straight-line
B.double-declining-balance
C.units-of-production
D.units-of-production or double-declining-balance
Answer:
An unsecured bond is the same as a
A.debenture bond.
B.zero coupon bond.
C.term bond.
D.bond indenture.
Answer:
Record the following selected transactions for April in a two-column journal,
identifying each entry by letter:
(a) Received $18,000 from Katie Long, owner.
(b) Purchased equipment for $27,000, paying $10,000 in cash and giving a note payable
for the remainder.
(c) Paid $2,300 for rent for April.
(d) Purchased $1,500 of supplies on account.
(e) Recorded $9,800 of fees earned on account.
(f) Received $7,500 in cash for fees earned.
(g) Paid $1,200 to creditors on account.
(h) Paid wages of $3,425.
(i) Received $7,900 from customers on account.
(j) Recorded owner’s withdrawal of $1,875.
Answer:
The number of times interest expense is earned is computed as
A.net income plus interest expense, divided by interest expense
B.income before income tax plus interest expense, divided by interest expense
C.net income divided by interest expense
D.income before income tax divided by interest expense
Answer:
Product costs
A.appear only on the balance sheet
B.appear only on the income statement
C.are expensed as costs are incurred for direct labor, direct material and factory
overhead
D.appear on both the income statement and balance sheet
Answer:
Two methods of accounting for uncollectible accounts are the
A.direct write-off method and the allowance method.
B.allowance method and the accrual method.
C.allowance method and the net realizable method.
D.direct write-off method and the accrual method.
Answer:
The phase of accounting system installation in which the information needs of people in
the organization are taken into account is
A.analysis
B.design
C.implementation
D.installation
Answer:
Treasury stock which was purchased for $3,000 is sold for $3,500. As a result of these
two transactions combined
A.income will be increased by $500
B.stockholders’ equity will be increased by $3,500
C.stockholders’ equity will be increased by $500
D.stockholders’ equity will not change
Answer:
The proper journal entry to record the receipt of inventory purchased on account in a
periodic inventory system would be:
A.Jan 1 Merchandise Inventory 1,600
Accounts Payable 1,600
B.Jan 1 Office Supplies 1,600
Accounts Payable 1,600
C.Jan 1 Purchases 1,600
Accounts Payable 1,600
D.Jan 1 Purchases 1,600
Accounts Receivable 1,600
Answer:
A bond indenture is
A.a contract between the corporation issuing the bonds and the underwriters selling the
bonds
B.the amount due at the maturity date of the bonds
C.a contract between the corporation issuing the bonds and the bond trustee, who is
acting on behalf of the bondholders.
D.the amount for which the corporation can buy back the bonds prior to the maturity
date
Answer:
The contribution margin ratio is:
A.the same as the variable cost ratio
B.the same as profit
C.the portion of equity contributed by the stockholders
D.the same as the profit-volume ratio
Answer:
The trial balance is out of balance and the accountant suspects that a transposition or
slide error has occurred. What will the accountant do to find the error?
A.Determine the amount of the error and look for that amount on the trial balance.
B.Determine the amount of the error and divide by two, then look for that amount on
the trial balance.
C.Determine the amount of the error and refer to the journal entries for that amount.
D.Determine the amount of the error and divide by nine. If the result is evenly divided,
then this type of error is likely.
Answer:
A company is preparing its their Cash Budget. The following data has been provided for
cash receipts and payments.
The company’s cash balance at January 1st is $290,000. This company desires a
minimum cash balance of $340,000.
What is the amount of excess cash or deficiency of cash (after considering the
minimum cash balance required) for February?
A.$109,100 deficiency
B.$10,900 excess
C.$900 deficiency
D.$109,100 excess
Answer:
Comparative information taken from the Koda Company financial statements is shown
below:
2012 _ 2011
(a) Notes receivable $ 10,000 $ -0-
(b) Accounts receivable 106,200 90,000
(c) Retained earnings 30,000 (40,000)
(d) Sales 654,000 600,000
(e) Operating expenses 160,000 200,000
(f) Income taxes payable 28,000 20,000
Instructions
Using horizontal analysis, show the percentage change from 2011 to 2012 with 2011 as
the base year.
Answer:
Use the following information in the adjusted trial balance for Stockton Company to
answer the following questions.
Determine total assets.
A.$24,130
B.$15,830
C.$21,930
D.$23,030
Answer:
If the actual direct labor hours spent producing a commodity differs from the standard
hours, the variance is termed a:
A.time variance
B.price variance
C.quantity variance
D.rate variance
Answer:
Percentage analyses, ratios, turnovers, and other measures of financial position and
operating results are
A.a substitute for sound judgment.
B.useful analytical measures.
C.enough information for analysis, industry information is not needed.
D.unnecessary for analysis, but reaction is better.
Answer:
Using the variable cost concept determine the mark-up per unit for 30,000 units using
the following data: Variable cost per unit $15.00, total fixed costs $90,000 and desired
profit $150,000.
A.$10
B.$15
C.$8
D.$23
Answer:
Planning for capital expenditures is necessary for all of the following reasons except:
A.machinery and other fixed assets wear out
B.expansion may be necessary to meet increased demand
C.amounts spent for office equipment may be immaterial
D.fixed assets may fall below minimum standards of efficiency
Answer:
The following totals for the month of June were taken from the payroll register of
Arcon Company:
The entry to record the payment of net pay would include a
A.debit to Salaries Payable for $14,000
B.Debit to Salaries Payable for $9,350
C.Credit to Salaries Expense for $9,350
D.Credit to Salaries Payable for $9,350
Answer:
The following are selected transactions related to purchases on account and cash
payments completed during April of the current year.
(a) Record the transactions, using the accompanying journals.
(b) Total and rule the purchases and cash payments journals as of April 30.
(c) Indicate the method of posting the individual items and the totals of the purchases
and cash payments journals in the following manner:
-1 For individual items and totals to be posted to the subsidiary ledger or not to be
posted, insert a check mark in the Posting Reference column or below the totals.
-2 For individual items and totals to be posted to the general ledger, insert the letter “G”
(as a substitute for specific account numbers) in the Posting Reference column or below
the totals.
Answer:
Following the completion of the bank reconciliation, an adjusting entry was made that
debited cash and credited Interest Revenue. Therefore the bank reconciliation must have
included an item that was
A.deducted from the balance per company’s records
B.deducted from the balance per bank statement
C.added to the balance per bank statement
D.added to the balance per company’s records
Answer:
All of the following are factors that may complicate capital investment analysis except:
A.possible leasing alternatives.
B.changes in price levels.
C.sunk costs.
D.federal income tax ramifications.
Answer:
Credit memos from the bank
A.decrease a bank customer’s account
B.are used to show a bank service charge
C.show that a company has deposited a customer’s NSF check
D.show the bank has collected a note receivable for the customer
Answer:
Department G had 3,600 units, 40% completed at the beginning of the period, 12,000
units were completed during the period, 2,000 units were one-fifth completed at the end
of the period, and the following manufacturing costs were debited to the departmental
work in process account during the period:
Assuming that all direct materials are placed in process at the beginning of production
and that the first-in, first-out method of inventory costing is used, what is the equivalent
units for materials and conversion costs, respectively.
A.14,000 and 12,160
B.10,400 and 10,960
C.14,000 and 13,600
D.10,400 and 10,240
Answer: