Which of the following accounts would appear on a manufacturing statement?
A. Raw materials, factory insurance expired, indirect labor.
B. Raw materials, goods in process, finished goods.
C. Factory buildings, delivery equipment, and depreciation on factory equipment.
D. Direct labor, indirect labor, sales salaries.
E. Direct labor, factory repairs and maintenance, wages payable.
Answer:
During the past year a company had total fixed costs of $70,000. Its product sold for $9
per unit. Variable costs during this time equaled $5 per unit. Next year the company is
anticipating a 4% increase in total fixed costs and a $1 per unit decrease in variable
costs but would like to maintain its current selling price per unit. How many units must
the company sell next year to earn $1 million? (Round answer to complete units.)
A. 119,200
B. 200,000
C. 214,560
D. 268,200
E. 18,200
Answer:
A company has total liabilities of $550 million and total equity of $300 million.
Calculate this company’s debt ratio.
A. 64.7%
B. 100%
C. 54.5%
D. 1.83 to 1
E. The debt ratio cannot be determined without additional information.
Answer:
Throughout an accounting period, the fees for legal services paid in advance by clients
are recorded in an account called Unearned Legal Fees. What is the end-of-period
adjusting entry to record the portion of those fees that have been earned?
A. Debit Cash and credit Legal Fees Earned.
B. Debit Cash and credit Unearned Legal Fees.
C. Debit Unearned Legal Fees and credit Legal Fees Earned.
D. Debit Legal Fees Earned and credit Unearned Legal Fees.
E. Debit Unearned Legal Fees and credit Accounts Receivable.
Answer:
Stated value of no-par stock is:
A. Another name for redemption value.
B. An amount assigned to par value stock by the state of incorporation.
C. The market value of the stock on the date of issuance.
D. The difference between the par value of stock and the amount below or above par
value contributed by the stockholder.
E. An amount assigned to no-par stock by the corporation’s board of directors.
Answer:
Use the following information to calculate cash received from dividends:
A. $26,400
B. $29,000
C. $29,800
D. $30,600
E. $32,400
Answer:
A responsibility accounting report that compares actual costs and expenses for a
department with the budgeted amounts is called a(n):
A. Performance report
B. Service report
C. Income statement
D. Balance sheet
E. Cost report
Answer:
Managerial accounting is different from financial accounting in that:
A. Managerial accounting is more focused on the organization as a whole and financial
accounting is more focused on subdivisions of the organization.
B. Managerial accounting never includes nonmonetary information.
C. Managerial accounting includes many projections and estimates whereas financial
accounting has a minimum of predictions.
D. Managerial accounting is used extensively by investors, whereas financial
accounting is used only by creditors.
E. Managerial accounting is mainly used to set stock prices.
Answer:
A corporation uses a LIFO perpetual inventory system.
August 2, 25 units were purchased at $12 per unit.
August 5, 10 units were purchased at $13 per unit.
August 15, 12 units were sold at $25 per unit.
August 18, 15 units were purchased at $14 per unit.
What was the amount of the ending inventory for the month of August?
A. $496.00
B. $486.00
C. $492.57
D. $300.00
E. $510.00
Answer:
The accounting records of Miller Company provided the data below ($ in 000s).
What is the net cash provided (used) by operating activities?
A. $20,600
B. $27,600
C. $3,800
D. ($27,600)
E. $41,800
Answer:
The Midwest segment of a company had a segment return on assets of 13%. If the
revenues and operating income of this segment were $4 million and $1 million,
respectively, what is the segment’s average total assets amount?
A. $130,000
B. $52,000
C. $30,769,230
D. $7,692,308
E. $23,076,923
Answer:
Prepare general journal entries on December 31 to record the following unrelated
year-end adjustments.
a. Estimated depreciation on office equipment for the year, $4,000.
b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An
examination of insurance policies shows $950 of insurance expired.
c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An
examination of insurance policies shows $600 of unexpired insurance.
d. The company has three office employees who each earn $100 per day for a five-day
workweek that ends on Friday. The employees were paid on Friday, December 26, and
have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31.
e. On November 1, the company received six months’ rent in advance from a tenant
whose rent is $700 per month. The $4,200 was credited to the Unearned Rent account.
f. The company collects rent monthly from its tenants. One tenant whose rent is $750
per month has not paid his rent for December.
Answer:
Which of the following statements is false with regard to the debt ratio?
A. It is of use to both internal and external users of accounting information.
B. A relatively high ratio is always desirable.
C. The dividing line for a high and low ratio varies from industry to industry.
D. Many factors such as the company’s age, stability, profitability, and cash flow
influence the determination of what would be interpreted as a high versus a low ratio.
E. The ratio might be used to help determine if a company is capable of increasing its
income by obtaining further debt.
Answer:
A company uses activity-based costing to determine the costs of its three products: A,
B, and C. The budgeted cost and activity for each of the companys three activity cost
pools are shown in the following table:
Which of the following statements is true regarding this companys activity rates?
A. The activity rate under the activity-based costing system for Activity 2 is $2.00.
B. The activity rate under the activity-based costing system for Activity 2 is $16.00.
C. The activity rate under the activity-based costing system for Activity 2 is $1.50.
D. The activity rate under the activity-based costing system for Activity 2 is $19.50.
E. The activity rate under the activity-based costing system for Activity 2 is $2.81.
Answer:
Outstanding checks refer to checks that have been:
A. Written, recorded, sent to payees, and received and paid by the bank.
B. Written and not yet recorded in the company books.
C. Held as blank checks.
D. Written, recorded on the company books, sent to the customer, supplier, or creditor
but not yet paid by the bank.
E. Issued by the bank.
Answer:
Congress passed the Sarbanes-Oxley Act to
A. Provide jobs to U.S. accountants and limit the number of jobs sent outside the
country.
B. Impose penalties on CEO’s and CFO’s who knowingly sign off on bogus accounting
reports, although at this time the penalties are token amounts.
C. Help curb financial abuses at companies that issue their stock to the public.
D. Force auditors to attest to the absolute accuracy of the financial statements.
E. Require that all companies publicly disclose their internal control plans.
Answer:
Reference: 21_05
A job was budgeted to require three hours of labor per unit at $8 per hour. The job
consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of
$198,000.
What is the labor rate variance?
A. $22,000 unfavorable
B. $16,000 unfavorable
C. $6,000 unfavorable
D. $16,000 favorable
E. $22,000 favorable
Answer:
A company had a $22,000 favorable direct labor efficiency variance during a time
period when the standard rate per direct labor hour was $22 and the actual rate per
direct labor hour was $21. If the standard direct labor hours allowed for production
were 5,000 what is the amount of actual direct labor cost during this period?
A. $84,000
B. $88,000
C. $100,000
D. $105,000
E. $110,000
Answer:
On August 31, 2013, Victory Corporation’s common stock is priced at $30 per share
before any stock dividend or split, and the stockholders’ equity section of its balance
sheet appears as follows. Assume that the company declares and immediately
distributes a 100% stock dividend.
What is the total amount in the Retained Earnings account immediately after the stock
dividend?
A. $266,000
B. $532,000
C. $366,000
D. $100,000
E. $0
Answer:
An asset is:
A. Only acquired with cash.
B. Something the company owns.
C. Only contributed by stockholders.
D. A companys obligation to pay.
E. Is also called contributed capital.
Answer:
Which of the following is a TRUE statement concerning a company’s financial
statements?
A. Balance sheet and income statement data combined contain the complete financial
picture of a given company.
B. A trial balance is another name for a balance sheet.
C. Another name for the income statement is the earnings statement.
D. Dividends paid to a company’s shareholders are shown on the income statement.
E. The balance sheet shows the financial position of a company for a period of time.
Answer:
Reference: 23_02
Parker Plumbing has received a special one-time order for 1,500 faucets (units) at $5
per unit. Parker currently produces and sells 7,500 units at $6.00 each. This level
represents 75% of its capacity. Production costs for these units are $4.50 per unit, which
includes $3 variable cost and $1.50 fixed cost. To produce the special order, a new
machine needs to be purchased at a cost of $1,000 with a zero salvage value.
Management expects no other changes in costs as a result of the additional production.
If Parker wishes to earn $1,250 on the special order, the size of the order would need to
be:
A. 4,500 units.
B. 2,250 units
C. 1,125 units
D. 625 units
E. 300 units
Answer:
Given the following information, determine the cost of goods sold at December 31
using the weighted-average perpetual inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit.
December 15: 20 units were purchased at $10.15 per unit.
December 22: 18 units were sold at $35 per unit.
A. $282.30
B. $332.10
C. $281.25
D. $290.70
E. $210.30
Answer:
The difference between actual and standard cost caused by the difference between the
actual quantity and the standard quantity is called the:
A. Controllable variance.
B. Standard variance.
C. Budget variance.
D. Quantity variance.
E. Price variance.
Answer:
Which of the following is not one of the four steps in accounting for production activity
in a period?
A. Determine over- or underapplied overhead.
B. Analyze the physical flow of units.
C. Analyze equivalent units.
D. Determine cost per equivalent unit.
E. Prepare a cost reconciliation.
Answer:
Corona Company’s balance sheet accounts follow:
What is Corona Companys debt to equity ratio for 2013?
A. 1.49
B. .71
C. .40
D. 4.39
E. .67
Answer:
Reference: 23_03
Teague Plumbing has received a special one-time order for 1,500 toilets (units) at $75
per unit. Teague currently produces and sells 7,500 units at $100 each. This level
represents 75% of its capacity. Production costs for these units are $75 per unit, which
includes $70 variable cost and $5 fixed cost. To produce the special order, shipping
costs of $10,000 will be incurred. Management expects no other changes in costs as a
result of the additional production.
Should the company accept the special order?
A. No, because additional production would exceed capacity.
B. No, because incremental costs exceed incremental revenue.
C. Yes, because incremental revenue exceeds incremental costs.
D. Yes, because incremental costs exceed incremental revenues.
E. No, because the incremental revenue is too low.
Answer:
Reference: 21_06
The following information describes a company’s use of direct labor in a recent period:
The direct labor cost variance is:
A. $28,000 favorable
B. $28,000 unfavorable
C. $45,000 unfavorable
D. $45,000 favorable
E. $17,000 unfavorable
Answer:
For each of the following separate cases, use the information provided to calculate the
missing cash inflow or cash outflow:
(a)
(b)
(c)
Answer:
Plant assets are:
A. Current assets
B. Used in operations
C. Natural resources
D. Long-term investments
E. Intangible
Answer:
The appropriate section in the statement of cash flows for reporting the cash payment
of wages is:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Schedule of noncash investing or financing activity.
E. None of these as this is not reported on the statement of cash flows.
Answer:
Northern Company is preparing a cash budget for June. The company has $12,000 cash
at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash
disbursements during June. Northern Company has an agreement with its bank to
maintain a cash balance of at least $10,000. As of May 31, the company owes $15,000
to the bank. To maintain the $10,000 required balance, during June the company must:
A. Borrow $4,500
B. Borrow $2,500
C. Borrow $10,000
D. Repay $7,500
E. Repay $2,500
Answer:
If Jefferson Company paid a bonus equal to 6.5% of net income after bonuses and the
total bonus distributed was $560,000, how much was net income for the year?
Answer:
From the information given, prepare a November income statement.
On November 1 of the current year, Lois Bell began Lois Bell, Interior Design as a
corporation with an initial investment of $50,000 cash. On November 30 her records
showed the following (alphabetically arranged) selected accounts and amounts:
Answer:
Identify at least three reasons for managers to favor the internal rate of return (IRR)
over other capital budgeting approaches.
Answer:
Converting receivables to cash before they are due is usually done by either (1)
_______________________ or (2) ________________________________.
Answer:
The rate for FICA Social Security is 6.2% and the rate for FICA Medicare is 1.45%.
Calculate the total amount of FICA withholding for an employee whose pay is $2,400
and is entirely subject to these FICA taxes.
Answer:
An overstated beginning inventory will ______________ cost of goods sold and
_____________ net income.
Answer:
______________________ are procedures set up to protect company property and
equipment, ensure reliable accounting reports, promote efficiency, and encourage
adherence to company policies.
Answer:
Long-term investments in available-for-sale securities are reported using their _______
on the balance sheet.
Answer:
If a 60-day note receivable is dated September 22, what is the maturity date of the
note?
Answer:
Reference: 21_08
Fairfield Co. has collected the following information about its production activities for
the current year:
Actual costs and quantities:
Direct materials used 95,000 lbs. @ $6.30 per lb.
Units completed during the year, 50,000 units
Standard costs and quantities:
Price per lb. of direct material, $6.05
Two lbs. of direct material per unit
Prepare the journal entry to record the direct materials purchases and the issuance of
direct materials into production.
Answer:
A company purchased two new trucks for a total of $250,000 on January 1, 2013. The
company paid $40,000 cash and gave a $210,000, three-year, 8% note for the remaining
balance. The note is to be paid in three annual end-of-year payments beginning
December 31, 2013. Assume the annual installment payments are to consist of equal
amounts of principal plus accrued interest. Prepare a note amortization table using the
format below.
Answer:
____________________________ are debt and equity securities that a company
intends to actively manage and trade for a profit.
Answer:
Cheshire, Inc., allocates fixed overhead at a rate of $18 per direct labor hour. This
amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units. During
May, Cheshire produced 5,500 units. Budgeted fixed overhead is $66,000, and
overhead incurred was $67,000.
Required:
Determine the volume variance for May.
Answer:
What is the difference between an opportunity cost and a sunk cost?
Answer:
Describe the flow of overhead costs in a process cost accounting system, including
accounts used.
Answer:
On October 1, 2011, Smith invested $20,000 cash, office equipment costing $15,000,
and drafting equipment costing $12,000 into the company in exchange for common
stock. Show the general journal entry to record this transaction.
Answer:
A corporation had the following stock outstanding when the company’s board of
directors declared a $95,000 cash dividend in the current year:
Allocate the cash dividend between the preferred and common stockholders assuming
the preferred stock is noncumulative and nonparticipating.
Answer:
Discuss how technology-based information systems affect accounting.
Answer:
Renton Co. uses special journals to record its transactions. They use the perpetual
inventory system. Shown below are the purchasing and cash disbursement transactions
for current month of May:
Record these transactions in the following journals:
Answer:
