1) Outstanding checks, deposits in transit, deductions for bank fees, additions for
interest, and errors are all factors that can cause the bank statement balance for a
checking account to be different from the company’s checking account balance.
2) A flexible budget expresses all costs on a per unit basis, regardless of cost behavior.
3) Horizontal analysis is used to reveal changes in the relative importance of each
financial statement item.
4) The debt-to-equity ratio is calculated by dividing total stockholders’ equity by total
liabilities.
5) Payments of FUTA are made quarterly to a federal depository bank if the total
amount due exceeds $500.
6) A company paid $9,000 for a twelve-month insurance policy on February 1. The
policy coverage began on February 1. On February 28, $750 of insurance expense must
be recorded.
7) Permanent accounts carry their balances into the next accounting period.
8) A worksheet can be helpful in showing the effects of proposed or “what if”
transactions but not in helping to prepare interim financial statements.
9) The master budget includes individual budgets for sales, production or purchases,
various expenses, capital expenditures, and cash.
10) All stock dividends are recorded at par value so there would never be a credit to the
paid-in capital in excess of par value account.
11) The following selected financial information for a company was reported for the
current year end. Calculate the following company ratios:
(a) Accounts receivable turnover.
(b) Inventory turnover.
(c) Days’ sales uncollected
12) The interest accrued on $7,500 at 6% for 90 days is:
A.$450.00.
B.$37.50.
C.$112.50.
D.$11.25.
E.$1,800.00.
13) Sales variance analysis is used by managers for:
A.Planning purposes only.
B.Budgeting purposes only.
C.Control purposes only.
D.Planning and control purposes.
E.Planning and budgeting purposes.
14) The checklist of steps necessary for approving an invoice for recording and
payment, also known as the check authorization, is the
A.Purchase requisition.
B.Purchase order.
C.Invoice.
D.Receiving report.
E.Invoice approval.
15) On January 1, $300,000 of par value bonds with a carrying value of $310,000 is
converted to 50,000 shares of $5 par value common stock. The entry to record the
conversion of the bonds includes all of the following entries except:
A.Debit to Bonds Payable $310,000.
B.Debit to Premium on Bonds Payable $10,000.
C.Credit to Common Stock $250,000.
D.Credit to Paid-In Capital in Excess of Par Value, Common Stock $60,000.
E.Debit to Bonds Payable $300,000.
16) A company’s beginning Work in Process inventory consisted of 20,000 units that
were 20% complete with respect to direct labor. These beginning units were completed
and another 90,000 units were started during the current period. Of those started, 60,000
were finished and the remaining 30,000 were 40% complete at the end of the period.
Using the weighted-average method, the equivalent units of production with regard to
direct labor were:
A.60,000.
B.74,000.
C.76,000.
D.92,000.
E.96,000.
17) Juniper Company uses a perpetual inventory system. The company purchased
$9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned
$1,500 worth of merchandise. On August 16, it paid the full amount due. The correct
journal entry to record the purchase on August 7 is:
A.Debit Merchandise Inventory $9,750; credit Cash $9,750.
B.Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750.
C.Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash
$8,250.
D.Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.
E.Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise
Inventory $9,750.
18) How long a company holds inventory before selling it can be measured by dividing
cost of goods sold by the average inventory balance to determine the:
A.Accounts receivable turnover.
B.Inventory turnover.
C.Days’ sales uncollected.
D.Current ratio.
E.Price earnings ratio.
19) The comparative income statements for Silverlight Company are shown below.
Calculate the following ratios for 2016:
(a) profit margin
(b) gross margin
(c) times interest earned.
20) On December 31, 2015 Winters Company received a $385 bill for the purchase of
supplies in December that it will not pay for until January 15. The adjusting entry
needed on December 31 to accrue this cost is:
A.Debit Supplies $385; credit Accounts Payable $385.
B.Debit Accounts Payable $385; credit Supplies $385.
C.Debit Accounts Payable $385; credit Cash $385.
D.Debit Supplies Expense $385; credit Cash $385.
E.Debit Supplies Expense $385; credit Supplies $385.
21) Georgia Inc., has collected the following data on one of its products. The actual cost
of the direct materials used is:
A.$133,750.
B.$150,000.
C.$106,250.
D.$158,750.
E.$120,000.
22) Miley Block is a building consultant. Shown below are (a) several accounts in her
ledger with each account preceded by an identification number, and (b) several
transactions completed by Block. Indicate the accounts debited and credited when
recording each transaction by placing the proper account identification numbers to the
right of each transaction.
23) _______________ bonds have specific assets of the issuing company pledged as
collateral.
24) Harley’s Antique Shop had net sales of $772,000. The gross profit was $415,000.
Calculate Harley’s cost of goods sold.
25) _________________________ leases are short-term or cancelable leases in which
the lessor retains the risks and rewards of ownership.
26) The __________________________ is the rate that yields a net present value of
zero for an investment.
27) On May 1 of the current year, a company paid $200,000 cash to purchase 6%,
10-year bonds with a par value of $200,000; interest is paid semiannually each May 1
and November 1. The company intends to hold these bonds until they mature. Prepare
the journal entry to record the bond purchase.
28) Able Graphics received a $400 utility bill for the current month’s electricity. It is not
due until the end of the next month which is when they intend to pay it. Which of the
following general journal entries will Able Graphics make to record this transaction?
29) _______________ refers to the expected proceeds from converting an asset into
cash.
30) Information for Stanton, Inc., as of December 31 follows. Prepare a schedule of
cost of goods manufactured for the year ended December 31.
31) On January 1, a company borrowed $50,000 cash by signing a 7% installment note
that is to be repaid in 5 annual end-of-year payments of $12,195. The first payment is
due on December 31. Prepare the journal entries to record the first and second
installment payments.
32) Describe the adjusting entries, including the accounts used, for 1) accrued expenses
and 2) accrued revenues.