1) The use of subsidiary ledgers is limited to Accounts Payable and Accounts
Receivable.
2) An advantage of the current ratio is that it considers the makeup of the current assets.
3) Indirect costs can be specifically identified to a cost object.
4) A clean audit opinion is the same as a qualified audit opinion.
5) A staff department has no direct authority over a line department.
6) For purposes of analysis, mixed costs can generally be separated into their variable
and fixed components.
7) The balances of the capital accounts from the Adjusted Trial Balance of the work
sheet are extended to the Statement of Owners Equity columns.
8) Changes in technology, machinery, or production methods may make past cost data
irrelevant when setting standards.
9) Prime costs consist of factory overhead and direct labor.
10) Financial accounting provides information to all users, while the main focus for
managerial accounting is to provide information to the management.
11) A secured bond is called a debenture bond and is backed only by the general
creditworthiness of the corporation.
12) Costs are transferred, along with the units, from one work in process inventory
account to the next in a process costing system.
13) If the standard to produce a given amount of product is 1,000 units of direct
materials at $11 and the actual was 800 units at $12, the direct materials price variance
was $800 unfavorable.
14) If the standard to produce a given amount of product is 2,000 units of direct
materials at $12 and the actual was 1,600 units at $13, the direct materials quantity
variance was $5,200 favorable.
15) A company is considering purchasing a machine for $21,000. The machine will
generate income from operations of $2,000; annual cash flows from the machine will be
$3,500. The payback period for the new machine is 10.5 years.
16) The accounting cycle requires three trial balances be done. In what order should
they be prepared?
A.Post-closing, unadjusted, adjusted
B.Unadjusted, post-closing, adjusted
C.Unadjusted, adjusted, post-closing
D.Post-closing, adjusted, unadjusted
17) Which of the following activity bases would be the most appropriate for gasoline
costs of a delivery service, such as United Postal Service?
A.Number of trucks employed
B.Number of miles driven
C.Number of trucks in service
D.Number of packages delivered
18) When a company receives an interest-bearing note receivable, it will
A.debit Notes Receivable for the maturity value of the note
B.debit Notes Receivable for the face value of the note
C.credit Notes Receivable for the maturity value of the note
D.credit Notes Receivable for the face value of the note
19) Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of Xs and
35,000 units of Ys. Related data are:
What was Rusty Co.s weighted average unit selling price?
A.$180.00
B.$75.00
C.$100.00
D.$110.00
20) Current liabilities are
A.due, but not receivable for more than one year
B.due, but not payable for more than one year
C.due and receivable within one year
D.due and payable within one year
21) The process of rewriting the information from the journal into the ledger is called
A.sliding
B.transposing
C.journalizing
D.posting
22) 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 6,000Accounts Payable 30,000
23) The standard factory overhead rate is $10 per direct labor hour ($8 for variable
factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000
direct labor hours. The standard cost and the actual cost of factory overhead for the
production of 5,000 units during May were as follows:
What is the amount of the factory overhead controllable variance?
A.$10,000 favorable
B.$2,500 unfavorable
C.$10,000 unfavorable
D.$2,500 favorable
24) At the end of the fiscal year, the balance in Factory Overhead is small. This balance
would normally be:
A.transferred to Work in Process
B.transferred to Cost of Goods Sold
C.transferred to Finished Goods
D.allocated between Work in Process and Finished Goods
25) Poobah Manufacturers Inc. has estimated total factory overhead costs of $95,000
and 10,000 direct labor hours for the current fiscal year. If job number 117 incurred
2,300 direct labor hours, the work in process account will be debited and factory
overhead will be credited for:
A.$21,850
B.$2,300
C.$95,000
D.cannot be determined
26) Businesses that are separated into two or more manageable units in which managers
have authority and responsibility for operations are said to be:
A.decentralized
B.consolidated
C.diversified
D.centralized
27) On November 15th, Great Designs Company purchased an advertising campaign
for the month of December. Great Designs paid cash of $2,700 in advance. The
advertising campaign ran in December.
(a) Prepare all necessary journal entries for the advertising campaign for November and
December .
(b) Explain why you prepared this/these journal entries.
28)
Calculate the fixed factory overhead volume variance using the above information:
A.$1,701 Favorable
B.$4,866.75 Unfavorable
C.$1,701 Unfavorable
D.$4,866.75 Favorable
29) The means by which the accounting system collects, summarizes, and reports
accounting information is called information
A.reporting methods
B.accounting methods
C.control methods
D.processing methods
30) Which of the following financial statements reports information as of a specific
date?
A.income statement
B.statement of owner’s equity
C.statement of cash flows
D.balance sheet
31) 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
32) The balance sheets at the end of each of the first two years of operations indicate
the following:
If net income is $115,000 and interest expense is $30,000 for 2012, what are the
earnings per share on common stock for 2012, (round to two decimal places)?
A.$2.07
B.$1.92
C.$1.77
D.$1.64
33) Indicate how the following transactions affect the accounting equation:
(a) The purchase of supplies on account.
(b) The purchase of supplies for cash.
(c) A withdraw by the owner to pay personal expenses.
(d) Revenues received in cash.
(e) Revenues received on account.
34) For the year ending December 31, 2010, Nathan Clinical Supplies Co. mistakenly
omitted adjusting entries for (1) $8,900 of unearned revenue that was earned, (2) earned
revenue that was not billed of $10,200, and (3) accrued wages of $7,000. Indicate the
combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for
2010.
35) On August 1, Jones Corporations packaging department had Work in Process
inventory of 8,000 units that were 75% complete with respect to materials and 30%
complete with respect to conversion costs. The cost of these units was $99,525 ($62,000
transferred-in from previous departments, $28,775 in materials, and $8,750 in labor and
overhead). During August, 125,000 units were transferred into the department. These
units had accumulated costs in previous departments of $1,418,560. The packaging
department incurred costs of $799,225 for materials and $498,010 for conversion costs
in August and transferred 131,000 units out of the department. The 2,000 units
remaining in ending inventory are 50% complete with respect to materials and 20%
complete with respect to conversion costs. Jones Corporation uses the average cost
method to cost its inventories.
Required
a. Calculate the cost per equivalent unit for transferred-in costs, materials, and
conversion costs.
b. Calculate the cost of the units transferred out of the department.
c. Calculate the cost of the ending inventory.
36) Moon Shoe Factory is an investment center and is responsible for all of their net
income and the use of their assets. In 2012, the invested assets totaled $475,000 and net
income was $125,000. What is the rate of return on assets?
A.26.3%
B.25.0%
C.4.0%
D.380.0%
37) Which of the following is NOT a way in which process and job order cost systems
are similar?
A.Both accumulate product costs–direct materials, direct labor, and factory overhead
B.Both allocate product cost to units produced
C.Both maintain perpetual inventories
D.Both use job order cost cards
38) Balance sheet and income statement data indicate the following:
Based on the data presented above, what is the number of times bond interest charges
were earned (round to two decimal places)?
A.5.67
B.4.33
C.3.24
D.3.50
39) An employee receives an hourly rate of $15, with time and a half for all hours
worked in excess of 40 during the week. Payroll data for the current week are as
follows: hours worked, 46; federal income tax withheld, $110; cumulative earnings for
the year prior to this week, $24,500; Social security tax rate, 6% on maximum of
$100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment
compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .
8% on the first $7,000. What is the net amount to be paid to the employee?
A.$569.87
B.$539.00
C.$625.00
D.$544.88
40) One of the accounting concepts upon which deferrals and accruals are based is
A.matching
B.cost
C.price-level adjustment
D.conservatism
41) The amount of cash to be reported on the balance sheet at June30 is the
A.total of the cash column in the cash receipts journal as ofJune 30
B.adjusted balance appearing in the bank reconciliation for June30
C.total of the cash column in the cash payments journal as of June 30
D.balance as of June 30 on the bank statement
42) Production and sales estimates for April are as follows:
The budgeted total sales for April is:
A.$200,000
B.$230,000
C.$270,000
D.$250,000
43) On March 1, a business paid $3,600 for a twelve month liability insurance policy.
On April 1 the same business entered into a two-year rental contract for equipment at a
total cost of $18,000. Determine the following amounts:
(a) insurance expense for the month of March
(b) prepaid insurance as of March 31
(c) equipment rent expense for the month of April
(d) prepaid equipment rental as of April 30
44) Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of
Arks and 56,000 units of Bins. Related data are:
What was Carter Co.’s weighted average unit selling price?
A.$200
B.$100
C.$ 80
D.$ 88
45) All of the following qualitative considerations may impact upon capital investment
analysis except:
A.time value of money
B.employee morale
C.the impact on product quality
D.manufacturing flexibility
46) Identify four capital investment analysis models discussed in the chapter and
discuss the strengths and weaknesses of each model.
47) The net present value has been computed for Proposals P and Q. Relevant data are
as follows:
Determine the present value index for each proposal. Round your answers to two
decimal places.
48) The inventory at May 1 and the costs charged to Work in Process–Department B
during May for Stella Company are as follows:
During May, all direct materials are transferred from Department A, the units in process
at May 1 were completed, and of the 55,000 units entering the department, all were
completed except 6,000 units which were 70% completed. Inventories are costed by the
first-in, first-out method.
Prepare a cost of production report for May. Round unit cost data to four decimal places
and total cost to nearest cent.
49) Revenue and expense data for Young Technologies are as follows:
Required:
50) Prepare an income statement for the year ended December 31, 2012, through gross
profit for Aframe Company using the following information. Assume Aframe Company
sold 8,600 units at $125 per unit. (Note: Normal production is 9,000 units)
51) Clanton Company engaged in the following transactions during 2011. Record each
in the general journal below:
1) On January 3, 2011, Clanton purchased a copyright from Dalton Company with a
cost of $250,000 with a remaining useful life of 25 years.
2) On January 10, 2011, Clanton purchased a trademark from Felton Company with a
cost of $700,000.
3) On July 1, 2011, Clanton purchased a patent from Garrison Company at a cost of
$80,000. The remaining legal life of the patent is 15 years and the expected useful life is
11 years.
4) On July 2, 2011, Clanton paid $30,000 in legal fees to defend the patent protection
purchased on July 1, 2011.
5) Recorded the appropriate amortization for the intangible assets for 2011.
6) Clanton Company includes an asset in its ledger recorded when Clanton purchased a
computer service business at a price in excess of the fair value of the assets of the
company in the amount of $400,000. At December 31, 2011, $100,000 of this asset has
become impaired.
52) The Finishing Department of Pinnacle Manufacturing Co. prepared the following
factory overhead cost budget for October of the current year, during which it expected
to operate at a 100% capacity of 10,000 machine hours:
During October, the plant was operated for 9,000 machine hours and the factory
overhead costs incurred were as follows: indirect factory wages, $16,400; power and
light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of
plant and equipment, $8,800; insurance and property taxes, $3,200.
Prepare a factory overhead cost variance report for October. (The budgeted amounts for
actual amount produced should be based on 9,000 machine hours.)
53) Krammer Company has liabilities equal to one fourth of the total assets. Krammers
owners equity is $45,000. Using the accounting equation, what is the amount of
liabilities for Krammer?