Production and sales estimates for June are as follows:
The number of units expected to be manufactured in June is:
A.15,500
B.17,500
C.16,500
D.13,500
Answer:
If the buyer is to pay the freight costs of delivering merchandise, delivery terms are
stated as
A.FOB shipping point
B.FOB destination
C.FOB n/30
D.FOB buyer
Answer:
Abbott Company uses the allowance method of accounting for uncollectible accounts.
Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, 2010,
the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2010,
Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of
$100,000. There were no Sales Returns or Sales Discounts during the year. After the
adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be
A.$1,200
B.$3,000
C.$3,600
D.$7,200
Answer:
Benson and Orton are partners who share income in the ratio of 2:3 and have capital
balances of $60,000 and $40,000 respectively. Ramsey is admitted to the partnership
and is given a 40% interest by investing $20,000. What is Benson’s capital balance after
admitting Ramsey?
A.$20,000
B.$24,000
C.$48,800
D.$71,200
Answer:
Production and sales estimates for April are as follows:
The number of units expected to be manufactured in April is:
A.11,500
B.10,000
C.12,500
D.13,500
Answer:
Sinking Fund Income is reported in the income statement as
A.income from operations
B.extraordinary
C.gain on sinking fund transactions
D.other income
Answer:
If a fixed asset, such as a computer, were purchased on January 1st for $3,750 with an
estimated life of 3 years and a salvage or residual value of $150, the journal entry for
monthly expense under straight-line depreciation is:
(Note: EOM indicates the last day of each month.)
A.EOM Depreciation Expense 100
Accumulated Depreciation 100
B.EOM Depreciation Expense 1,200
Accumulated Depreciation 1,200
C.EOM Accumulated Depreciation 1,200
Depreciation Expense 1,200
D.EOM Accumulated Depreciation 100
Depreciation Expense 100
Answer:
A check drawn by a company in payment of a voucher for $965 was recorded in the
journal as $695. This item would be included in the bank reconciliation as a(n)
A.deduction from the balance per the company’s records
B.addition to the balance per the bank statement
C.deduction from the balance per the bank statement
D.addition to the balance per the company’s records
Answer:
Contractors who sell to government agencies would be most likely to use which of the
following cost concepts in pricing their products?
A.Variable cost
B.Product cost
C.Total cost
D.Fixed cost
Answer:
Jacks Corporation purchases $200,000 bonds plus accrued interest for 2 months of
$2,000 from Kennedy Company on March 1. The bonds have an annual interest rate of
6% payable on June 30 and December 31. The entry to record the purchase of the bonds
would include:
A.Interest Receivable debit $2,000
B.Investment in Bonds debit $202,000.
C.Cash debit $200,000
D.Interest Revenue credit $2,000.
Answer:
ABC Corporation has three service departments with the following costs and activity
base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
How much service department cost would be allocated to the Macro Division?
A.$405,000
B.$175,000
C.$130,000
D.$305,000
Answer:
In accordance with the debit and credit rules, which of the following is true?
A.Debits increase assets.
B.Credits increase assets.
C.Debits increase both assets and capital.
D.Credits increase both assets and liabilities.
Answer:
Cash dividends paid on capital stock would be reported in the statement of cash flows
in
A.the cash flows from financing activities section
B.the cash flows from investing activities section
C.a separate schedule
D.the cash flows from operating activities section
Answer:
What term is used to describe the process of developing the organization’s objectives
and translating those into courses of action?
A.Supervising
B.Planning
C.Improving
D.Decision making
Answer:
If a company values inventory at the lower of cost or market, which of the following is
the value of merchandise inventory on the balance sheet? Apply the
lower-of-cost-or-market method to inventory as a whole.
A.$6,960
B.$7,700
C.$6,540
D.$7,280
Answer:
If variable costs per unit decreased because of a decrease in utility rates, the break-even
point would:
A.decrease
B.increase
C.remain the same
D.increase or decrease, depending upon the percentage increase in utility rates
Answer:
Which of the items below would appear in the Income Statement columns of the work
sheet?
A.Equipment
B.Unearned Fees
C.Prepaid Expense
D.Net Loss
Answer:
The present value of $30,000 to be received in two years, at 12% compounded annually,
is (rounded to nearest dollar)
A.$23,916
B.$37,632
C.$23,700
D.$30,000
Answer:
Below is a table for the present value of $1 at Compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, if an investment is made now for $23,500 that will generate a
cash inflow of $8,000 a year for the next 4 years, what would be the net present value
(rounded to the nearest dollar) of the investment, (assuming an earnings rate of 10%)?
A.$23,500
B.$16,050
C.$25,360
D.$1,860
Answer:
The formula to compute direct materials price variance is to calculate the difference
between
A.actual costs – (actual quantity * standard price)
B.actual cost + standard costs
C.actual cost – standard costs
D.(actual quantity * standard price) -standard costs
Answer:
Which of the following concepts of cash is not appropriate to use in preparing the
statement of cash flows?
A.cash
B.cash and money market funds
C.cash and cash equivalents
D.cash and U.S. treasury bonds
Answer:
Accompanying the bank statement was a debit memo for bank service charges. What
entry is required in the company’s accounts?
A.debit Miscellaneous Administrative Expense; credit Cash
B.debit Cash; credit Other Income
C.debit Cash; credit Accounts Payable
D.debit Accounts Payable; credit Cash
Answer:
Jackson and Campbell have capital balances of $100,000 and $300,000 respectively.
Jackson devotes full time and Campbell one-half time to the business. Determine the
division of $120,000 of net income under each of the following assumptions:
(a) No agreement as to division of net income.
(b) In ratio of capital balances.
(c) In ratio of time devoted to business.
(d) Interest of 10% on capital balances and remainder equally.
(e) Interest of 10% on capital balances, salaries of $40,000 to Jackson and $20,000 to
Campbell, and the remainder equally.
Answer:
Which of the following is not an advantage of the average rate of return method?
A.It is easy to use.
B.It takes into consideration the time value of money.
C.It includes the amount of income earned over the entire life of the proposal.
D.It emphasizes accounting income.
Answer:
Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts
journal as $2,300. What entry is required in the company’s accounts?
A.debit Sales; credit Cash
B.debit Cash; credit Accounts Receivable
C.debit Cash; credit Sales
D.debit Accounts Receivable; credit Cash
Answer:
What is the major difference between a periodic and perpetual inventory system?
A.Under the periodic inventory system, the purchase of inventory will be debited to the
Purchases account
B.Under the periodic inventory system, no journal entry is recorded at the time of the
sale of inventory for the cost of the inventory.
C.Under the periodic inventory system, all adjustments such as purchases returns and
allowances and discounts are reconciled at the end of the month.
D.All are correct.
Answer:
On the chart of accounts, the balance sheet accounts are normally listed in the following
order
A.liabilities, assets, owner’s equity
B.assets, liabilities, owner’s equity
C.owner’s equity, assets, liabilities
D.assets, owner’s equity, liabilities
Answer:
Budgets need to be fair and attainable for employees to consider the budget important
in their normal daily activities. Which of the following is not considered a human
behavior problem?
A.Setting goals among managers that conflict with one another.
B.Setting goals too tightly making it difficult to meet performance expectation.
C.Allowing employees the opportunity to be a part of the budget process.
D.Allowing goals to be so low that employees develop a ‘spend it or lose it” attitude.
Answer:
The difference between the balance of a fixed asset account and the related accumulated
depreciation account is termed
A.historical cost
B.contra asset
C.book value
D.market value
Answer:
Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. The records further indicate that direct materials, direct labor,
and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000,
respectively. In addition, work in process at the beginning of the period for Department
1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs into Department 1 during the period for
direct labor is:
A.Work in Process–Department 165,000
Wages Payable65,000
B.Wages Payable125,000
Work in Process–Department 1125,000
C.Work in Process–Department 1125,000
Wages Payable125,000
D.Wages Payable65,000
Work in Process–Department 165,000
Answer:
Work in process inventory increased by $20,000 during 2011. Cost of goods
manufactured was $180,000. Total manufacturing costs incurred in 2011 are:
A.$198,000
B.$160,000
C.$189,000
D.$200,000
Answer:
After posting the second closing entry to the income summary account, the balance will
be equal to
A.zero.
B.owner’s equity.
C.revenues for the period
D.the net income or (loss) for the period.
Answer: