A process of examining the differences between actual and budgeted costs and
describing them in terms of the amounts that resulted from price and quantity
differences is called:
A. Cost analysis.
B. Flexible budgeting.
C. Variable analysis.
D. Cost variable analysis.
E. Cost variance analysis.
Answer:
An account used to record the owners’ investments in the business is called:
A. Dividends
B. Common Stock
C. Revenue
D. Expense
E. Liability
Answer:
The following data are available for a company’s manufacturing activities:
Assume the company uses FIFO inventory. If materials are added when the production
process begins and direct labor is applied uniformly throughout the process, what are
the equivalent units for direct materials and for direct labor, respectively?
A. 16,250; 19,250
B. 16,250; 21,750
C. 21,000; 19,250
D. 19,250; 18,750
E. 21,000; 22,250
Answer:
Dell Builders manufactures each house to customer specifications. It most likely would
use:
A. Capital process costing.
B. A periodic inventory system.
C. Unique costing.
D. Job order costing.
E. Activity-based costing.
Answer:
At acquisition, debt securities are:
A. Recorded at their cost, plus total interest that will be paid over the life of the security.
B. Recorded at the amount of interest that will be paid over the life of the security.
C. Recorded at cost.
D. Not recorded, because no interest is due yet.
E. Recorded at the amount of dividend income to be received.
Answer:
The following information is available for the Edwards Company for its March 31
bank reconciliation:
From the March 31 bank statement:
NSF: A check from a customer, Cook Co. in payment of their account.
IN: Interest earned on the account.
From the Edwards Company’s accounting records:
a. Based on the above information, prepare a bank reconciliation for the Edwards
Company.
b. Prepare the necessary general journal entries to adjust cash to the reconciled balance.
Answer:
Orange Company uses a plantwide overhead rate with machine hours as the allocation
base. Use the following information to solve for the amount of machine hours estimated
per unit of product Q.
A. 35 MH per unit of Q.
B. .50 MH per unit of Q.
C. 70 MH per unit of Q.
D. 5 MH per unit of Q.
E. 30 MH per unit of Q.
Answer:
A partnership agreement:
A. Is not binding unless it is in writing.
B. Is the same as a limited liability partnership.
C. Is binding even if it is not in writing.
D. Does not generally address the issue of the rights and duties of the partners.
E. Is also called the articles of incorporation.
Answer:
The useful life of a plant asset is:
A. The length of time it is used productively in a company’s operations.
B. Never related to its physical life.
C. Its productive life, but not to exceed one year.
D. Determined by the FASB.
E. Determined by law.
Answer:
Shamrock Company had net income of $30,000. On January 1, there were 8,000 shares
of common stock outstanding. On April 1, the company issued an additional 2,000
shares of common stock. The company declared a $2,700 dividend on its
noncumulative, nonparticipating preferred stock. There were no other stock
transactions. The company has an earnings per share of:
A. $2.87
B. $2.73
C. $3.41
D. $3.16
E. $3.75
Answer:
A company uses the retail inventory method and has the following information
available concerning its most recent accounting period:
(a) What is the cost-to-retail ratio using the retail method?
(b) What is the estimated cost of the ending inventory?
Answer:
A plan that states the number of units to be manufactured during each future period
covered by the budget, based on the budgeted sales for the period and the levels of
inventory needed to support future sales, is the:
A. Sales budget.
B. Merchandise purchases budget.
C. Production budget.
D. Cash budget.
E. Manufacturing budget.
Answer:
Which of the following accounts would not be on the post- closing trial balance?
A. Accounts Payable
B. Accounts Receivable
C. Common Stock
D. Dividends
E. Retained Earnings
Answer:
The total amount of cash and other assets received by a corporation from its
stockholders in exchange for common stock is:
A. Always equal to its par value.
B. Always equal to its stated value.
C. Referred to as contributed capital.
D. Referred to as retained earnings.
E. Always below its stated value.
Answer:
A company uses a job order cost accounting system and applies overhead on the basis
of direct labor cost. At the end of a recent period, the company’s Goods in Process
Inventory account appeared as follows:
Write in the blanks for the following:
A. The total cost of the direct materials, direct labor, and factory overhead applied in
the December 31 goods in process inventory is $_______________________.
B The company’s overhead application rate is __________________%
C Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had
$________ of direct materials cost.
D. Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had
$________ of factory overhead cost.
Answer:
Match each of the following terms with the appropriate definitions:
A) Payroll register
B) Current liabilities
C) Payroll bank account
D) Warranty
E) Gross pay
F) Employee benefits
G) Deferred income tax liability
H) Federal depository bank
I) Times interest earned
J) Short-term note payable
Answer:
A given project requires a $28,500 investment and is expected to generate end-of-period
annual cash inflows of $12,000 for each of three years. Assuming a discount rate of
10%, what is the net present value of this investment? Selected present value factors for
a single sum are shown in the table below:
A. $0.00
B. $2,668.00
C. ($7,461.00)
D. $1,341.60
E. $29,841.60
Answer:
What would be the account balance in the Cash account after the following
transactions, assuming a zero beginning balance?
A. $124,250
B. $80,150
C. $78,250
D. $79,200
E. $80,450
Answer:
At the end of the day, the cash register’s record shows $1,250, but the count of cash in
the cash register is $1,245. The correct entry to record the cash sales for the day is:
A.
B.
C.
D.
E.
Answer:
The inventory turnover ratio is calculated as:
A. Cost of goods sold divided by average merchandise inventory.
B. Sales divided by cost of goods sold.
C. Ending inventory divided by cost of goods sold.
D. Cost of goods sold divided by ending inventory.
E. Cost of goods sold divided by ending inventory times 365.
Answer:
If a company had income before interest and taxes in the amount of $2,345,540 and a
times interest earned ratio of 5.2, what is the total amount of the companys interest
expense?
A. $451,065
B. $320,185
C. $121,968
D. $275,840
E. $230,000
Answer:
A company established a direct material standard of 2 pounds of material at a cost of $6
per pound for unit produced. During August the company produced 6,000 units of
product; 10,000 pounds of direct material that cost $6.50 per pound were used in the
production process. Compute the direct material price variance for August.
A. $5,000 unfavorable
B. $12,000 unfavorable
C. $5,000 favorable
D. $12,000 favorable
E. $7,000 favorable
Answer:
Data pertaining to a company’s joint manufacturing process for the current period
follows:
What cost amount should be allocated to Product A for this period’s $660 of joint costs
on the basis of market value at the point of separation?
A. $330.00
B. $440.00
C. $220.00
D. $194.12
E. $484.00
Answer:
A component of operating efficiency and profitability, calculated by expressing net
income as a percent of net sales, is equal to the:
A. Acid-test ratio
B. Merchandise turnover
C. Price earnings ratio
D. Accounts receivable turnover
E. Profit margin ratio
Answer:
Which of the following items would appear on the income statement?
A. Common stock, service revenue, retained earnings, accounts payable, and unearned
revenue.
B. Cash, supplies, prepaid rent, accounts receivable, office equipment, utilities expense,
and shaving equipment.
C. Common stock, cash, supplies, prepaid rent, retained earnings, accounts payable,
accounts receivable, office equipment, unearned revenue, and shaving equipment.
D. Service revenue and utilities expense.
E. Service revenue, unearned revenue, and utilities expense.
Answer:
Collins and Farina are forming a partnership. Collins is investing a building that has a
market value of $80,000 and a book value of $65,000. However, the building carries a
$56,000 mortgage that will be assumed by the partnership. Farina is investing $20,000
cash. Total capital in the partnership will be:
A. $80,000
B. $24,000
C. $56,000
D. $44,000
E. $60,000
Answer:
The days’ sales uncollected ratio is used to:
A. Measure how many days of sales remain until the end of the year.
B. Determine the number of days that have passed without collecting on accounts
receivable.
C. Identify the likelihood of collecting sales on account.
D. Estimate how much time is likely to pass before the amount of accounts receivable is
collected.
E. Measure the amount of layaway sales for a period.
Answer:
The following is a list of accounts and identification letters A through J for Shannon
Management Co.:
Use the form below to identify the type of account and its normal balance. The first
item is filled in as an example.
Type of Account Normal Balance
Asset Liability Equity Debit Credit
Answer:
The Fireside Country Inn is a very popular destination for tourists. The Inn requires
guests to make reservations at least two months in advance of their stay. A 20 percent
down payment is required at the time the reservation is made. When should this inn
recognize room rental revenue?
A. On the date the reservation is received.
B. On the date the money for the reservation is received.
C. On the date the guests stay in the inn.
D. On the date the guests pay the remaining 80 percent due.
E. Once all cash has been received.
Answer:
Use the following company information to calculate its net cash provided or used by
investing activities:
(a) Equipment with a book value of $125,000 and an original cost of $220,000 was sold
at a gain of $22,000.
(b) Paid $49,000 cash for a new truck.
(c) Sold land costing $30,000 for $26,000 cash, realizing a $4,000 loss.
(d) Purchased treasury stock for $53,000 cash.
(e) Long-term investments in stock are sold for $41,000 cash, realizing a gain of
$3,500.
Answer:
How can the use of absorption costing result in overproduction?
Answer:
Erlander Company uses a job order cost accounting system. On November 1, $15,000
of direct materials and $3,500 of indirect materials were requisitioned for production.
Prepare the general journal entry to record this requisition.
Answer:
A partnership designed to protect innocent partners from malpractice or negligence
claims resulting from the acts of other partners is a ____________________________
partnership.
Answer:
A company has an inventory turnover ratio of 2.81, merchandise inventory for 2014 of
$93,303, and average inventory of $83,397. What is the cost of goods sold?
Answer:
A cost-plus method of determining a products selling price adds a
_________________________ to total product cost to reach a target price.
Answer:
Beginning inventory plus the net cost of purchases is the _____________________.
Answer:
List the main principles of internal controls.
Answer:
When excess capacity exists, managers should accept a special order if the special order
price exceeds the ________________________.
Answer:
Explain the role of accounting in the information age.
Answer:
A company reported average total assets of $496,000 in 2012 and $604,000 in 2013. Its
net operating cash flow was $41,150 in 2012 and $55,500 in 2013. Calculate its cash
flow on total assets ratio for both years. Comment on the results.
Answer:
Describe how accounts receivable arise and how they are accounted for, including the
use of a subsidiary ledger and an allowance account.
Answer:
Explain what a predetermined overhead allocation rate is, how it is calculated, and why
it is used.
Answer:
Foreign exchange rates fluctuate due to changing _______________ and ___________
conditions.
Answer:
Walters Industries manufactures a product that contains part XYZ. The company has
always purchased this part from a supplier for $70 each. Walters recently upgraded its
own manufacturing capabilities and now has enough excess capacity (including trained
workers) to begin manufacturing the part instead of buying it. The company prepared
the following per unit cost projections of making the part, assuming that overhead is
allocated to the part at the normal predetermined overhead rate of 60% of direct labor
cost:
The required volume of output to produce the parts will not require any incremental
fixed overhead. Incremental variable overhead cost is $4.50 per part. Should Walters
make or buy the parts?
Answer:
Unsecured bonds are also called ____________________ and are backed by the
issuer’s general credit standing.
Answer:
Dawls Corporation reported stockholders’ equity on December 31 of the prior year as
follows:
The following selected transactions occurred during the current year:
Prepare a statement of retained earnings as of December 31 of the current year.
Answer:
A ____________________ is a part of a company that is separately identified by its
products or services or by the geographic market it serves.
Answer:
A ____________________ is a noncorporate business that is owned by only one
person.
Answer: