An unfavorable volume variance may be due to a failure of supervisors to maintain an
even flow of work.
Answer:
In a process costing system, indirect materials are charged to Work in Process.
Answer:
Managers use managerial information to evaluate performance of a company’s
operation.
Answer:
The depreciable cost of a building is the same as its acquisition cost.
Answer:
A payment system that uses computerized electronic impulses to effect a cash
transaction is called electronic funds transfer (EFT).
Answer:
Each account in the cost ledger in a job order system is called a job cost sheet.
Answer:
Accounts receivable contributed to the partnership are recorded at their face value.
Answer:
The specific identification inventory method should be used when the inventory
consists of identical, low cost units that are purchased and sold frequently.
Answer:
If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even
point amount to $2,500,000, and the maximum possible sales are $3,300,000, the
margin of safety is 11,500 units.
Answer:
The balance in Retained Earnings at the end of the period is created by closing entries.
Answer:
In a computerized accounting system, a work sheet may not be necessary because the
software program automatically posts entries to the accounts and prepares financial
statements.
Answer:
Ordinarily, a corporation owning a significant portion of the voting stock of another
corporation accounts for the investment using the equity method.
Answer:
When estimated costs are used in applying the cost-plus approach to product pricing,
the estimates should be based upon ideal levels of performance.
Answer:
The first budget to be prepared is usually the production budget.
Answer:
Sales Discounts is a revenue account with a credit balance.
Answer:
The excess of the cash flowing in from revenues over the cash flowing out for expenses
is termed net discounted cash flow.
Answer:
The journal entry to record the cost of warranty repairs that were incurred during the
current period, but related to sales made in prior years, includes a debit to Warranty
Expense.
Answer:
Comprehensive income does not affect net income or retained earnings.
Answer:
The dollars available from each unit of sales to cover fixed cost and profit is the unit
variable cost.
Answer:
The term B2C refers to transactions conducted between two companies.
Answer:
Other receivables include non trade receivables such as loans to company officers.
Answer:
If the proceeds from the sale of bond investments exceeds the carrying amount of the
bonds, a gain is realized.
Answer:
Direct materials, direct labor, and factory overhead are assigned to each manufacturing
process in a process costing system.
Answer:
The chart of accounts, the journal, and the ledger are essential parts of the accounting
system.
Answer:
Whenever a partnership is dissolved, the assets are liquidated.
Answer:
Accounting systems evolve through a three-step process: analysis, design and feedback.
Answer:
Treasury Stock is listed in the stockholders’ equity section onthe balance sheet.
Answer:
Differential analysis can aid management in making decisions on a variety of
alternatives, including whether to discontinue an unprofitable segment and whether to
replace usable plant assets.
Answer:
A fixed asset’s market value is reflected in the Balance Sheet.
Answer:
A company pays $6,500 for two season tickets on September 1. If $2,500 is earned by
December 31, the adjusting entry made at that time is debit Cash, $2,500 and credit
Ticket Revenue, $2,500.
Answer:
Under the periodic inventory system, the merchandise inventory account continuously
discloses the amount of inventory on hand.
Answer:
Transfer prices may be used when decentralized units are organized as cost, profit, or
investment centers.
Answer:
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 quantity variance was
$2,200 unfavorable.
Answer:
The report on internal control required by the Sarbanes-Oxley Act of 2002 may be
prepared by either management or the company’s auditors.
Answer:
In most business organizations, the chief accountant is called the controller.
Answer:
The time expected to pass before the net cash flows from an investment would return its
initial cost is called the amortization period.
Answer:
The classified Balance Sheet will divide its Liabilities Section as the following
subsections
A.Current Liabilities and Long-Term Liabilities
B.Current Liabilities and Other Liabilities
C.Other Liabilities and Long-Term Liabilities
D.Present Liabilities and Tomorrow’s Liabilities
Answer:
Ruby Company produces a chair that requires 5 yds. of material per unit. The standard
price of one yard of material is $7.60. During the month, 8,500 chairs were
manufactured, using 40,000 yards at a cost of $7.50. Determine the (a) price variance,
(b) quantity variance, and (c) cost variance.
Answer:
Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners
have capital totaling $34,000 before admitting Lambert. After distribution of the bonus,
what is Lambert’s capital?
A.$18,000
B.$20,000
C.$6,667
D.$11,333
Answer:
Which of the following journals is called an all-purpose journal?
A.General journal
B.Purchases journal
C.Revenue journal
D.Accounting journal
Answer:
For the year ended December 31, 2014 Depot Max’s cost of merchandise sold was
$56,900. Inventory at the beginning of the year was $6,540. Ending inventory was
$7,250. Compute Depot Max’s inventory turnover for the year.
A.8.7
B.7.8
C.8.3
D.44
Answer:
Present entries to record the selected transactions described below:
(a) Issued $2,750,000 of 10-year, 8% bonds at 97.
(b) Amortized bond discount for a full year, using the straight-line method.
(c) Called bonds at 98. The bonds were carried at $2,692,250 at the time of the
redemption.
Answer:
Use the following information in the adjusted trial balance for Stockton Company to
answer the following questions.
Determine the net income (loss) for the period.
A.Net Income $9,250
B.Net Loss $790
C.Net Loss $5,670
D.Net Income $3,580
Answer:
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
Answer:
Operating expenses directly traceable to or incurred for the sole benefit of a specific
department and usually subject to the control of the department manager are termed:
A.miscellaneous administrative expenses
B.direct expenses
C.indirect expenses
D.fixed expenses
Answer:
Which method for evaluating capital investment proposals reduces the expected future
net cash flows originating from the proposals to their present values and computes a net
present value?
A.Net present value
B.Average rate of return
C.Internal rate of return
D.Cash payback
Answer:
If sales are $525,000, variable costs are 53% of sales, and operating income is $50,000,
what is the contribution margin ratio?
A.47%
B.26.5%
C.9.5%
D.53%
Answer:
Identify the following costs as a (a) product cost or (b) period cost for a cake factory.
1 _____ Frosting
2 _____ Baker’s wages
3 _____ Advertising fees
4 _____ Transportation out
Answer:
If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000,
what is the operating leverage?
A.2.5
B.7.5
C.2.0
D.0
Answer:
The amount of income that would result from an alternative use of cash is called:
A.differential income
B.sunk cost
C.differential revenue
D.opportunity cost
Answer:
An extraordinary item results from
A.a segment of the business being sold.
B.corporate income tax being paid.
C.a change from one accounting method to another acceptable accounting method.
D.a transaction or event that is unusual and occurs infrequently.
Answer:
Using accrual accounting, expenses are recorded and reported only
A.when they are incurred, whether or not cash is paid
B.when they are incurred and paid at the same time
C.if they are paid before they are incurred
D.if they are paid after they are incurred
Answer:
All of the following would probably be considered a direct material except:
A.steel
B.fabric
C.glue
D.lumber
Answer:
The following data is given for the Stringer Company:
Overhead is applied on standard labor hours.
The direct material quantity variance is:
A.22,800F
B.22,800U
C.52,000F
D.52,000U
Answer:
In the manufacture of 15,000 units of a product, direct materials cost incurred was
$165,000, direct labor cost incurred was $105,000, and applied factory overhead was
$53,500. What is the total conversion cost?
A.$270,000
B.$158,500
C.$323,500
D.$53,500
Answer:
The ability of a business to pay its debts as they come due and to earn a reasonable
amount of income is referred to as
A.solvency and leverage
B.solvency and profitability
C.solvency and liquidity
D.solvency and equity
Answer:
On January 1, 2015, Yeargan Company obtained an $125,000, seven year 5%
installment note from Farmers Bank. The note requires annual payments of $21,602,
with the first payment occurring on the last day of the fiscal year. The first payment
consists of $6,250 interest and principal repayment of $15,352.
Requirement:
Answer:
As of January 1 of the current year, the Grackle Company had accounts receivables of
$50,000. The sales for January, February, and March were as follows: $120,000,
$140,000 and $150,000. 20% of each month’s sales are for cash. Of the remaining 80%
(the credit sales), 60% are collected in the month of sale, with remaining 40% collected
in the following month. What is the total cash collected (both from accounts receivable
and for cash sales) in the month of February?
A.$129,600
B.$62,400
C.$133,600
D.$91,200
Answer:
Identify each of the following as relating to (a) the control environment, (b) risk
assessment, or (c) control procedures.
1) Mandatory vacations
2) Personnel policies
3) Report of outside consultants on future market changes
Answer:
If the amount of factory overhead cost incurred exceeds the amount applied, the factory
overhead account will have a:
A.debit balance and be underapplied
B.credit balance and be underapplied
C.credit balance and be overapplied
D.debit balance and be overapplied
Answer:
The maturity value of a $40,000, 9%, 40-day note receivable dated July 3 is
A.$40,000
B.$40,400
C.$43,600
D.$44,000
Answer:
Based on the following data and using a 365-day year, compute (a) the accounts
receivable turnover and (b) the number of days’ sales in receivables. The industry
average is a collection period of once every 20 days, and the number of days’ sales in
receivables averages (c) Comment on this situation.
Answer:
On April 2nd a corporation purchased for cash 5,000 shares of its own $10 par common
stock at $16 a share. They sold 3,000 of the treasury shares at $19 a share on June 15th.
The remaining 2,000 shares were sold on November 10th for $12 a share.
Answer:
Three identical units of Item Magnesium XP are purchased during May, as shown
below.
Assume that two units are sold on May 23 for $313. Determine the gross profit for May
and ending inventory on May 31 using (a) FIFO, (b) LIFO, and (c) average cost
methods.
Answer:
Franco and Jason share income and losses in a 2:1 ratio after allowing for salaries to
Franco of $15,000 and $30,000 to Jason. If the partnership suffers a $15,000 loss, by
how much would Jason’s capital account increase?
A.$10,000
B.$20,000
C.$40,000
D.$25,000
Answer:
As of January 1 of the current year, the Grackle Company had accounts receivables of
$50,000. The sales for January, February, and March of 2012 were as follows:
$120,000, $140,000 and $150,000. 20% of each month’s sales are for cash. Of the
remaining 80% (the credit sales), 60% are collected in the month of sale, with
remaining 40% collected in the following month. What is the total cash collected (both
from accounts receivable and for cash sales) in the month of January?
A.$$74,000
B.$110,000
C.$71,600
D.$131,600
Answer:
Which of the following is an example of direct labor cost for an airplane manufacturer?
A.Cost of oil lubricants for factory machinery
B.Cost of wages of assembly worker
C.Salary of plant supervisor
D.Cost of jet engines
Answer:
On March 4, of the current year, Barefoot Bay, Inc. reacquired 5,000 shares of its
common stock at $89 per share. On August 7, Barefoot Bay sold 3,500 of the
reacquired shares at $100 per share. The remaining 1,500 shares were sold at $88 per
share on November
Answer:
Match each of the following investment terms with the appropriate definition below.
Answer:
Match each of the following terms with the best definition given below.
Answer:
The Supplies account had a beginning balance of $1,750. Supplies purchased during the
period totaled $3,500. At the end of the period before adjustment, $350 of supplies were
on hand. Prepare the adjusting entry for supplies.
Answer:
Robin Company purchased and used 500 pounds of direct materials to produce a
product with a 520 pound standard direct materials requirement. The standard materials
price is $1.90 per pound. The actual materials price was $2.00 per pound. Prepare the
journal entries to record (1) the purchase of the materials and (2) the material entering
production. Robin records standards and variances in the general ledger.
Answer:
Match each of the following terms with the best definition.
Answer:
Journalize the entries to record the following selected equity investment transactions
completed by Perry Company during 2012. Perry accounts for this investment using the
cost method.:
Answer:
Organize the following accounts into the usual sequence of a chart of accounts.
Miscellaneous Expense
Accounts Payable
Accounts Receivable
Cash
Alecia Morris, Capital
Fees Earned
Prepaid Rent
Salaries Expense
Unearned Revenue
Alecia Morris, Drawing
Answer:
Why is the sales budget usually prepared first?
Answer:
For each of the following businesses, explain how a purchase journal might be modified
for the specific business.
1) North County Medical Center
2) Tri-County Farms, Inc.
3) Prescott’s Quick Lube and Tire Store
Answer:
A company reports the following:
Determine the company’s earnings per share on common stock.
Answer:
Given the following data, prepare the journal entry to record interest expense and any
related amortization on December 31st of the first year using the effective method.
Assume interest is paid annually on January 1. The bonds were issued on January 1 for
$7,411,233.
Bonds Payable $8,000,000 (matures in 10 years)
Contract rate = 5%
Yield = 6%
Round answers to nearest dollar.
Answer:
Watson Company has the following data:
Show how you would calculate the amount of Direct Materials Used.
Answer:
Name and describe the four primary financial statements for a proprietorship.
Answer:
Townson Company had gross wages of $200,000 during the week ended December The
amount of wages subject to social security tax was $180,000, while the amount of
wages subject to federal and state unemployment taxes was $24,000. Tax rates are as
follows:
The total amount withheld from employee wages for federal taxes was $32,000.
Answer:
