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Prepare the required general journal entry to record the following transactions for the
Flaherty Company.
(a.) Incurred $95,000 of factory labor cost which is paid in cash.
(b.) Used $42,000 of direct labor in the grinding department, and $36,000 of direct
labor in the sifting department.
(c.) Used $17,000 of indirect labor.
Answer:
An organizational unit of a factory that has the responsibility for partially
manufacturing or producing a product is called a:
A. Production department.
B. Service department.
C Primary department.
D. Responsibility department.
E. Control department.
Answer:
A financial report that summarizes the amounts and types of costs that were incurred in
the manufacturing process during the period is a:
A. Materiality statement
B. Managerial statement
C. Manufacturing statement
D. Merchandise statement
E. Monetary statement
Answer:
Cash, not including cash equivalents, includes:
A. Postage stamps.
B. Coins, currency, and checking accounts.
C. IOUs.
D. Two-year certificates of deposit.
E. Money market funds.
Answer:
Teller, a calendar year company, purchased merchandise from TechCom on October 17
of the current year. TechCom accepted Teller's $4,800, 90-day, 10% note as payment.
What entry should TechCom make on January 15 of the next year when the note is paid,
assuming an adjusting entry for interest was made for interest on December 31?
A.
B.
C.
D.
E.
Answer:
Assume that a company using a purchases journal made an error in totaling the
journal's columns. The error should be discovered:
A. When the purchases journal is posted to the general ledger.
B. When the trial balance is prepared.
C. When the total of the schedule of accounts payable is compared with the balance of
the Accounts Payable account.
D. When the creditors receive their payments.
E. When the financial statements are prepared.
Answer:
The following special journal is taken from a merchandising company that uses the
perpetual inventory system:
a. What is the name of the journal shown above?
b. Write an explanation for each entry in this journal.
c. What do the numbers in parentheses at the bottom of the journal indicate?
Answer:
Fluffy Pet Grooming deposits all cash receipts on the day when they are received and
all payments are made by check. At the close of business on June 30, its Cash account
shows a $14,811 debit balance. Fluffy Pet Grooming's June 30 bank statement shows
$14,472 on deposit in the bank. Prepare a bank reconciliation for Fluffy Pet Grooming
using the following information:
a. Outstanding checks as of June 30 total $2,261.
b. The June 30 bank statement included a $75 debit memorandum for bank services.
c. Check No. 919, listed with the canceled checks, was correctly drawn for $789 in
payment of a utility bill on June 15. Fluffy Pet Grooming mistakenly recorded it with a
debit to Utilities Expense and a credit to Cash in the amount of $798.
d. The June 30 cash receipts of $2,534 were placed in the banks night depository after
banking hours and were not recorded on the June 30 bank statement.
What is the adjusting journal entry required as a result to record the increase in cash for
the adjusted bank balance?
A. Debit to cash $2,261 credit to accounts receivable $2,261.
B. Credit to accounts receivable $2,261 debit to cash $2,261.
C. No adjusting entry is necessary.
D. Debit to cash $2,534 credit to accounts receivable $2,534.
E. Credit to cash $2,534 credit to accounts receivable $2,534.
Answer:
On October 1, a $30,000, 6%, three-year installment note payable is issued by a
company. The note requires that $10,000 of principal plus accrued interest be paid at the
end of each year on September 30. The issuer's journal entry to record the second
annual interest payment would include:
A. A debit to Interest Expense for $1,800.
B. A debit to Interest Expense for $1,200.
C. A credit to Cash for $11,800.
D. A credit to Cash for $10,000.
E. A debit to Notes Payable for $1,200.
Answer:
Whitman Products and Rockland Industries report the following information at
December 31:
Required:
(a) Which company is a manufacturer? Explain.
(b) Prepare the current asset section of the balance sheet for the manufacturer.
Answer:
The payroll records of a company provided the following data for the weekly pay
period ended December 7:
The FICA Social Security tax rate is 6.2% and the FICA Medicare tax rate is1.45% on
all of this week's wages paid to each employee. The federal and state unemployment tax
rates are 0.8% and 5.4%, respectively, on the first $7,000 paid to each employee.
Prepare the journal entries to (a) accrue the payroll and (b) record payroll taxes
expense.
Answer:
Alpha Co. can produce a unit of Beta for the following costs:
An outside supplier offers to provide Alpha with all the Beta units it needs at $60 per
unit. If Alpha buys from the supplier, Alpha will still incur 40% of its overhead. Alpha
should:
A. Buy Beta since the relevant cost to make it is $72.
B. Make Beta since the relevant cost to make it is $56.
C. Buy Beta since the relevant cost to make it is $48.
D. Make Beta since the relevant cost to make it is $48.
E. Buy Beta since the relevant cost to make it is $56.
Answer:
Teeco Systems Inc. has a limited amount of direct material available for products 1A1
and 2B2. Each unit of 1A1 has a contribution margin of $12 and each unit of 2B2 has a
contribution margin of $30. A unit of 2B2 uses three times as much direct material as a
unit of 1A1. What is Teecos most profitable sales mix, assuming there is unlimited
demand for either product?
A. Make all 2B2.
B. Make all 1A1.
C. Make equal number of units of 1A1 and 2B2.
D. Make three times as many 1A1 as 2B2.
E. Make three times as many 2B2 as 1A1.
Answer:
The standard materials cost to produce one unit of Product K is 7 pounds of material at
a standard price of $32 per pound. In manufacturing 8,000 units, 54,000 pounds of
material were used at a cost of $30 per pound. What is the total direct material cost
variance?
A. $108,000 favorable
B. $ 64,000 favorable
C. $172,000 favorable
D. $ 44,000 favorable
E. $104,000 favorable
Answer:
Ajax Company accumulated the following account information for the year:
Using the above information, total factory overhead costs would be:
A. $9,800
B. $16,800
C. $15,800
D. $13,000
E. $7,800
Answer:
On December 31 of the current year, a company's unadjusted trial balance included the
following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful
Accounts, credit balance of $951. What amount should be debited to Bad Debts
Expense, assuming 6% of outstanding accounts receivable at the end of the current year
will be uncollectible?
A. $951
B. $3,992
C. $4,884
D. $5,835
E. $6,786
Answer:
The deferred income tax liability:
A. Represents income tax payments that are deferred until future years because of
temporary differences between GAAP rules and tax accounting rules.
B. Is a contingent liability.
C. Can result in a deferred income tax asset.
D. Is never recorded.
E. Is recorded whether or not the difference between taxable income and financial
accounting income is permanent or temporary.
Answer:
The overall coordinating activity of the budget process is the responsibility of the:
A. Chief accounting officer
B. Chief executive officer (CEO)
C. Chief financial officer (CFO)
D. Budget committee
E. Board of directors
Answer:
Triple Companys accountant made an entry that included the following items: debit
postage expense $12.42, debit office supplies expense $27.33, credit cash over/short
$2.19. If the original amount in petty cash is $320, how much is in petty cash before the
reimbursement?
A. $320.00
B. $282.44
C. $37.56
D. $39.75
E. $41.94
Answer:
Chad Forrester is a limited partner in a sports management firm. During the previous
year his return on partnership equity was 16%. The beginning balance in his capital
account was $450,000 and his partnership net income for this year was $75,000. What
was the balance in Chad's capital account at the end of last year?
A. $525,000
B. $937,500
C. $487,500
D. $468,750
E. $37,500
Answer:
Given the following information, determine the cost of ending inventory at December
31 using the weighted-average perpetual inventory method. Assume this is the first
month of the company's operations.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 12: 2 units were sold.
A. $17.20
B. $111.80
C. $129.00
D. $94.00
E. $8.60
Answer:
An asset created by prepayment of an expense is:
A. Recorded as a debit to an unearned revenue account.
B. Recorded as a debit to a prepaid expense account.
C. Recorded as a credit to an unearned revenue account.
D. Recorded as a credit to a prepaid expense account.
E. Not recorded in the accounting records until the earnings process is complete.
Answer:
A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount
of paid-in capital in excess of par is:
A. $100
B. $600
C. $1,000
D. $6,000
E. $7,000
Answer:
Based on the following information, determine the current ratio, assuming all accounts
have a normal balance?
A. 1.23
B. 3.58
C. 11.57
D. 12.3
E. 1.57
Answer:
Triple Companys accountant made an entry that included the following items: debit
postage expense $12.42, debit office supplies expense $27.33, credit cash over/short
$2.19. If the original amount in petty cash is $320, how much was the credit to cash for
the reimbursement?
A. $320.00
B. $202.44
C. $37.56
D. $39.75
E. $41.94
Answer:
An additional cost that is incurred only if a particular action is taken is a(n):
A. Period cost
B. Pocket cost
C. Discount cost
D. Incremental cost
E. Sunk cost.
Answer:
Flower Enterprises Inc. expects its three departments to yield the following income for
next year:
Which of the following statements is true regarding Flowers business segments?
A. If Dept. F is eliminated, overall profit will decline $5,000.
B. Overall profit will decline by $2,000 if any one of these segments is eliminated.
C. If Dept. G is eliminated, overall profit will decline $8,000.
D. If Dept. H is eliminated, overall profit will increase $3,000.
E. Eliminating Dept. H will reduce overall profit more than eliminating Dept. F.
Answer:
ABC Corporation had total quick assets of $5,888,000, current assets of $11,700,000,
and current liabilities of $8,000,000. Its acid-test ratio equals:
A. 0.50
B. 0.68
C. 0.74
D. 1.50
E. 2.20
Answer:
Standard costs are:
A. Actual costs incurred to produce a specific product or perform a service.
B. Preset costs for delivering a product or service under normal conditions.
C. Established by the IMA.
D. Rarely achieved.
E. Uniform among companies within an industry.
Answer:
Which of the following accounts is a balance sheet account?
A. Wages Payable
B. Operating Activities
C. Revenues
D. Dividends
E. Expenses
Answer:
The entry to record reimbursement of the petty cash fund for postage expense should
include:
A. A debit to Postage Expense.
B. A debit to Petty Cash.
C. A debit to Cash.
D. A debit to Cash Short and Over.
E. A debit to Supplies.
Answer:
A company has 90 employees and a weekly payroll of $117,000. The FICA-Social
Security tax is 6.2% and the FICA-Medicare tax is 1.45%. The total withholding for
federal income tax is $16,500 for the current week. Calculate the amount of FICA taxes
owed (assume no employee's salary is over the FICA limit) and prepare the journal
entry to accrue this week's salaries expense and withholdings.
Answer:
The first three steps in preparing a departmental income statement are: (1) accumulate
__________________ of the department, (2) allocate __________________ to the
department, and (3) allocate _____________________ to the operating departments.
Answer:
On December 31, 2013, Stable Company sold a piece of equipment that was purchased
on January 1, 2008. The equipment originally cost $820,000 and has an estimated
useful life of eight years. Stable uses the straight-line method of depreciation. What is
the gain/loss on the sale of equipment that Stable will recognize if the equipment was
sold for $230,000?
A $230,000 gain
B. $25,000 loss
C. $25,000 gain
D. $73,750 gain
E. $0; no gain or loss
Answer:
A company has an inventory turnover ratio of 2.90, merchandise inventory for 2014 of
$46,095, and cost of goods sold of $173,420. What is the average inventory?
Answer:
The __________________________ shows expected cash inflows and outflows during
the budget period.
Answer:
The _______________________ ratio is a measure of a segment's profitability and is
calculated as segment operating income divided by segment average assets.
Answer:
The __________________ principle requires that an accounting information system
conform to a company's activities, personnel, and structure and must adapt to a
company's unique characteristics.
Answer:
A company had total assets of $350,000; total liabilities of $101,500; and total equity
of $248,500. Calculate its debt ratio.
Answer:
________ distinct groups of units must be considered in determining the equivalent
units of production under the FIFO method of process costing.
Answer:
A _______________________ overhead rate is a single overhead rate determined by
using volume-related measures.
Answer:
__________________________ costs are amounts the company would not incur if a
segment was eliminated.
Answer:
Legacy Company is considering the production and sale of a new product with the
following sales and cost data: unit sales price $18; unit variable costs $8.10; and total
fixed costs of $8,250. Legacy is subject to a 25% tax rate. Determine the dollar sales
needed to generate an after-tax income of $33,000.
Answer:
Armstrong withdraws from the FAP Partnership. The remaining partners agree to buy
out her share for her capital balance of $35,000. Prepare the journal entry to record the
withdrawal from the partnership.
Answer:
A period's ___________________ becomes the next period's beginning inventory.
Answer:
A company has total fixed costs of $360,000. Its product sells for $40 per unit and
variable costs amount to $25 per unit. What is the break-even point in dollar sales?
Answer:
Following are selected accounts and their balances for a company after the adjustments
as of May 31, the end of its fiscal year. (All accounts have normal balances.)
Prepare all the necessary closing entries for this company.
Answer:
_______________________ are links among computers giving different users and
different computers access to common databases and programs.
Answer:
