1) Northington, Inc. is preparing the company’s statement of cash flows for the fiscal
year just ended. Using the following information, determine the amount of cash flows
from financing activities:
A.($168,000).
B.$200,000.
C.$168,000.
D.($191,700).
E.$191,700.
2) Which of the following items does not represent a difference between financial and
managerial accounting?
A.Users of the information.
B.Flexibility of reporting.
C.Timeliness of information.
D.Focus of the information.
E.Managerial accounting does not use the financial information from the financial
accounting system.
3) Powers Company reported Net sales of $1,200,000 and average Accounts
Receivable, net of $78,500. The accounts receivable turnover ratio is:
A.0.65 times.
B.14.3 times.
C.28.6 times.
D.15.3 times.
E.16.3 times.
4) Match the following terms with the definitions.
1)The potential benefits lost by taking a specific action when two or more alternative
choices are available.
2)A series of cash flows of equal dollar amount over equal time periods.
3)An estimate of an asset’s value to the company; computed by discounting the future
net cash flows from the investment the project’s required rate of return and then
subtracting the initial amount invested.
4)A cost that requires a future outlay of cash and is relevant for current and future
decision making.
5)An additional cost incurred if a company pursues a certain course of action.
6)A cost that cannot be avoided or changed because it arises from past decision;
irrelevant to future decisions.
A> Out-of-pocket cost
B> Annuity
C> Net present value
D> Sunk cost
E> Incremental cost
F> Opportunity cost
5) The accountant for Mandarin Company is preparing the company’s statement of cash
flows for the fiscal year just ended. The following information is available:
What is the amount of cash dividends paid that should be reported in the financing
section of the statement of cash flows?
A.$42,000.
B.$43,000.
C.$63,000.
D.$1,000.
E.$41,000.
6) Williams Company computed its cost per equivalent unit for direct materials to be
$2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000
units of product were completed and transferred out as finished goods during the
month, and 36,000 of equivalent units remained unfinished at the end of the month. The
amount that should be reported in Finished Goods Inventory is:
A.$650,000.
B.$135,000.
C.$1,816,100.
D.$1,587,500.
E.$228,600.
7) The controlling investor is called the:
A.Owner.
B.Subsidiary.
C.Parent.
D.Investee.
E. Senior entity.
8) All of the following are necessary for budgets to be effective except:
A.Goals should be attainable.
B.Employees affected by a budget should be consulted when it is prepared.
C.Evaluations should be made carefully with opportunities to explain differences
between actual and budgeted amounts.
D.Managers must be aware of potential negative outcomes of budgeting, such as
budgetary slack.
E.All budgeted amounts must be spent to ensure that budgets aren’t reduced for the next
period.
9) Two investment centers at Marshman Corporation have the following current-year
income and asset data:
A.578.3%
B.24.1%
C.17.3%
D.39.2%
E.19.1%
10) Jerry’s Butcher Shop had the following assets and liabilities at the beginning and
end of the current year:
If Jerry invested an additional $12,000 in the business during the year, but withdrew no
assets during the year, what was the amount of net income earned by Jerry’s Butcher
Shop?
11) Preferred stock on which the right to receive dividends is forfeited for any year that
the dividends are not declared is referred to as:
A.Participating preferred stock.
B.Callable preferred stock.
C.Cumulative preferred stock.
D.Convertible preferred stock.
E.Noncumulative preferred stock.
12) All of the following statements regarding manufacturing costs are true except:
A.Direct material costs that increase in total with volume of production are called
variable costs.
B.The reporting of fixed and variable costs separately is not helpful to managers in
analyzing cost behavior.
C.When overhead costs vary with production, they are called variable overhead.
D.When overhead costs don’t vary with production, they are called fixed overhead.
E.Overhead can be both variable and fixed.
13) A company sells merchandise on credit for $6,000. The merchandise cost is $3,400.
The journal that the transaction would be recorded in is the:
A.Cash disbursements journal.
B.Sales journal.
C.Cash receipts journal.
D.Purchases journal.
E.General journal.
14) On December 1, Williams Company borrowed $45,000 cash from Second National
Bank by signing a 90-day, 9% note payable.
a. Prepare Williams’ journal entry to record the issuance of the note payable.
b. Prepare Williams’ journal entry to record the accrued interest due at December 31.
c. Prepare Williams’ journal entry to record the payment of the note on March 1 of the
next year.
15) Marlow Company purchased a point of sale system on January 1 for $3,400. This
system has a useful life of 10 years and a salvage value of $400. What would be the
book value of the asset at the end of the first year of its useful life using the
double-declining-balance method?
A.$680.
B.$2,320.
C.$2,720.
D.$600.
E.$300.
16) Mustang Corporation has accumulated the following accounting data for the month
of April:
The cost of goods sold for the year is:
A.$169,300.
B.$108,900.
C.$59,700.
D.$120,100.
E.$144,700.
17) On January 1, Year 1, Stratton Company borrowed $100,000 on a 10-year, 7%
installment note payable. The terms of the note require Stratton to pay 10 equal
payments of $14,238 each December 31 for 10 years. The required general journal
entry to record the first payment on the note on December 31, Year 1 is:
A.Debit Interest Expense $7,000; debit Notes Payable $7,238; credit Cash $14,238.
B.Debit Notes Payable $7,000; debit Interest Expense $7,238; credit Cash $14,238.
C.Debit Notes Payable $10,000; debit Interest Expense $7,000; credit Cash $17,000.
D.Debit Notes Payable $14,238; credit Cash $14,238.
E.Debit Notes Payable $10,000; debit Interest Expense $4,238; credit Cash $14,238.
18) A ___________ inventory system updates the accounting record for inventory only
at the end of an accounting period.
19) Match the following terms with the definitions.
20) Mary’s Antiques does not have its own retail location, instead maintains inventory
in its warehouse and sells merchandise through Oldtime Antique Mall. Oldtime does
not assume responsibility for goods until they are sold to customers at which time it
takes a commission for items sold and sends the sale proceeds to Mary’s. Identify which
company has the role of the consignor and the consignee. Which company should
include any unsold goods as part of its inventory?
21) One of the main differences between the calculation of cost of goods sold for a
merchandiser and that of a manufacturer is that the calculation includes cost of goods
purchased for the merchandiser, but the manufacturer replaces that with
__________________________.
22) Conklin plans to leave the CAP Partnership. The recorded value of his capital
account is $48,000. The remaining partners Arthurs and Preston agree to pay Conklin
$40,000 cash and Conklin accepts. The partners share income and loss equally. Prepare
the general journal entry to record the withdrawal from the partnership.
23) A company reported net income of $318,000, operating cash flows of $218,000,
total cash flows of $184,000, and average total assets of $898,000. Calculate its cash
flow on total assets ratio.
24) Alex Reagent, owner of Delectable Candy Company, understands that accounting
systems are important for success. Explain how Alex can use the accounting system to
assess business operations.
25) ______________ are amounts owed to suppliers for products or services purchased
on credit.
26) Lafayette Company’s experience shows that 20% of its sales are for cash and 80%
are on credit. An analysis of credit sales shows that 50% are collected in the month
following the sale, 45% are collected in the second month, and 5% prove to be
uncollectible. Calculate the following.