1) The sales budget for Modesto Corp. shows that 20,000 units of Product A and 22,000
units of Product B are going to be sold for prices of $10 and $12, respectively. The
desired ending inventory of Product A is 20% higher than its beginning inventory of
2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending
inventory of B is 3,000 units. Budgeted purchases of Product B for the year would be:
A.24,500 units.
B.22,500 units.
C.16,500 units.
D.26,500 units.
E.20,500 units.
2) The salaries of employees who spend all their time working in one department are:
A.Variable expenses.
B.Indirect expenses.
C.Direct expenses.
D.Responsibility expenses.
E.Unavoidable expenses.
3) The unadjusted trial balance of Rapido Delivery is entered on the partial work sheet
below. Complete the work sheet using the following information:
(a) Salaries earned by employees that are unpaid and unrecorded, $5,000.
(b) An inventory of supplies showed $1,000 of unused supplies still on hand.
(c) Depreciation on delivery vans, $24,000.
(d) Services paid in advance by customers of $10,000 have now been provided to
customers.
4) If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and
budgeted cost of goods sold is $10,260, budgeted purchases should be:
A.$860
B.$1,100
C.$1,960
D.$9,160
E.$11,360
5) The adjusted trial balance of Carson’s Internet Services follows:
(a) Prepare the four closing entries necessary.
(b) What is the balance of Carson Gaines’ capital account after the closing entries are
posted?
6) Features of a job costing system include all but which of the following:
A.Diversity of products produced.
B.Mass production.
C.Heterogeneity.
D.Customization.
E.Separate manufacturing from other products.
7) Evaluation of company performance can include comparison and/or assessment of all
but which of the following?
A.Past performance.
B.Current performance.
C.Current financial position.
D.Future performance and risk.
E.External user needs and demands.
8) Landmark Corp. buys $300,000 of Schroeter Company’s 8% five-year bonds payable
at par value on September 1. Interest payments are made semiannually. Landmark plans
to hold the bonds for the five year life. When the bonds mature, the journal entry to
record the proceeds will be:
A.Debit Long-Term Investments-HTM $300,000; credit Cash $300,000.
B.Debit Cash $300,000; credit Interest Revenue $300,000.
C.Debit Cash $300,000; credit Long-Term Investments-HTM $300,000.
D.Debit Cash $300,000; credit Interest Receivable $300,000.
E.Debit Cash $300,000; credit Bonds Payable $300,000.
9) Pleasant Hills Properties is developing a golf course subdivision that includes 250
home lots; 100 lots are golf course lots and will sell for $95,000 each; 150 are street
frontage lots and will sell for $65,000. The developer acquired the land for $1,800,000
and spent another $1,400,000 on street and utilities improvement. Compute the amount
of joint cost to be allocated to the street frontage lots using value basis.
A.$1,920,000.
B.$720,000.
C.$1,620,800.
D.$1,579,200.
E.$1,080,000.
10) Charm Enterprises’ production budget shows the following units to be produced for
the coming three months:
A finished unit requires four ounces of a key direct material. The March 31 Raw
Materials inventory has 2,560 ounces (oz.) of the material. Each month’s ending Raw
Materials inventory should be 35% of the following month’s production needs. The
materials to be purchased during May should be:
A.11,352 oz.
B.11,520 oz.
C.7,448 oz.
D.15,384 oz.
E.7,616 oz.
11) At the end of its first month of operations, Michael’s Consulting Services reported
net income of $25,000. They also had account balances of: Cash, $18,000; Office
Supplies, $2,000 and Accounts Receivable $10,000. The owner’s total investment for
this first month was $5,000.
Calculate the ending balance in the Owner’s Capital account to be reported on the
Statement of Owner’s Equity.
A.$30,000
B.$25,000
C.$20,000
D.$5,000
E.$7,000
12) A record that contains detailed information on specific accounts with a common
characteristic and is support for a controlling account is a(n):
A.Subsidiary ledger.
B.General ledger.
C.Special ledger.
D.All-purpose ledger.
E.Column balance ledger.
13) Match each of the following terms with the appropriate definitions.
14) Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10
per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be
$80,000. Clevenger actually produced and sold 37,000 units.
Using a contribution margin format:
Prepare a fixed budget income statement for the planned level of sales and production.
15) Investments in equity securities where the investor has a significant, but not
controlling influence, are accounted for using the _______________ method.
16) You increase the Service Revenue account on the ___________ side of its account.
17) The difference between the actual sales and the flexible budget sales is called the
______________________ variance.
18) Define plant assets and identify the four primary issues in accounting for them.
19) What are the four steps in the effective management of variance analysis?
20) The ____________________ of a note is the day the principle plus interest of a
note must be repaid.
21) A company can buy a machine that is expected to have a three-year life and a
$30,000 salvage value. The machine will cost $1,800,000 and is expected to produce a
$200,000 after-tax net income to be received at the end of each year. If a table of
present values of 1 at 12% shows values of 0.8929 for one year, 0.7972 for two years,
and 0.7118 for three years, what is the net present value of the cash flows from the
investment, discounted at 12%?
22) Mesner’s and Sanchez’s company is organized as a partnership. At the prior
year-end, Mesner’s equity balance was $258,000 and Sanchez’s was $212,000. For the
current year, partnership net income is $125,000 ($75,000 allocated to Mesner and
$50,000 allocated to Sanchez); withdrawals are $77,000 ($40,000 for Mesner and
$37,000 for Sanchez). Compute the total partnership return on equity and the individual
partner return on equity ratios.