First Buy Television Antenna Company provided the following manufacturing costs for
the month of June.
From the above information, calculate First Buy’s total fixed costs.
A) $298,800
B) $40,200
C) $60,200
D) $64,200
In 2017, a corporation purchased a small business for $250,000. The market value of
the small business’s assets was $400,000, and the market value of the liabilities was
$200,000. The corporation recorded goodwill of $50,000 at the time of acquisition. At
the end of 2018, it measured goodwill and found it had a remaining fair value of only
$20,000. At year-end 2018, the corporation will ________.
A) record a loss on sale of assets
B) record an impairment loss
C) record accumulated depletion
D) record a gain in goodwill
Which of the following is a cash outflow for a financing activity on the statement of
cash flows?
A) payment of interest on a loan
B) payment for purchasing Merchandise Inventory
C) payment of dividends
D) payments to the government for taxes
On June 1, Westbrook Productions had beginning balances as shown in the T-accounts
below.
Raw Materials Inventory
Work-in-Process Inventory
Finished Goods Inventory
Manufacturing Overhead
During June, the following transactions took place:
June 2: Issued $3,300 of direct materials and $600 of indirect materials to production.
June 13: Incurred $7,400 of direct factory labor cost and $14,800 of indirect factory labor
cost.
What was the balance in the Manufacturing Overhead account following these
transactions?
A) $41,600
B) $56,400
C) $55,800
D) $59,100
Moretown, Inc. had the following transactions in 2017, its first year of operations:
• Issued 31,000 shares of common stock. Stock has par value of $1.00 per share and
was issued at $20.00 per share.
• Earned net income of $70,000.
• Paid no dividends.
At the end of 2017, what is total stockholders’ equity?
A) $31,000
B) $690,000
C) $620,000
D) $70,000
From the following details of a merchandiser, calculate the Cost of Goods Sold.
(Assume the merchandiser uses the periodic inventory system.)
A) $116,150
B) $62,800
C) $114,800
D) $54,150
Cardoza Corp. purchased a mine on January 1, 2016, for $513,000, which is estimated
to contain 30,000 tons of iron ore. There is no residual value. The business extracted
and sold 9,500 tons of ore in 2016 and 16,800 tons of ore in 2017. What is the depletion
expense for 2017?(Round any intermediate calculations to two decimal places, and your
final answer to the nearest dollar.)
A) $162,450
B) $449,730
C) $287,280
D) $63,270
Worthington Sailboats Company manufactures 100 luxury yachts per month. Included
in each yacht is a compact media center. Worthington Sailboats manufactures the media
center in-house. The company is considering the possibility of outsourcing the
production of the media centers in order to close down some of its facilities and reduce
the administrative costs. At present, the variable cost per unit is $275, and fixed costs
are $44,000 per month. Assume that if it outsources, fixed costs could be reduced by
60%. The production manager advised the company to contract with a foreign supplier
who offered a contract cost of $410 per unit. If it outsources the media center, how
would that affect operating income?
A) Operating income would improve by $12,900.
B) Operating income would improve by $26,400.
C) Operating income would decline by $12,900.
D) Operating income would remain the same.
Frazier Service Company had a net income of $14,500 for the year ending December
31, 2016. The total assets on January 1, 2016 were $28,000. The total assets on
December 31, 2016 were $16,000.
Calculate Frazier’s return on assets (ROA). Show your computations and label your
work. Round your answer to one decimal place.
When the corporation declares a stock dividend, a stockholder’s percentage ownership
in the stock of the corporation ________.
A) will decrease
B) can increase or decrease
C) will increase
D) remains unchanged
The records at Smith and Jones, Inc. show that Job 110 is charged with $10,000 of
direct materials and $13,000 of direct labor. Smith and Jones, Inc. allocate
manufacturing overhead at 80% of direct labor cost. What is the total cost of Job No.
110?
A) $31,000
B) $33,400
C) $23,000
D) $13,000
Which of the following is added to operating income to arrive at net income?
A) sales revenue
B) cost of goods sold
C) interest revenue
D) operating expenses
Young Guns Company, which sells tents, has provided the following information:
What are the required sales in units for Young to break even? (Round your answer up to
the nearest whole unit.)
A) 227 units
B) 1,155 units
C) 283 units
D) 374 units
Which of the following is true of a stock split and a stock dividend?
A) A stock split will increase total stockholders’ equity, but a stock dividend will not.
B) Neither a stock split nor a stock dividend will increase total stockholders’ equity.
C) A stock dividend will increase total stockholders’ equity, but a stock split will not.
D) A stock split will decrease retained earnings, but a stock dividend will not.
For which of the following decisions is absorption costing most appropriate?
A) decisions related to using the sales mix to maximize profitability
B) decisions related to controlling short-term costs
C) decisions related to setting sales prices in the long run
D) decisions related to increasing contribution margin
Regarding a classified balance sheet, which of the following statements is correct?
A) Accounts are classified by their purchase dates.
B) Account balances are listed from the highest amount to the lowest amount.
C) Assets are listed in the order of their liquidity.
D) Assets are listed in alphabetical order.
Cost accounting systems are used ________.
A) to accumulate product cost information
B) to accumulate and assign period costs to products
C) by manufacturing companies, not service companies
D) by stockholders for decision-making purposes
Which of the following is true of the traditional format of the income statement?
A) It is prepared under the variable costing method.
B) It shows contribution margin as a line item.
C) It is not allowed under GAAP.
D) It is prepared under the absorption method.
Which of the following is true of available-for-sale (AFS) investments?
A) They are always reported as current assets in the balance sheet.
B) They are always reported as long-term assets in the balance sheet.
C) They are reported as current assets on the balance sheet only if the business expects
to sell them within the first two years.
D) They are reported as long-term assets on the balance sheet only if they are planned
to be held for longer than a year.
If a company is financing more assets with debt than with equity, the ________.
A) debt to equity ratio will be more than 1
B) debt to equity ratio will be between 0 to 1
C) debt to equity ratio will be equal to 1
D) debt to equity ratio will be negative
On January 1, 2017, Citywide Sales issued $25,000 in bonds for $29,800. These are
eight-year bonds with a stated rate of 15% and pay semiannual interest. Citywide Sales
uses the straight-line method to amortize the bond premium. On June 30, 2017, when
Citywide makes the first payment to bondholders, what is the amount that will be
reported as Interest Expense?
A) $1,575
B) $1,875
C) $3,225
D) $1,225
Fred, Inc. owns a delivery truck. Which of the following costs, associated with the
truck, will be capitalized and depreciated?
A) modification for new use
B) change of oil filters
C) replacement of tires
D) normal engine repair
Which of the following journal entries would be recorded if a business purchased office
supplies on account in a previous accounting period and now makes a cash payment of
$750 to the supplier to settle the account?
A)
B)
C)
D)
Unearned revenue, for services to be performed in six months, appears on the balance
sheet as ________.
A) long-term investments
B) current liabilities
C) current assets
D) long-term assets
Trek Holidays Company signed a 9%, 10-year note for $154,000. The company paid an
installment of $2,900 for the first month. What portion of the first monthly payment is
principal? (Round your answer to the nearest whole number.)
A) $1,745
B) $4,645
C) $1,540
D) $15,733
Baptiste Accounting Services expects its accountants to work a total of 30,000 direct
labor hours per year. The company’s estimated total indirect costs are $152,000. The
direct labor rate is $104 per hour. The company uses direct labor hours as the allocation
base for indirect costs. If Baptiste performs a job requiring 52 hours of direct labor and
bills the client using a standard markup of 40% of costs, calculate the amount of the
client’s bill. (Round any intermediate calculations to the nearest cent, and your final
answer to the nearest dollar.)
A) $5,408
B) $216,320
C) $2,269
D) $7,940
Which of the following is included in comprehensive income?
A) Foreign currency translation adjustments
B) Owners’ investments
C) Purchase of capital assets
D) Payment of dividend
Differential analysis is a method that ________.
A) evaluates both relevant and irrelevant information
B) considers all areas of the traditional income statement
C) is not used for short-term decision making
D) looks at how operating income would differ under each decision alternative
Which of the following accounts will be closed by crediting the Income Summary
account?
A) Service Revenue
B) Depreciation Expense
C) Accounts Payable
D) Accumulated Depreciation
In process costing, factory rent and utilities are debited to the ________.
A) Work-in-Process Inventory account
B) Manufacturing Overhead account
C) Finished Goods Inventory account
D) Cost of Goods Sold account