1) The balances that appear on the post-closing trial balance will match the
a.income statement account balances after adjustments
b.balance sheet account balances after closing entries
c.income statement account balances after closing entries
d.balance sheet account balances after adjustments
2) The heading for a post-closing trial balance has a date line that is similar to the one
found on
a.a balance sheet
b.an income statement
c.an owner’s equity statement
d.the worksheet
3) Brian and Sandy are forming a partnership. Brian will invest a truck with a book
value of $10,000 and a fair value of $14,000. Sandy will invest a building with a book
value of $30,000 and a fair value of $42,000 with a mortgage of $15,000. What amount
should be recorded in Sandys capital account?
a.$30,000
b.$27,000
c.$42,000
d.$14,000
4) In evaluating the margin of safety, the
a.break-even point is not relevant
b.higher the margin of safety ratio, the greater the margin of safety
c.higher the dollar amount, the lower the margin of safety
d.higher the margin of safety ratio, the lower the fixed costs
5) A 30-day note dated June 18 has a maturity date of
a.July 19
b.July 18
c.July 17
d.July 16
6) When bonds are sold, the gain or loss on sale is the difference between the
a.sales price and the cost of the bonds
b.net proceeds and the cost of the bonds
c.sales price and the market value of the bonds
d.net proceeds and the market value of the bonds
7) Which of the following is not part of the accounting process?
a.Recording
b.Identifying
c.Financial decision making
d.Communicating
8) Mother Hips Garment Company purchased equipment on June 1 for $90,000, paying
$20,000 cash and signing a 9%, 2-month note for the remaining balance. The equipment
is expected to depreciate $18,000 each year. Mother Hips Garment Company prepares
monthly financial statements.
Instructions
(a)Prepare the general journal entry to record the acquisition of the equipment on June
1st.
(b)Prepare any adjusting journal entries that should be made on June 30th.
(c)Show how the equipment will be reflected on Mother Hips Garment Companys
balance sheet on June 30th.
9) An accounts payable clerk also has access to the approved supplier master file for
purchases. The control principle of
a.establishment of responsibility is violated
b.independent internal verification is violated
c.documentation procedures is violated
d.segregation of duties is violated
10) Accounts receivable arising from sales to customers amounted to $86,000 and
$77,000 at the beginning and end of the year, respectively. Income reported on the
income statement for the year was $290,000. Exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of
cash flows is
a.$290,000
b.$299,000
c.$213,000
d.$280,000
11) What term describes all activities associated with providing a product or service?
a.The manufacturing chain
b.The product chain
c.The supply chain
d.The value chain
12) On August 1, 2014, Homer Bates buys a copier machine for his business and makes
this purchase with a cash down payment and issues a note payable for the balance.
When journalizing this transaction, he will
a.list the credit entries first, which is proper form for this type of transaction
b.use two journal entries
c.make a simple entry
d.make a compound entry
13) A debit balance in Cash Over and Short is reported as a
a.contra asset
b.miscellaneous asset
c.miscellaneous expense
d.miscellaneous revenue
14) A primary driver of overhead costs in continuous manufacturing operations is:
a.direct labor dollars
b.direct labor hours
c.machine hours
d.machine maintenance dollars
15) At the end of the first year of operations, the total cost of the trading securities
portfolio is $245,000. Total fair value is $250,000. The financial statements should
show
a.an addition to an asset of $5,000 and a realized gain of $5,000
b.an addition to an asset of $5,000 and an unrealized gain of $5,000 in the stockholders
equity section
c.an addition to an asset of $5,000 in the current assets section and an unrealized gain of
$5,000 in Other revenues and gains
d.an addition to an asset of $5,000 in the current assets section and a realized gain of
$5,000 in Other revenues and gains
16) Striegel Company has purchased equipment that requires annual payments of
$60,000 to be paid at the end of each of the next 6 years. The appropriate discount rate
is 12%. What amount will be used to record the equipment?
a.$360,000
b.$246,685
c.$331,544
d.$231,299
17) The cash budget reflects
a.all revenues and all expenses for a period
b.expected cash receipts and cash disbursements from all sources
c.all the items that appear on a budgeted income statement
d.all the items that appear on a budgeted balance sheet
18) Minor Landscaping Company is preparing its budget for the first quarter of 2013 .
The next step in the budgeting process is to prepare a cash receipts schedule and a cash
payments schedule. To that end the following information has been collected.
Clients usually pay 60% of their fee in the month that service is provided, 30% the
month after, and 10% the second month after receiving service.
Actual service revenue for 2012 and expected service revenues for 2013 are: November
2012, $120,000; December 2012, $110,000; January 2013, $140,000; February 2013,
$160,000; March 2013, $170,000.
Purchases on landscaping supplies (direct materials) are paid 40% in the month of
purchase and 60% the following month. Actual purchases for 2012 and expected
purchases for 2013 are: December 2012, $21,000; January 2013, $20,000; February
2013, $22,000; March 2013, $27,000.
Instructions
(a)Prepare the following schedules for each month in the first quarter of 2013 and for
the quarter in total:
(1)Expected collections from clients.
(2)Expected payments for landscaping supplies.
(b)Determine the following balances at March 31, 2013:
(1)Accounts receivable.
(2)Accounts payable.
19) Given the following information for Brookman Company, compute the company’s
ROI: Sales $500,000; Controllable Margin $60,000; Average Operating Assets
$250,000.
a.12%
b.24%
c.40%
d.50%
20) The statement of cash flows will not provide insight into
a.why dividends were not increased
b.whether cash flow is greater than net income
c.the exact proceeds of a future bond issue
d.how the retirement of debt was accomplished
21) Pixies Inc. pays its rent of $54,000 annually on January 1 . If the February 28
monthly adjusting entry for prepaid rent is omitted, which of the following will be true?
a.Failure to make the adjustment does not affect the February financial statements
b.Expenses will be overstated by $4,500 and net income and owners equity will be
understated by $4,500
c.Assets will be overstated by $9,000 and net income and owners equity will be
understated by $9,000
d.Assets will be overstated by $4,500 and net income and owners equity will be
overstated by $4,500
22) In accounting for debt investments, entries are made for each of the following
except the
a.acquisition
b.interest revenue
c.amortization of any discount or premium
d.sale
23) The total column of the Partners’ Capital Statement for DeltaBell Company is as
follows:
Capital, January 1$600,000
Additional investment240,000
Drawings360,000
Net income720,000
The partnership has three partners. The first two partners have ending capital balances
that are equal. The ending balance of the third partner is half of the ending balance of
the first partner. What is the ending capital balance of the third partner?
a.$288,000
b.$192,000
c.$240,000
d.$264,000
24) The debt to assets ratio
a.is a solvency ratio
b.is computed by dividing total assets by total debt
c.measures the total assets provided by stockholders
d.is a profitability ratio
25) Grant Manufacturing uses a job order cost accounting system. On April 1, the
company has Work in Process Inventory of $7,400 and two jobs in process: Job No.
221, $3,400, and Job No. 222, $4,000. During April, a summary of source documents
reveals the following:
ForMaterials Requisition SlipsLabor Time Tickets
Job No.221$1,300$ 1,700
2221,8002,000
2232,5002,600
2242,6003,000
General use 800 400
Totals$9,000$9,700
Grant applies manufacturing overhead to jobs at an overhead rate of 65% of direct labor
cost. Job No. 221 is completed during the month.
Instructions
(a)Prepare summary journal entries to record the raw materials requisitioned, factory
labor used, the assignment of manufacturing overhead to jobs, and the completion of
Job No. 221.
(b)Calculate the balance of the Work in Process Inventory account at April 30.
26) A company stamps checks received in the mail with the words “For Deposit Only”.
This endorsement is called a(n)
a.blank endorsement
b.rubber stamp
c.restrictive endorsement
d.operational endorsement
27) Warranty expenses are reported on the income statement as
a.administrative expenses
b.part of cost of goods sold
c.contra-revenues
d.selling expenses
28) The effect of a stock dividend is to
a.decrease total assets and stockholders’ equity
b.change the composition of stockholders’ equity
c.decrease total assets and total liabilities
d.increase the book value per share of common stock
29) Turnbull Department Store had net credit sales of $18,000,000 and cost of goods
sold of $15,000,000 for the year. The average inventory for the year amounted to
$2,500,000. The average number of days in inventory during the year was
a.365 days
b.60.8 days
c.50.7 days
d.30 days
30) The process of making capital expenditure decisions in business is called
___________.
31) Sarah Mongan is discussing the advantages of the effective-interest method of bond
amortization with her accounting staff. What do you think Sarah is saying?
32) In alphabetical order below are current asset items for Duboney Company as of
December 31, 2014 . Prepare the current assets section of the companys balance sheet
as of the same date.
Accounts receivable$44,000
Cash62,000
Finished goods27,000
Prepaid expenses5,000
Raw materials19,000
Work in process30,000
33) Distinguish between FOB shipping point and FOB destination. Identify the freight
terms that will result in a debit to Inventory by the purchaser and a debit to Freight-out
by the seller.
34) Bonds that mature at a single specified future date are called _______________
bonds, whereas bonds that mature in installments are called ________________ bonds.