1) Any cash dividends received from equity securities are recorded as Dividend
Expense.
2) If net present values are used to evaluate two investments that have equal costs and
equal total cash flows, the one with more cash flows in the early years has the higher
net present value.
3) In process costing, the cost object is the process and in job costing, the cost object is
a job.
4) In activity-based costing, all overhead is lumped together and a predetermined
overhead rate per unit of an allocation base is computed and used to assign overhead to
jobs and processes.
5) When the usefulness of plant assets used to extract natural resources is directly
related to the depletion of a natural resource, their costs are depreciated using the
units-of-production method of depreciation, as long as the assets will not be moved to
and used at another site when extraction of the natural resources is complete.
6) Cragmont has beginning equity of $277,000, net income of $63,000, withdrawals of
$25,000 and no additional investments by owners during the period. Its ending equity
is:
A.$365,000.
B.$239,000.
C.$189,000.
D.$315,000.
E.$277,000.
7) Amortizing a bond discount:
A.Allocates a portion of the total discount to interest expense each interest period.
B.Increases the market value of the Bonds Payable.
C.Decreases the Bonds Payable account.
D.Decreases interest expense each period.
E.Increases cash flows from the bond.
8) The statement of cash flows reports:
A.Assets, liabilities, and equity.
B.Revenues, gains, expenses, and losses.
C.Cash inflows and cash outflows for an accounting period.
D.Equity, net income, and dividends.
E.Changes in equity.
9) Atkins Company collected $1,750 as payment for the amount owed by a customer
from services provided the prior month on credit. How does this transaction affect the
accounting equation for Atkins?
A.Assets would decrease $1,750 and liabilities would decrease $1,750.
B.One asset would increase $1,750 and a different asset would decrease $1,750, causing
no effect.
C.Assets would increase $1,750 and equity would increase $1,750.
D.Assets would increase $1,750 and liabilities would increase $1,750.
E.Liabilities would decrease $1,750 and equity would increase $1,750.
10) Use the following selected information from Wheeler, LLC to determine the 2015
and 2014 trend percentages for cost of goods sold using 2014 as the base.
A.36.4% for 2015 and 41.1% for 2014.
B.55.0% for 2015 and 56.0% for 2014.
C.119.4% for 2015 and 100.0% for 2014.
D.117.2% for 2015 and 100.0% for 2014.
E.65.1% for 2015 and 64.6% for 2014.
11) Portofino Corporation uses the following activity rates from its activity-based
costing to assign overhead costs to products:
Data concerning two products appear below:
How much overhead cost would be assigned to Product KL37 using the activity-based
costing system?
A.$1,595.79
B.$5,874.82
C.$10,385.22
D.$5,562.61
E.$6,516.61
12) On February 15, Jewel Company buys 7,000 shares of Marcelo Corp. common at
$28.53 per share plus a brokerage fee of $400. The stock is classified as
available-for-sale securities. On March 15, Marcelo Corp. declares a dividend of $1.15
per share payable to stockholders of record on April 15. Jewel Company received the
dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November
17 of the current year for $29.30 per share less a brokerage fee of $250. The fair value
of the remaining shares is $29.50 per share. The amount that Jewel Company should
report in the equity section of its year-end December 31 balance sheet for its investment
in Marcelo Corp. is:
A.$10,295.
B.$8,050.
C.$2,245.
D.$3,195.
E.$6,390.
13) Identify the accounting information system principle indicated in letters a-e that
applies to each of the situations below by entering the appropriate letter next to the
statement.
14) A company has earnings per share of $9.60. Its dividend per share is $0.50, its
market price per share is $110, and its book value per share is $96. Its price-earnings
ratio equals:
A.1.15.
B.0.87.
C.19.2.
D.10.0.
E.11.46.
15) Annual cash dividends per share divided by market price per share is the:
A.Price-earnings ratio.
B.Price-dividends ratio.
C.Profit margin.
D.Dividend yield ratio.
E.Earnings per share.
16) A company’s board of directors votes to declare a cash dividend of $.75 per share of
common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500
shares outstanding. The total amount of the cash dividend is:
A.$10,250.
B.$14,625.
C.$7,125.
D.$7,500.
E.$11,250.
17) The three major cost components of manufacturing a product are:
A.Marketing, selling, and administrative costs.
B.Indirect labor, indirect materials, and fixed expenses.
C.Direct materials, direct labor, and factory overhead.
D.Product costs, period costs, and variable costs.
E.General, selling, and administrative costs.
18) If Regent Tax Services’ office supplies account balance on March 1 was $1,400, the
company purchased $675 of supplies during the month, and a physical count of supplies
on hand at the end of March indicated $1,250 unused, what is the amount of the
adjusting entry for office supplies on March 31?
A.$675
B.$825
C.$1,250
D.$1,975
E.$525
19) What are the ways a partner can withdraw from a partnership? Explain how to
account for the withdrawal of a current partner from a partnership.
20) The Income Statement columns of the work sheet prepared for Crawford Delivery
Service at current year-end are shown below. In addition, L. Crawford, Capital had a
credit balance of $117,000 and L. Crawford, Withdrawals had a debit balance of
$30,000 at year end. Prepare closing journal entries for this company.
21) Describe the flow of labor in a process costing system, including accounts used.
22) A company’s employees had the following earnings records at the close of the
current payroll period:
23) _______________ financial statements are reports where financial amounts are
placed side-by-side in columns on a single statement for analytical purposes.
24) ______________________ are amounts received in advance from customers for
future products or services.