Jewel Tone Paints Company uses the direct method for preparing its statement of cash
flow. Jewel Tone reports the following information regarding 2017:
From the income statement:
Sales Revenues, $267,000
Cost of Goods Sold, $213,000
Operating Expenses, $33,000
From the balance sheet:
What amount will be shown for payments to suppliers for Merchandise Inventory
purchases? (Assume that Accounts Payable are for purchases of merchandise inventory
only.)
A) $207,300
B) $213,900
C) $200,700
D) $212,100
The balance sheet of a ________ company will include Work-in-Process Inventory as a
line item.
A) manufacturing
B) merchandising
C) service
D) trading
The Work-in-Process Inventory account includes the ________.
A) goods that are ready to be sold
B) goods that are partially completed
C) goods that have been sold in the market
D) goods that are damaged during production
Orlando Avionics makes three types of radios for small aircraft—Model A, Model B,
and Model C. The manufacturing operations are mechanized, and there is no direct
labor. Manufacturing overhead costs are significant, and Orlando has adopted an
activity-based costing system. Direct materials costs per unit for each model are as
follows:
Model A $20
Model B $33
Model C $36
Orlando has three activities—assembly, materials management, and testing. The cost
driver for assembly is machine hours. The cost driver for materials management is the
number of parts, and the cost driver for testing is the number of units of product. Total
costs and production volumes for the year were estimated as follows:
The Model A radio requires 12 parts to construct and 20 machine hours of processing.
What is the manufacturing cost to make one unit of Model A? (Round any intermediate
calculations to the nearest cent, and your final answer to the nearest dollar.)
A) $168
B) $44
C) $152
D) $172
A merchandiser had sales returns and allowances of $400, sales discounts of $700, cost
of goods sold of $14,000, and all other expenses of $4,400. The merchandiser uses a
perpetual inventory system. The second entry in the closing process would include
________.
A) a debit to Income Summary for $19,500
B) a credit to Income Summary for $18,400
C) a debit to Income Summary for $4,400
D) a debit to Income Summary for $18,400
Star Stationery Company is a price-taker and uses target pricing. Refer to the following
information:
What is the target full product cost per year? Assume all units produced are sold.
A) $18,000,000
B) $17,730,000
C) $27,000,000
D) $9,600,000
The starting point in developing the master budget is the preparation of the ________.
A) cash budget
B) production budget
C) sales budget
D) budgeted income statement
The financial statements of Harbor Furniture Company include the following items:
What is 2017 acid-test ratio? (Round your answer to two decimal places.)
A) 0.23
B) 1.07
C) 1.86
D) 0.54
At the beginning of the year, Judge Manufacturing had the following account balances:
Work-in-Process Inventory
Finished Goods Inventory
Manufacturing Overhead
Cost of Goods Sold
Sales Revenue
The following additional details are provided for the year:
The ending balance in the Finished Goods Inventory account is a ________.
A) debit of $509,700
B) debit of $501,700
C) debit of $8,000
D) debit of $571,900
Which of the following corporate characteristics is a disadvantage of a corporation?
A) Stockholders have limited liability.
B) A corporation has a continuous life.
C) There is no mutual agency between the stockholders and the corporation.
D) Earnings of a corporation may be subject to double taxation.
In an accounting information system, source documents are the documents which
________.
A) are audited and presented to the Securities and Exchange Commission
B) detail the strategic planning of the business
C) have complete information about the financial statements
D) provide the evidence for accounting transactions
Which of the following costing methods charges all the manufacturing costs to the
products?
A) variable costing
B) direct costing
C) absorption costing
D) contribution costing
Neptune Accounting Services expects its accountants to work for 24,000 direct labor
hours per year. The company’s estimated total indirect costs are $225,000. The direct
labor rate is $70 per hour. The company uses direct labor hours as the allocation base
for indirect costs. If Neptune performs a job requiring 30 hours of direct labor, what is
the total job cost? (Round any intermediate calculations to the nearest cent, and your
final answer to the nearest dollar.)
A) $225,000
B) $281
C) $2,381
D) $2,100
An asset is considered to be obsolete ________.
A) only when it wears out
B) only at the end of its useful life
C) when it is fully depreciated
D) when a newer asset can perform the job more efficiently than the old asset can
A company reports total assets of $870,000 and stockholders’ equity of $560,000.
Calculate the debt ratio. (Round your answer to two decimal places.)
A) 39.16%
B) 35.63%
C) 64.37%
D) 55.36%
The income statement for Bedtime Company is divided by its two product lines,
blankets and pillows, as follows:
Bedtime is considering eliminating the pillows product line. If this line is eliminated,
Bedtime will be able to eliminate $73,000 of total fixed costs. How would this business
decision impact operating income?
A) increase of $73,000 in operating income
B) decrease of $60,000 in operating income
C) increase of $136,000 in operating income
D) increase of $13,000 in operating income
Which of the following is an intangible asset?
A) copyright
B) building
C) land
D) equipment
Raphael, Inc. has a division that manufactures a component that sells for $190 and has a
variable cost of $35. Another division of the company wants to purchase the
component. Fixed cost per unit of the component is $22. What is the minimum transfer
price if the division is operating below its capacity?
A) $190
B) $35
C) $57
D) $22
Which of the following is true of posting entries from a cash payments journal?
A) Entries in the cash payments journal are posted monthly to the accounts payable
subsidiary ledger and daily to the general ledger.
B) The postings of accounts payable are credits and increase the balance in the
individual accounts payable account.
C) After posting the payment of accounts payable, a checkmark is entered in the cash
payments journal and the posting reference is printed in the subsidiary ledger.
D) At the end of the month, each column is totaled and the totals, including the Other
Accounts DR column, are posted to the specific general ledger accounts.
Christopher Corp. is preparing its statement of cash flows using the indirect method. It
provides the following information about transactions for the year:
Plant assets, net—beginning balance: $111,000
Plant assets, net—ending balance: $148,000
Equipment was purchased for $65,000.
Equipment with a net asset value of $12,000 was sold for $18,000.
Depreciation Expense of $16,000 was recorded during the year.
What was the amount of net cash provided by (used for) investing activities?
A) $(47,000)
B) $47,000
C) $(63,000)
D) $(39,000)
A company produces 1,000 packages of chicken feed per month. The sales price is $5
per pack. Variable cost is $1.50 per unit, and fixed costs are $1,700 per month.
Management is considering adding a vitamin supplement to improve the value of the
product. The variable cost will increase from $1.50 to $1.80 per unit, and fixed costs
will increase by 20%. The CEO wants to price the new product at a level that will bring
operating income up to $3,000 per month. What sales price should be charged? (Round
your answer to the nearest cent.)
A) $3.50
B) $6.84
C) $5.00
D) $3.20
During the accounting period, office supplies were purchased on account for $3,200. A
physical count, on the last day of the accounting period, shows $1,100 of office supplies
on hand. Supplies Expense for the accounting period is $3,600. What was the beginning
balance of Office Supplies?
A) $4,700
B) $2,100
C) $1,500
D) There is not enough information to answer this question.
The following information is from the 2017 records of Lane Bicycle Shop:
Bad debts expense is estimated by the aging-of-receivables method. Management
estimates that $5,000 of accounts receivable will be uncollectible. Calculate the ending
balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at
December 31, 2017.
A) $5,310
B) $8,800
C) $9,000
D) $5,000
The following are the current month’s balances for Jackson, Inc.
Calculate the total amount of credits for the trial balance.
A) $24,500
B) $22,750
C) $25,750
D) $33,750
Buffalo, Inc. reported sales revenue for 2017 of $903,000. The products were sold with
a nine-month warranty. Members of Buffalo’s management estimate that the cost of the
warranty will be equal to 7% of sales revenue. Which of the following will be included
in the entry to record the actual amounts paid out as a result of warranty claims?
A) a debit to Estimated Warranty Payable for the actual amount of payments
B) a credit to Estimated Warranty Payable for $63,210
C) a debit to Estimated Warranty Payable for $63,210
D) a debit to Warranty Expense for the actual amount of payments
Janeway, Inc. has a cash balance of $24,000 on April 1. The company is now preparing
the cash budget for the second quarter. Budgeted cash collections and payments are as
follows:
There are no budgeted capital expenditures or financing transactions during the quarter.
Based on the above data, calculate the projected cash balance at the end of June.
A) $37,700
B) $48,000
C) $50,700
D) $62,700
The net income of a company for the year was $570,000. The company has no preferred
stock. Common stockholders’ equity was $1,800,000 at the beginning of the year and
$2,300,000 at the end of the year. Calculate the rate of return on common stockholders’
equity. (Round your answer to two decimal places.)
A) 24.78%
B) 19.86%
C) 31.67%
D) 27.80%
Which of the following is an intangible asset?
A) plant and machinery
B) goodwill
C) building
D) land
The static budget, at the beginning of the month, for Keats Company follows:
Static budget:
Sales volume: 2,100 units; Sales price: $52.00 per unit
Variable costs: $12.00 per unit; Fixed costs: $26,000 per month
Operating income: $58,000
Actual results, at the end of the month, follows:
Actual results:
Sales volume: 1,850 units; Sales price: $59.00 per unit
Variable costs: $18.00 per unit; Fixed cost: $37,000 per month
Operating income: $38,850
Calculate the sales volume variance for operating income.
A) $9,150 U
B) $250 F
C) $10,000 U
D) $10,000 F
On January 1, 2017, Walker Sales issued $30,000 in bonds for $23,300. These are
eight-year bonds with a stated rate of 11%, and pay semiannual interest. Walker Sales
uses the straight-line method to amortize the bond discount. After the second interest
payment on December 31, 2017, what is the bond carrying amount? (Round your
intermediate answers to the nearest cent, and your final answer to the nearest dollar.)
A) $24,138
B) $23,719
C) $30,000
D) $23,300
Assets with no physical form are called ________.
A) current assets
B) intangible assets
C) long-term investments
D) mortgaged investments
Which of the following is true of net sales revenue?
A) It is calculated by subtracting cost of goods sold from sales.
B) It is calculated by adding sales discounts to sales.
C) It is calculated by adding sales discounts and sales returns and allowances to sales.
D) It is calculated by deducting sales discounts and sales returns and allowances from
sales.
Which of the following is true of debt securities?
A) Debt securities entitle the holder to receipt of a share of profit in the form of
dividends.
B) Debt securities typically pay interest for a fixed period.
C) Debt securities include preferred stocks.
D) Debt securities represent ownership interests of the investors.
Pluto Corp. sold goods, with a selling price of $17,221, for cash. The state sales tax rate
is 8%. What amount is credited to the Sales Revenue account?
A) $17,221
B) $18,599
C) $1,378
D) $15,843
A CR.5 posting reference in a subsidiary ledger signifies that the ________.
A) posting is transferred from the cash receipts journal, page 5
B) transaction on page number 5 is credited
C) amount credited is after a 5% discount
D) sales on credit is expected to be paid within five days
