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In a cash receipts journal, ________.
A) cash sales are recorded in the Accounts Receivable CR column and the Cash DR
column
B) collections on account are recorded in the Accounts Receivable DR column and the
Cash DR column
C) the miscellaneous cash receipt transactions are ignored
D) the cash sales are recorded in the Sales Revenue CR column
Which of the following is a benefit provided by internal control?
A) It ensures timely collection of accounts receivables.
B) It ensures that collusion will never happen.
C) It guarantees that a business makes profit.
D) It promotes operational efficiency.
Which of the following is true of a contingent liability?
A) It is a potential liability that depends on a future event.
B) It is an actual liability that is difficult to estimate.
C) It is an actual liability that depends on a past event.
D) It is a liability resulting from a lawsuit settled in court.
If there is cash involved in a business transaction, the transaction should be recorded in
either the ________.
A) cash payments journal or cash receipts journal
B) cash payments journal or general journal
C) cash payments journal or cash receipts journal and in general journal
D) sales journal or purchases journal
Unit product cost calculations using absorption costing do not include ________.
A) fixed manufacturing overhead
B) variable manufacturing overhead
C) variable selling and administrative costs
D) direct materials
Mayflower, Inc. provided the following for 2017:
Calculate the average merchandise inventory held by Thomas, Inc. during the year.
A) $930,000
B) $465,000
C) $300,000
D) $630,000
The purchase of equipment financed by a long-term notes payable is an example of
________.
A) investing activity
B) financing activity
C) operating activity
D) non-cash investing and financing activity
On June 30, 2017, Rangers, Inc. showed the following data on the equity section of
their balance sheet:
On July 1, 2017, the company declared and distributed a 10% stock dividend. The market
value of the stock at that time was $15 per share. Following this transaction, what is the
number of shares issued?
A) 86,500
B) 297,300
C) 160,600
D) 146,000
When the sales price per unit decreases, the contribution margin per unit ________.
A) increases proportionately
B) increases
C) remains the same
D) decreases
Under which of the following categories would bonds held as an investment for less
than a year appear?
A) Long-term assets
B) Current assets
C) Long-term liabilities
D) Current liabilities
Lawrence, an employee of Light, Inc., has gross salary for March of $4,000. The entire
amount is under the OASDI limit of $117,000, and thus subject to FICA. His
year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. Which of
the following is a part of the journal entry to record the employer's payroll taxes?
A) debit to Payroll Tax Expense
B) debit to FICA Taxes Payable
C) credit to Payroll Tax Expense
D) debit to Cash
Under the weighted-average method for inventory costing, the cost per unit is
determined by ________.
A) dividing the cost of goods available for sale by the number of units available
B) dividing the cost of goods available for sale by the number of units in beginning
inventory
C) multiplying the number of units purchased with the weighted-average cost
D) multiplying the cost of goods available for sale by the ending weighted-average cost
of the previous accounting period
Huang Consumer Products has a small car division that operates as a profit center.
Below is a partially completed responsibility report for the first quarter.
Responsibility Report
Compute the percentage variance for the flexible budget variance for sales revenue.
(Round your answer to two decimal places.)
A) 1.71% F
B) 1.71% U
C) 4.04% U
D) 4.04% F
On January 1, 2017, Everlight Corp. has the following account balances:
Accounts Receivable
Allowance for Bad Debts
Bad Debts Expense
During the year, Everlight has $155,000 of credit sales, collections of credit sales of
$143,000, and write-offs of $3,300. It records bad debts expense at the end of the year
using the aging-of-receivables method. At the end of the year, the aging analysis shows
that $1,700 is the estimate of uncollectible accounts. Before the year-end entry to adjust
the bad debts expense is made, the balance in the Allowance for Bad Debts expense is
________.
A) a debit of $2,100
B) a credit of $4,500
C) a zero balance
D) a debit of $3,300
Sensitivity analysis is a technique that ________.
A) sets the budgets of alternative investment opportunities
B) analyzes the effect of an investment on workers' morale
C) evaluates the different available investment options
D) shows how results differ when underlying assumptions change
When preparing the report to analyze a proposed quality improvement program, which
of the following costs are included in the total costs of undertaking the quality
improvement program?
A) warranty costs
B) sales returns
C) inspection of raw materials
D) cost of rework
The balance sheet is a snapshot of the entity. Which of the following is included on the
balance sheet?
A) Revenues
B) Expenses
C) Assets
D) Dividends
A business renders services to a customer for $26,000 on account. Which of the
following accounts is credited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
Cheong Automobiles Company fabricates automobiles. Each vehicle includes one
wiring harness, which is currently made in-house. Details of the harness fabrication are
as follows:
An Indonesian factory has offered to supply Cheong Company with ready-made units for a
cost of $17 for each harness. Assume that Cheong's fixed costs are unavoidable and that
Cheong will not be able to use the excess capacity in any profitable manner. If Cheong
decides to outsource, monthly operating income will ________.
A) increase by $5,850
B) decrease by $15,000
C) increase by $15,000
D) decrease by $5,850
Which of the following is a major control risk related to payroll?
A) theft of inventory by staff
B) a dishonest employee cashing a paycheck that was written to a fictitious person
C) expenses being recorded as assets in order to manipulate earnings
D) contracts being awarded to relatives of employees
On June 1, Dalton 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 $2,200 of direct materials and $700 of indirect materials to production.
What was the balance in the Manufacturing Overhead account following this transaction?
A) $43,900
B) $43,200
C) $41,700
D) $41,000
Nurix, Inc. is a business consulting firm. During the month of February, Nurix earned
$56,400 of revenues by providing services to 48 clients. Operating expenses for
February were $10,500 and non-operating expenses were $6,000.
What is the unit cost per service? (Round your answer to the nearest cent.)
A) $125.00
B) $218.75
C) $1,175.00
D) $10,625.00
An accounting entry that is characterized by having multiple debits and/or multiple
credits is called a ________ entry.
A) balanced
B) posted
C) chart of accounts
D) compound journal
Freighters, Inc. has the following budgeted figures:
Calculate the budgeted purchases for the month of January.
A) $35,400
B) $61,650
C) $31,650
D) -$9,150
For Expenses, the category of account and its normal balance is ________.
A) equity and a credit balance
B) assets and a debit balance
C) assets and a credit balance
D) equity and a debit balance
Santora Company manufactures two products—toaster ovens and bread machines. The
following data are available:
Santora can manufacture six toaster ovens per machine hour and four bread machines per
machine hour. Santora's production capacity is 2,000 machine hours per month, and it can
sell as many units of either type as it can produce. Which product and how many units
should the company produce in a month to maximize profits? (Round machine hour per
unit to two decimal places and your final answer to the nearest whole dollar.)
A) 8,000 bread machines
B) 6,000 toaster ovens and 4,000 bread machines
C) 8,000 toaster ovens and 6,000 bread machines
D) 12,000 toaster ovens
________ refers to purchasing software and data storage from a third party.
A) Cloud computing
B) Resource planning
C) Networking
D) Entry-level software
Regarding discontinued operations, which of the following statements is correct?
A) Gains and losses on the sale of plant assets are reported as discontinued operations.
B) A loss on discontinued operations is reported with an addition for the applicable
income tax.
C) Most analysts include the results of discontinued operations in financial analysis.
D) The disposal of the financing segment of a large corporation would be reported as a
discontinued operation.
On May 31, a retail firm pays rent of $2,700 for the month of May. When this
transaction is recorded in the cash payments journal, ________.
A) assets and equity will increase by $2,700
B) assets and liabilities will decrease by $2,700
C) assets and equity will decrease by $2,700
D) liabilities and equity will increase by $2,700
An asset was purchased for $31,000 on January 1, 2016. The asset's estimated useful
life was five years, and its residual value was $8,000. The straight-line method of
depreciation was used. Calculate the gain or loss if the asset is sold for $21,000 on
December 31, 2016, the last day of the accounting period.
A) $2,700 gain
B) 5,400 loss
C) 5,400 gain
D) no gain or no loss
Bespoke, Inc. offers warranties on all their bikes. They estimate warranty expense at
3.5% of sales. At the beginning of 2017, the Estimated Warranty Payable account had a
credit balance of $1,900. During the year, Bespoke had $296,000 in sales and had to
pay out $5,900 in warranty payments. At the end of the year, what is the closing balance
in the Estimated Warranty Payable accounts?
A) $6,360
B) $7,800
C) $8,460
D) $10,360
Sparks Stationery Company is a price-taker and uses target pricing. The company has
just done an analysis of its revenues, costs, and desired profits and has calculated its
target full product cost. Assume all products produced are sold. Refer to the following
information:
Actual costs are currently higher than target full product cost. Assuming that fixed costs
cannot be reduced, what is the target variable cost per unit? (Round your answer to the
nearest cent.)
A) $3.42
B) $1.58
C) $1.84
D) $2.00
Morris Company established a petty cash fund with a $400 balance. Which of the
following statements is incorrect?
A) A journal entry is needed to debit the Cash account and credit the Petty Cash account
for $400.
B) There is no net effect on current assets.
C) The sum of the cash plus the total of the petty cash tickets should equal $400 at all
times.
D) The petty cash custodian cashes a check for $400 and places the currency in the
petty cash fund box.
Which of the following is pay over and above base salary, usually paid for exceptional
performance?
A) FICA
B) benefits
C) wages
D) bonuses
If the Fair Value Adjustment account for trading investments has a debit balance,
________.
A) it is subtracted from the Fixed Asset account to determine carrying value
B) it is subtracted from the Short-term Investment–Trading account to determine
carrying value
C) it is added to the Short-term Investment–Trading account to determine carrying
value
D) it is added to the Fixed Asset account to determine carrying value
