The Winston Company estimates that the factory overhead for the following year will
be $1,250,000. The company has decided that the basis for applying factory overhead
should be machine hours, which is estimated to be 50,000 hours. The total machine
hours for the year was 54,300. The actual factory overhead for the year was $1,348,800.
a) Determine the total factory overhead amount applied.
b) Calculate the over or under applied amount for the year.
c) Prepare the journal entry to close factory overhead into Cost of Goods Sold.
Answer:
Each account in the cost ledger is called a:
A.finished goods sheet
B.stock record
C.materials requisition
D.job cost sheet
Answer:
The term applied to the amount of cost to transfer to expense resulting from a decline in
the utility of intangible assets is
A.amortization
B.depletion
C.depreciation
D.allocation
Answer:
An example of a period cost is:
A.advertising expense
B.indirect materials
C.depreciation on factory equipment
D.property taxes on plant facilities
Answer:
Use the following information in the adjusted trial balance for Stockton Company to
answer the following questions.
Determine the Owner’s Equity ending balance for the period.
A.$12,150
B.$15,730
C.$6,480
D.$21,400
Answer:
A chart of accounts for a merchandising business
A.usually is the same as the chart of accounts for a service business
B.usually requires more accounts than does the chart of accounts for a service business
C.usually is standardized by the FASB for all merchandising businesses
D.always uses a three-digit numbering system
Answer:
The comparative balance sheet of Posner Company, for 2011 and the preceding year
ended December 31, 2010, appears below in condensed form:
The income statement for the current year is as follows:
Additional data for the current year are as follows:
(a) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and
equipment was purchased for $183,200.
(b) Bonds payable for $100,000 were retired by payment at their face amount.
(c) 5,000 shares of common stock were issued at $13 for cash.
(d) Cash dividends declared and paid, $25,000.
Prepare a statement of cash flows, using the indirect method of reporting cash flows
from operating activities.
Answer:
The income statement is prepared from:
A.the adjusted trial balance.
B.the income statement columns of the work sheet.
C.either the adjusted trial balance or the income statement columns of the work sheet.
D.both the adjusted trial balance and the income statement columns of the work sheet.
Answer:
Which of the following is recorded in the cash receipts journal?
A.cash withdrawn by the owner
B.cash purchase of equipment
C.cash received on customer’s account
D.adjusting entry for depreciation
Answer:
A net loss appears on the work sheet in the
A.debit column of the Balance Sheet columns
B.credit column of the Balance Sheet columns
C.debit column of the Income Statement columns
D.credit column of the Adjustments columns
Answer:
If a two-column (all-purpose) general journal, a revenue journal, and a cash receipts
journal are used, indicate the journal in which each of the following transactions should
be recorded:
(a) Investment of additional cash in the business by the owner.
(b) Rendering of services for cash.
(c) Rendering of services on account.
(d) Receipt of cash on account from a customer.
(e) Sale of office supplies for cash, at cost, to a neighboring business.
(f) Adjustment to record supplies used at the end of the year.
(g) Closing of drawing account at the end of the year.
Answer:
The balance sheets at the end of each of the first two years of operations indicate the
following:
If net income is $115,000 and interest expense is $30,000 for 2012, what are the
earnings per share on common stock for 2012, (round to two decimal places)?
A.$2.07
B.$1.92
C.$1.77
D.$1.64
Answer:
In the normal operation of business you receive a check from a customer and deposit it
into your checking account. With your bank statement you are advised that this check
for $775 is “NSF”. The bank also informs you that due to the amount of activity on your
business account the monthly service charge is $75. During a bank reconciliation, you
will:
A.subtract both values from balance according to bank.
B.add both values from balance according to books.
C.add both values from balance according to bank.
D.subtract both values from balance according to books.
Answer:
If the allowance method of accounting for uncollectible receivables is used, what
general ledger account is credited to write off a customer’s account as uncollectible?
A.Uncollectible Accounts Expense
B.Accounts Receivable
C.Allowance for Doubtful Accounts
D.Interest Expense
Answer:
The unexpired insurance at the end of the fiscal period represents
A.an accrued asset
B.an accrued liability
C.an accrued expense
D.a deferred expense
Answer:
A company is preparing its their Cash Budget. The following data has been provided for
cash receipts and payments.
The company’s cash balance at January 1st is $290,000. This company desires a
minimum cash balance of $340,000.
What is the amount of excess cash or deficiency of cash (after considering the
minimum cash balance required) for January?
A.$26,700 excess
B.$136,700 deficiency
C.$356,700 excess
D.$60,000 excess
Answer:
Which of the following group of accounts are increased with a debit?
A.assets, liabilities, owner’s equity
B.assets, drawing, expenses
C.assets, revenues, expenses
D.assets, liabilities, revenues
Answer:
If the merchandise costs $3,500, insurance in transit costs $250, tariff costs $75,
processing the purchase order by the purchasing department costs $50, and the
company receiving dock personnel cost $25, what is the total cost charged to the
merchandise?
A.$3,825
B.$3,850
C.$3,875
D.$3,500
Answer:
The adjusting entry for rent earned that was previously recorded in the unearned rent
account is
A.debit Unearned Rent; credit Rent Revenue
B.debit Rent Revenue; credit Unearned Rent
C.debit Unearned Rent; credit Prepaid Rent
D.debit Rent Expense; credit Unearned Rent
Answer:
If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs
are $110, what is the amount of sales required to realize an operating income of
$200,000?
A. 9,231 units
B.12,000 units
C.10,769 units
D. 5,833 units
Answer:
Indicate whether each of the following activities would be reported on the Statement of
Cash Flows as an Operating Activity, an Investing Activity, a Financing Activity, or
does not appear on the Cash Flow Statement.
(a) Cash paid for building
(b) Cash paid to suppliers
(c) Cash paid for owner’s withdrawal
(d) Cash received from customers
(e) Cash received from the owner’s investment
(f) Cash received from the sale of a building
(g) Borrowed cash from a bank
Answer:
All of the following are examples of indirect labor except:
A.maintenance personnel
B.janitorial personnel
C.machine operators
D.plant managers
Answer:
Division X of O’Blarney Company has sales of $300,000, cost of goods sold of
$120,000, operating expenses of $58,000, and invested assets of $150,000.
What is the profit margin for Division X?
A.81.3%
B.20.2%
C.40.7%
D.60%
Answer:
When a partnership is formed, assets contributed by the partners should be recorded on
the partnership books at their
A.book values on the partners’ books prior to their being contributed to the partnership
B.fair market value at the time of the contribution
C.original costs to the partner contributing them
D.assessed values for property purposes
Answer:
A summary of the materials requisitions completed during a period serves as the basis
for transferring the cost of the materials from the controlling account in the general
ledger to the controlling accounts for:
A.work in process and cost of goods sold
B.work in process and factory overhead
C.finished goods and cost of goods sold
D.work in process and finished goods
Answer:
According to a summary of the payroll of Scotland Company, $450,000 was subject to
the 7.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.
Federal income tax withheld was $98,000. Also, $15,000 was subject to state (4.2%)
and federal (0.8%) unemployment taxes. The journal entry to record accrued salaries
would include:
A.a debit to Salary Payable of $450,000
B.a credit to Salary Payable of $500,000
C.a debit to Salary Expense of $500,000
D.a credit to Salary Expense of $450,000
Answer:
The primary goal of managerial accounting is to provide information to:
A.investors
B.creditors
C.management
D.external auditors
Answer:
Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported
on the income statement as other income. On the statement of cash flows, what amount
should be reported as an investing activity from the sale of land?
A.$173,000
B.$140,000
C.$313,000
D.$33,000
Answer:
When an additional partner is admitted to a partnership by contribution of assets to the
partnership
A.the total assets of the partnership do not change
B.no liabilities can be contributed at the same time
C.the amount of the cash contribution is the same as the amount of the debit to the new
partner’s capital account
D.the total of the owner’s equity accounts increases
Answer:
The capital accounts of Hawk and Martin have balances of $160,000 and $140,000,
respectively, on January 1, 2010, the beginning of the current fiscal year. On April 10,
Hawk invested an additional $10,000. During the year, Hawk and Martin withdrew
$86,000 and $68,000, respectively, and net income for the year was $258,000. The
articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what
amount in the capital account for Hawk on December 31, 2010?
A.$211,600
B.$213,000
C.$201,000
D.$203,000
Answer:
Which of the following is not included in conversion costs?
A.Direct labor.
B.Factory overhead.
C.Indirect labor.
D.Direct materials.
Answer:
The proper journal entry to purchase a computer costing $975 on account on January 2
to be utilized within the business would be:
A.Jan 2 Office Supplies 975
Accounts Payable 975
B.Jan 2 Office Equipment 975
Accounts Payable 975
C.Jan 2 Office Supplies 975
Accounts Receivable 975
D.Jan 2 Office Equipment 975
Accounts Receivable 975
Answer:
Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital
balances are $40,000 and $60,000 respectively. Income Summary has a credit balance
of $20,000. What is Tomas’s capital balance after closing Income Summary to Capital?
A.$45,000
B.$55,000
C.$65,000
D.$75,000
Answer:
How does paying a liability in cash affect the accounting equation?
A.assets increase; liabilities decrease
B.assets increase; liabilities increase
C.assets decrease; liabilities decrease
D.liabilities decrease; owner’s equity increases
Answer:
Net income plus operating expenses is equal to
A.cost of merchandise sold
B.cost of merchandise available for sale
C.net sales
D.gross profit
Answer: