1) Match the following terms with the definitions.
A. Volume variance
B. Fixed budget
C. Standard costs
D. Variance analysis
E. Price variance
F. Flexible budget
G. Quantity variance
H. Controllable variance
I. Management by exception
J. Cost variance
2) Grant Co. uses the following standard to produce a single unit of its product: Variable
overhead (2 hrs. per unit @ $4/hr.) Actual data for the month show total variable
overhead costs of $190,000, and 23,000 units produced. The total variable overhead
variance is:
A.$6,000F.
B.$6,000U.
C.$78,000U.
D.$78,000F.
E.$0.
3) Jones Corp. reported current assets of $193,000 and current liabilities of $137,000 on
its most recent balance sheet. The current ratio is:
A.1.4:1.
B.0.7:1.
C.0.3:1.
D.1:1.
E.0.4:1.
4) Collateral agreements for a note or bond can:
A.Reduce the risk of loss in comparison with unsecured debt.
B.Increase the risk of loss in comparison with unsecured debt.
C.Have no effect on risk.
D.Reduce the issuer’s assets.
E.Increase total cost for the borrower.
5) The following information is available for the Annum Corporation for the current
year:
Annum Company uses a predetermined overhead rate of 150% of direct labor cost.
Prepare journal entries for the following transactions and events:
(a) Purchase of raw materials on account.
(b) Assignment of materials costs to Work in Process Inventory and Factory Overhead.
(c) Assignment of Factory Payroll to Work in Process Inventory and Factory Overhead.
(d) Recording of other factory overhead. Assume that all items other than depreciation
are paid in cash.
(e) Assignment of Factory Overhead to Work in Process Inventory.
(f) Transfer of goods completed to Finished Goods Inventory.
(g) Recording cost of goods sold.
(h) Assignment of over- or underapplied overhead to Cost of Goods Sold.
6) A responsibility accounting performance report displays:
A.Only actual costs.
B.Only budgeted costs.
C.Both actual costs and budgeted costs.
D.Only direct costs.
E.Only indirect costs.
7) The cash flow on total assets ratio:
A.Is the same as return on assets.
B.Is the same as profit margin.
C.Can be an indicator of earnings quality.
D.Is highly affected by accounting principles of income recognition and measurement.
E.Is average net assets divided by cash flows from operations.
8) A company sells tablet computers for $1,300 each. The price includes a two-year
warranty. During the current year, the company sells 400 tablets. On the basis of past
experience, the warranty costs are estimated to be $280 per tablet. The actual warranty
costs (paid in cash) by the company during the current year were $65,000. Prepare
general journal entries to record the (a) estimated warranty expense and (b) warranty
repair costs during current year.
9) Walter Products and Sandburg Industries report the following information at
December 31:
Required:
(a) Which company is a manufacturer? Explain.
(b) Prepare the Current Asset Section of the Balance Sheet for the manufacturer.
10) A company had net income of $40,000, net sales of $300,000, and average total
assets of $200,000. Its profit margin and total asset turnover were respectively:
A.13.3%; 0.2.
B.13.3%; 1.5.
C.2.0%; 1.5.
D.1.5%; 0.2.
E.1.5%; 13.3.
11) On February 15, Jewel Company buys 7,000 shares of Marcelo Corp. common
stock 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 journal
entry to record the dividend on April 15 is:
A.Debit Cash $7,350; credit Dividend Revenue $7,350.
B.Debit Cash $8,050; credit Dividend Revenue $8,050.
C.Debit Cash $8,050; credit Interest Revenue $8,050.
D.Debit Cash $7,350; credit Interest Revenue $7,350.
E.Debit Cash $8,050; credit Gain on Sale of Investments $8,050.
12) Carter Pearson is a partner in Event Promoters. His beginning partnership capital
balance for the current year is $55,000, and his ending partnership capital balance for
the current year is $62,000. His share of this year’s partnership income was $6,250.
What is his partner return on equity?
A.5.34%
B.8.93%
C.10.08%
D.11.36%
E.10.68%
13) Examples of other subsidiary ledgers besides those for accounts receivable and
accounts payable may include all of the following except:
A.Equipment.
B.Cash.
C.Payroll.
D.Inventory.
E.Investments.
14) A company has earnings per share net income of $90,000; its weighted-average
common shares outstanding are 18,000. Its dividend per share is $0.45, its market price
per share is $88, and its book value per share is $76. Its price-earnings ratio equals:
A.9.0.
B.17.6.
C.12.5.
D.15.2.
E.16.9.
15) All of the following statements related to preparation of the statement of cash flows
under U.S. GAAP and IFRS are true except:
A.Both U.S. GAAP and IFRS permit the reporting of cash flows from operating
activities using either the direct or indirect method.
B.IFRS permits classification of cash outflows for interest expense under operating or
financing based on which one results in better cash flows from operating activities.
C.U.S. GAAP requires cash outflows for income tax be classified as operating
activities.
D.IFRS permits the splitting of income tax cash flows among operating, investing, and
financing depending on the sources of that tax.
E.IFRS permits classification of interest expense under operating or financing activities
provided it is consistently applied across periods.
16) A voucher is an internal document or file:
A.Prepared after an invoice is received.
B.Used as a substitute for an invoice if the supplier fails to send one.
C.Used to accumulate information needed to control cash disbursements and to ensure
that transactions are properly recorded.
D.Takes the place of a bank check.
E.Prepared before the company orders goods to make sure that all goods are being
ordered from an approved vendor list.
17) Match the following terms with the definitions.
A. Selling expense budget
B. Activity-based budgeting
C. Budgeted balance sheet
D. Budget
E. Sales budget
F. Capital expenditures budget
G. Continuous budgeting
H. Production budget
I. Cash budget
J. Rolling budgets
18) Provided below is a list of definitions and terms. Match them by placing the letter
that identifies the best definition in the blank space next to each term.
19) In the current year, Logic Co. purchased bonds of Waterford Co. with a cost of
$125,000 and a year-end fair value of $123,700. Logic also purchased 1,500 shares of
Jasper Co. common stock with a cost of $25,000 and a year-end fair value of $26,100.
These are classified as long-term available-for-sale securities. Prepare the journal entry
to record the market value of the investments as of its December 31 year-end.
20) On June 1, a company issued $200,000 of 12% bonds at their par value plus
accrued interest. The interest on these bonds is payable semiannually on January 1 and
July 1. Prepare the issuer’s journal entry to record the bond issuance of June 1.
21) At the beginning of the period, a company had $350,000 worth of assets, $110,000
worth of liabilities, and $240,000 worth of equity. Assume the only change during the
period was a $30,000 purchase of equipment by issuing a note payable. Show the
accounting equation with the appropriate amounts at the end of the period.
22) Match the following types of adjustments with the transactions.
23) The production budget for Greski Company revealed the following production
volume for the months of July-September. Each unit produced requires 2.5 hours of
direct labor. The direct labor rate is predicted to be $16 per hour in all months. Prepare
a direct labor budget for Greski Company for July-September.
24) The records of Roadmaster Auto Rentals show the following information as of
December 31. The owner, Rob Fletcher withdrew $52,000 during the year for personal
expenses. Prepare a December income statement, a December statement of owner’s
equity, and a December 30 balance sheet.
25) Floral Depot’s income before interest expense and income taxes was $5,900 million,
and interest expense was $38 million. Calculate Floral Depot’s times interest earned.
26) Duncan Crafts manufactures specialty key chains for tourist attractions. On January
1, the firm had 300 souvenir attraction disks used in the production of the chains that
cost $3 each; and 600 completed key chains that cost $6 each. During the year Duncan
Crafts purchased 1,500 souvenir disks costing $3 each and produced 1,100 key chains.
Compute the total cost of raw materials inventory at December 31.
27) Refer to the following information about the Finishing Department in the Davidson
Factory for the month of June. Davidson Factory uses the FIFO method of inventory
costing.
Compute the equivalent cost per unit for direct materials, direct labor and overhead for
June.