Cash paid for preferred stock dividends should be shown on the statement of cash flows
under
A.investing activities
B.financing activities
C.noncash investing and financing activities
D.operating activities
Answer:
Listed below are selected transactions completed by Ridge Company during March of
the current year.
(a) Record the transactions, using the accompanying revenue journal and cash receipts
journal.
(b) Total and rule the revenue and cash receipts journals.
(c) Indicate the method of posting the individual items and the columnar totals of the
revenue and cash receipts journals in the following manner:
(1) For individual items and totals to be posted to the subsidiary ledger or not to be
posted, insert a check mark in the Posting Reference column or below the totals.
(2) For individual items and totals to be posted to the general ledger, insert the letter
“G” (as a substitute for specific account numbers) in the Posting Reference column or
below the totals.
Answer:
The management of Charlton Corporation is considering the purchase of a new machine
costing $380,000. The company’s desired rate of return is 6%. The present value factor
for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing
information, use the following data in determining the acceptability in this situation:
The cash payback period for this investment is:
A.4 years
B.5 years
C.19 years
D.3.3 years
Answer:
Given the following data:
Dec. 31,2014 Dec. 31,2013
Total liabilities $128,250 $120,000
Total owner’s equity 95,000 80,000
Compute the ratio of liabilities to owner’s equity for each year. Round to two decimal
places.
A.1.50 and 1.07, respectively
B.1.35 and 1.50, respectively
C.1.07 and 1.19, respectively
D.1.19 and 1.35, respectively
Answer:
Which of the following is NOT a cost concept commonly used in applying the cost-plus
approach to product pricing?
A.Total cost concept
B.Product cost concept
C.Variable cost concept
D.Fixed cost concept
Answer:
Under the perpetual inventory system, all purchases of merchandise are debited to the
account entitled
A.Merchandise Inventory
B.Cost of Merchandise Sold
C.Cost of Merchandise Available for Sale
D.Purchases
Answer:
The following adjusting journal entry found in the journal is missing an explanation.
Select the best explanation for the entry.
A.Record payment of wages
B.Record wages paid last month
C.Record wages paid in advance
D.Record wages expense incurred and to be paid next month
Answer:
Blanton Corporation purchased 15% of the outstanding shares of common stock of
Worton Corporation as a long-term investment. Subsequently, Worton Corporation
reported net income and declared and paid cash dividends. What journal entry would
Blanton Corporation use to record the dividends it receives?
A.debit Investment in Worton Corporation; credit Cash
B.debit Cash; credit Dividend Revenue
C.debit Investment in Worton Corporation; credit Income of Worton Corporation
D.debit Cash; credit Investment in Worton Corporation
Answer:
The costs of services charged to a profit center on the basis of its use of those services
are called:
A.operating expenses
B.noncontrollable charges
C.service department charges
D.activity charges
Answer:
Notes Receivable due in 350 days appear on the
A.balance sheet in the current assets section
B.balance sheet in the fixed assets section
C.balance sheet in the current liabilities section
D.income statement as an expense
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 is the rate
earned on stockholders’ equity for 2012 (round percent to one decimal point)?
A.10.6%
B.11.1%
C.12.4%
D.14.0%
Answer:
The cost system best suited to industries that manufacture a large number of identical
units of commodities on a continuous basis is:
A.process
B.departmental
C.first-in, first-out
D.job order
Answer:
Using the following partial table of present value of $1 at compound interest, determine
the present value of $20,000 to be received four years hence, with earnings at the rate of
10% a year:
A.$13,660
B.$12,720
C.$15,840
D.$10,400
Answer:
If Department H had 600 units, 60% completed, in process at the beginning of the
period, 8,000 units were completed during the period, and 500 units were 30%
completed at the end of the period, what was the number of equivalent units of
production for the period for conversion if the first-in, first-out method is used to cost
inventories? Assume the completion percentage applies to both direct materials and
conversion cost.
A.7,790
B.8,390
C.8,600
D.8,000
Answer:
A check drawn by a company for $340 in payment of a liability was recorded in the
journal as $430. What entry is required in the company’s accounts?
A.debit Accounts Payable; credit Cash
B.debit Cash; credit Accounts Receivable
C.debit Cash; credit Accounts Payable
D.debit Accounts Receivable; credit Cash
Answer:
What effect does this journal entry have on the accounts?
A.Decrease accounts payable, increase cash
B.Increase cash, decrease accounts payable
C.Increase accounts payable, increase cash
D.Decrease accounts payable, decrease cash
Answer:
Costs that remain constant in total dollar amount as the level of activity changes are
called:
A.fixed costs
B.mixed costs
C.product costs
D.variable costs
Answer:
Merchandise with a list price of $4,200 and costing $2,300 is sold on account, subject
to the following terms: FOB destination, 2/10, n/30. The seller prepays the freight costs
of $85 (debit Freight Out for the freight costs). Prior to payment for the goods, the
seller issues a credit memo for $750 to the customer for merchandise costing $425 that
is returned. The correct amount is received within the discount period. The company
uses a perpetual inventory system.
Record the foregoing transactions of the seller in the sequence indicated below.
(a) Sold the merchandise, recognizing the sale and cost of merchandise sold.
(b) Paid the freight charges.
(c) Issued the credit memo.
(d) Received payment from the customer.
Answer:
Equipment with a cost of $160,000, an estimated residual value of $40,000, and an
estimated life of 15 years was depreciated by the straight-line method for 4 years. Due
to obsolescence, it was determined that the useful life should be shortened by 3 years
and the residual value changed to zero. The depreciation expense for the current and
future years is
A.$11,636
B.$16,000
C.$11,000
D.$8,000
Answer:
Bonds that are subject to retirement at a stated dollar amount prior to maturity at the
option of the issuer are called
A.debentures
B.callable bonds.
C.early retirement bonds.
D.options.
Answer:
The recording of the jobs shipped and customers billed would include a debit to:
A.Accounts Payable
B.Cash
C.Finished Goods
D.Cost of Goods Sold
Answer:
Which of the following accounts normally has a subsidiary ledger?
A.capital stock
B.retained earnings
C.supplies
D.accounts payable
Answer:
Which of the following is not an assumption underlying cost-volume-profit analysis?
A.The break-even point will be passed during the period.
B.Total sales and total costs can be represented by straight lines.
C.Costs can be accurately divided into fixed and variable components.
D.The sales mix is constant.
Answer:
The receivable that is usually evidenced by a formal instrument of credit is a(n)
A.trade receivable.
B.note receivable.
C.accounts receivable.
D.income tax receivable.
Answer:
If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even
point (dollars)?
A.$2,125,000
B.$ 340,000
C.$3,400,000
D.$1,416,666
Answer:
A disadvantage of static budgets is that they:
A.are dependent on previous year’s actual results
B.cannot be used by service companies
C.do not show possible changes in underlying activity levels
D.show the expected results of a responsibility center for several levels of activity
Answer:
Cash paid to purchase long-term investments would be reported in the statement of cash
flows in
A.the cash flows from operating activities section
B.the cash flows from financing activities section
C.the cash flows from investing activities section
D.a separate schedule
Answer:
All of the following would be reported on the balance sheet as a current asset except:
A.factory overhead
B.materials inventory
C.finished goods inventory
D.work in process inventory
Answer:
The following data are available from the accounting records of Suwanee Co. for the
month ended May 31, 2012. 17,000 units were manufactured and sold during the
accounting period at a price of $60 per unit. There was no beginning inventories and all
units were completed (no work in process).
Answer:
The following are examples of external users of accounting information except:
A.government
B.customers
C.creditors
D.all of the above
Answer: