1) Make-to-order companies produce mainly to stock inventory.
2) The current year’s advertising costs are normally considered period costs.
3) Variable costs are costs that vary in total in direct proportion to changes in the
activity level.
4) A corporation often issues callable bonds to protect itself against significant declines
in future interest rates.
5) Within-batch wait time increases total lead time.
6) The sales budget is the starting point for preparation of the direct labor cost budget.
7) Ratios and various other analytical measures are not a substitute for sound judgment,
nor do they provide definitive guides for action.
8) In the just-in-time (JIT) philosophy, unexpected downtime is the result of unreliable
processes.
9) Held-to-maturity securities are reported on the balance sheet at fair market value.
10) The totals of the Adjusted Trial Balance columns on a work sheet will always be the
sum of the Trial Balance column totals and the Adjustments column totals.
11) Generally accepted accounting principles (GAAP) require the use of fair value
accounting for all assets and liabilities.
12) A work sheet includes columns for
A.adjusting entries
B.closing entries
C.reversing entries
D.adjusting and closing entries
13) Cost of Materials Used $45,000
Direct Labor costs $48,000
Factory Overhead $39,000
Work in Process, beg. $28,000
Work in Process, end. $18,000
Finished Goods,beg. $28,000
Finished Goods, end. $18,000
What is Cost of Goods Sold?
A.$152,000
B.$142,000
C.$10,000
D.$128,000
14) On December 1st, JumpStart Company provides $2,800 in services to clients.
(a) Journalize this event as if the clients had paid cash at the time the services were
rendered.
(b) (1) Journalize this event as if the clients had placed this on account.
(b) (2) Assume that the clients paid $1,200 of the amount on account on December
30th. Journalize this transaction.
What is the amount of Raw Materials Used?
A.$5,000
B.$65,000
C.$75,000
D.$30,000
16) Hsu Company produces a part with a standard of 5 yds. of material per unit. The
standard price of one yard of material is $8.50. During the month, 8,800 parts were
manufactured, using 45,700 yards of material at a cost of $8.30.
Required:
Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
17) In most business organizations, the chief management accountant is called the:
A.chief accounting officer
B.controller
C.chairman of the board
D.chief executive officer
18) Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share.
When the transaction is recorded, credits are made to:
A.Common Stock $15,000 and Paid-in Capital in Excess of Par Value $7,000
B.Common Stock $22,000 and Retained Earnings $15,000
C.Common Stock $7,000 and Paid-in Capital in Excess of Stated Value $15,000
D.Common Stock $22,000
19) In contribution margin analysis, the unit price or unit cost factor is computed as:
A.the difference between the actual unit price or unit cost and the planned unit price or
cost, multiplied by the planned quantity sold
B.the difference between the actual unit price or unit cost and the planned unit price or
cost, multiplied by the actual quantity sold
C.the difference between the actual quantity sold and the planned quantity sold,
multiplied by the planned unit sales price or unit cost
D.the difference between the actual quantity sold and the planned quantity sold,
multiplied by the actual unit sales price or unit cost
20) A difference in quantity of materials used on two comparable jobs may be caused
by:
A.inadequately trained employees
B.poor quality materials
C.employee carelessness
D.all of the above
21) The charter of a corporation provides for the issuance of 100,000 shares of common
stock. Assume that 40,000 shares were originally issued and 10,000 were subsequently
reacquired. What is the number of shares outstanding?
A.10,000
B.40,000
C.30,000
D.50,000
22) Which of the following statements concerning taxation is accurate?
A.Corporations pay federal income taxes but not state income taxes
B.Corporations pay federal and state income taxes
C.Only the owners must pay taxes on corporate income
D.Corporations pay income taxes but their owners do not
23) In cost-volume-profit analysis, all costs are classified into the following two
categories:
A.mixed costs and variable costs
B.sunk costs and fixed costs
C.discretionary costs and sunk costs
D.variable costs and fixed costs
24) The amount of cash to be reported on the balance sheet at June30 is the
A.total of the cash column in the cash receipts journal as ofJune 30
B.adjusted balance appearing in the bank reconciliation for June30
C.total of the cash column in the cash payments journal as of June 30
D.balance as of June 30 on the bank statement
25) When a buyer returns merchandise purchased for cash, the buyer may record the
transaction using the following entry
A.debit Merchandise Inventory; credit Cash
B.debit Cash; credit Merchandise Inventory
C.debit Cash; credit Sales Returns and Allowances
D.debit Sales Returns and Allowances; credit Cash
26) 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
27) Short-term creditors are typically most interested in assessing
A.marketability
B.profitability
C.operating results
D.solvency
28) Which of the following accounts increase with a credit?
A.capital stock, revenues, expenses
B.assets, capital stock, revenues
C.liabilities, capital stock, revenues
D.retained earnings, capital stock, assets
29) Taking advantage of a 2/10, n/30 purchases discount is equal to a savings yearly
rate of approximately
A.2%
B.24%
C.20%
D.36%
30) Bonds with a face amount $1,000,000, are sold at 96. The entry to record the
issuance is
A.Cash 1,000,000
Premium on Bonds Payable 40,000
Bonds Payable 960,000
B.Cash 960,000
Premium on Bonds Payable 40,000
Bonds Payable 1,000,000
C.Cash 960,000
Discount on Bonds Payable 40,000
Bonds Payable 1,000,000
D.Cash 960,000
Bonds Payable 960,000
31) Silver River Company sells Products S and T and has made the following estimates
for the coming year:
Fixed costs are estimated at $202,400. Determine (a) the estimated sales in units of the
overall product necessary to reach the break-even point for the coming year, (b) the
estimated number of units of each product necessary to be sold to reach the break-even
point for the coming year, and (c) the estimated sales in units of the overall product
necessary to realize an operating income of $119,600 for the coming year.
32) Division X reported income from operations of $975,000 and total service
department charges of $575,000. Therefore:
A.net income was $400,000
B.the gross profit margin was $400,000
C.income from operations before service department charges was $1,550,000
D.consolidated net income was $400,000
33) Using the FIFO method, the cost of goods completed and transferred out during
July was (use average cost per unit rounded to four decimal places in computations)
A.$227,270
B.$225,060
C.$236,905
D.$228,200
34) Which group of accounts is comprised of only assets?
A.Cash, Accounts Payable, Buildings
B.Accounts Receivable, Revenue, Cash
C.Prepaid Expenses, Buildings, Patents
D.Unearned Revenues, Prepaid Expenses, Cash
35) Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. The records further indicate that direct materials, direct labor,
and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000,
respectively. In addition, work in process at the beginning of the period for Department
1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs from Department 1 into Department 2
during the period is:
A.Work in Process–Department 2390,000
Work in Process–Department 1390,000
B.Work in Process–Department 2330,000
Work in Process–Department 1330,000
C.Work in Process–Department 2215,000
Work in Process–Department 1215,000
D.Work in Process–Department 2375,000
Work in Process–Department 1375,000
36) An employee receives an hourly rate of $27, with time and a half for all hours
worked in excess of 40 during a week. Payroll data for the current week are as follows:
hours worked, 46; federal income tax withheld, $350; cumulative earnings for year
prior to current week, $99,700; social security tax rate, 6.0% on maximum of $100,000;
and Medicare tax rate, 1.5% on all earnings. What is the net amount to be paid to the
employee?
A.$713.75
B.$935.15
C.$764.75
D.$873.77
37) The following data are taken from the balance sheet at the end of the current year.
Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Present figures
used in your computations. Round ratios to the nearest tenth.
38) Percentage analyses, ratios, turnovers, and other measures of financial position and
operating results are
A.a substitute for sound judgment
B.useful analytical measures
C.enough information for analysis, industry information is not needed
D.unnecessary for analysis, but reaction is better
39) If Beginning Inventory (BI) + Purchases (P) – Ending Inventory (EI) = Cost of
Goods Sold (COGS), an equivalent equation can be written as?
A.BI + P = COGS – EI
B.BI – P = COGS + EI
C.BI + P = COGS + EI
D.EI + P = COGS – BI
40) An aging of a company’s accounts receivable indicates that the estimate of
uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300
debit balance, the adjustment to record the bad debt expense for the period will require
a
A.debit to Bad Debt Expense for $7,700
B.debit to Bad Debt Expense for $6,400
C.debit to Bad Debt expense for $5,100
D.credit to Allowance for Doubtful Accounts for $1,300
41) A business issued a 120-day, 6% note for $10,000 to a creditor on account. The
company uses a 360-day year for interest calculations. Journalize the entries to record
(a) the issuance of the note and (b) the payment of the note at maturity, including
interest.
42) Numbers of times interest charges earned is computed as
A.Income before income taxes plus Interest Expense divided by Interest Expense
B.Income before income taxes less Interest Expense divided by Interest Expense
C.Income before income taxes divided by Interest Expense
D.Income before income taxes plus Interest Expense divided by Interest Revenue
43) A manufacturing company applies factory overhead based on direct labor hours. At
the beginning of the year, it estimated that factory overhead costs would be $360,000
and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred
were $377,200, and actual direct labor hours were 36,000. The entry to apply the
factory overhead costs for the year would include a
A.debit to factory overhead for $360,000
B.credit to factory overhead for $432,000
C.debit to factory overhead for $377,200
D.credit to factory overhead for $360,000
44) On June 1, 2014, Aaron Company purchased equipment at a cost of $120,000 that
has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000
hours.
Using straight line depreciation, calculate depreciation expense for the last year.
A.$17,500
B.$30,000
C.$12,500
D.$40,000
45) For the year ended December 31, 2014 Depot Maxs cost of merchandise sold was
$56,900. Inventory at the beginning of the year was $6,540. Ending inventory was
$7,250. Depot Maxs number of days sales in inventory is closest to
A.42
B.46
C.8
D.44
46) Inventory reduction is a ____ principle.
A.just-in-time
B.traditional processing
C.economic
D.wait time
47) The transfer price that must be less than the market price but greater than the
supplying divisions variable costs per unit is called
A.the cost price approach
B.the negotiated cost approach
C.the standard cost approach
D.the market price approach
48) Prior to the last weekly payroll period of the calendar year, the cumulative earnings
of employees A and B are $99,350 and $91,000 respectively. Their earnings for the last
completed payroll period of the year are $850 each. The maximum amount of earnings
subject to social security tax at 6% is $100,000. All earnings are subject to Medicare tax
of 1.5%. Assuming that the payroll will be paid on December 29, what will be the
employer’s total FICA tax for this payroll period on the two salary amounts of $850
each?
A.$127.50
B.$115.50
C.$112.50
D.$0
49) The Keith Company reports the following data.
Determine Keith Companys operating leverage.
50) Amos Moving Services account balances at March 31, 2014, the end of the current
year, are listed below. The Retained Earnings balance was $180,000 at April 1, 2013,
the beginning of the current year.
Based on the data provided for Amos Moving Services, prepare a balance sheet for the
current year ended March 31, 2014.
51) On the first day of the fiscal year, a company issues a $500,000, 8%, 10 year bond
that pays semi-annual interest of $20,000 ($500,000 8% 1/2), receiving cash of
$520,000. Journalize the entry to record the first interest payment and amortization of
premium using the straight-line method.
52) Information for the Sandy Manufacturing Company for the month of July 2012 is as
follows:
Prepare a cost of production report for the month of July, using the FIFO method.
53) Beginning inventory, purchases and sales data for tennis rackets are as follows:
Complete the inventory cost card assuming the business maintains a perpetual
inventory system and calculates the cost of merchandise sold and ending inventory
using FIFO.
54) A company reports the following:
Determine the ratio of net sales to total assets. Round your answer to one decimal place.
55) Each of the following transactions for Morrison Company requires an adjusting
entry, which if omitted, will overstate or understate assets, liabilities, stockholders
equity, revenues, expenses, or net income. Indicate the amount and direction of the
misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and
use (+) for overstate, (-) for understate, and (NE) for no effect.
1> Morrison purchased supplies on December 1 for $900. On December 31, $350 of
supplies were on hand.
2> Prepaid insurance had a debit balance of $5,400 on December 1, which represented
a prepayment for 2 years of insurance.
3> The unearned rent revenue account has a credit balance of $390 on December 1,
which represents 3 months rent.