The budgeted balance sheet assumes that all operating and financing plans are met.
Answer:
The financial statements are prepared from the unadjusted trial balance.
Answer:
Capital expenditures are costs that are charged to Stockholders’ Equity accounts.
Answer:
A responsibility center in which the department manager has responsibility for and
authority over costs, revenues, and assets invested in the department is termed a cost
center.
Answer:
There is really no benefit in preparing financial statements in any particular order.
Answer:
Eliminating a product or segment may have the long-term effect of reducing fixed costs.
Answer:
Unearned revenues that will be earned in a relatively short period of time are listed on
the balance sheet as current assets.
Answer:
Any gains or losses on the sale of bonds normally would be reported in the Other
Income (Loss) section of the income statement.
Answer:
If ending inventory for the year is understated, net income for the year is overstated.
Answer:
Adjustments for accruals are needed to record a revenue that has been earned or an
expense that has been incurred but not recorded.
Answer:
One of the primary uses of a cost of production report is to assist management in
controlling production costs.
Answer:
Factory overhead is an example of a product cost.
Answer:
If in evaluating a proposal by use of the net present value method there is an excess of
the present value of future cash inflows over the amount to be invested, the rate of
return on the proposal is less than the rate used in the analysis.
Answer:
Prime costs are the combination of direct materials and direct labor costs.
Answer:
The capital expenditures budget summarizes future plans for acquisition of fixed assets.
Answer:
It is correct to rely exclusively on past cost data when establishing standards.
Answer:
The responsibility for coordinating the preparation of a master budget should be
assigned to the CEO of a firm.
Answer:
When a business receives a bill from the utility company, no entry should be made until
the invoice is paid.
Answer:
In preparing the statement of cash flows, the correct order of reporting cash activities is
Financing, Operating, Investing.
Answer:
Accounting for the sale of stock is the same for both the cost and the equity methods of
accounting for investments.
Answer:
Businesses who have several bank accounts, petty cash, and cash on hand, would
maintain a separate ledger account for each type of cash.
Answer:
In computing the rate earned on total assets, interest expense is subtracted from net
income before dividing by average total assets.
Answer:
All costs of the processes in a process costing system ultimately pass through the Cost
of Goods Sold account.
Answer:
Accounts in the ledger are usually maintained in alphabetical order.
Answer:
Premium on bonds payable may be amortized by the straight-line method if the results
obtained by its use do not materially differ from the results obtained by use of the
interest method.
Answer:
For years one through five, a proposed expenditure of $250,000 for a fixed asset with a
5-year life has expected net income of $40,000, $35,000, $25,000, $25,000, and
$25,000, respectively, and net cash flows of $90,000, $85,000, $75,000, $75,000, and
$75,000, respectively. The cash payback period is 3 years.
Answer:
The service fee that credit card companies charge retailers varies and is the primary
reason why some businesses do not accept all credit cards.
Answer:
The contribution margin ratio is the same as the profit-volume ratio.
Answer:
FICA tax is a payroll tax that is paid only by employers.
Answer:
In establishing a petty cash fund, a check is written for the amount of the fund and is
recorded as a debit to Accounts Payable and a credit to Petty Cash.
Answer:
If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary
to earn an operating income of $50,000 are 10,000 units.
Answer:
Updating information in a computerized accounting system happens at the end of the
month.
Answer:
In preparing a bank reconciliation, the amount indicated by a debit memo for bank
service charges is added to the balance per company’s records.
Answer:
If Department H had 600 units, 60% completed, in process at the beginning of the
period, 6,000 units were completed during the period, and 700 units were 30%
completed at the end of the period, what was the number of equivalent units of
production for conversion costs for the period, if the first-in, first-out method is used to
cost inventories?
A.7,300
B.5,640
C.6,700
D.5,850
Answer:
A capital expenditure results in a debit to
A.an expense account
B.a capital account
C.a liability account
D.an asset account
Answer:
Partners Ken and Macki each have a $40,000 capital balance and share income and
losses in a 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities
equal $60,000. If the noncash assets are sold for $50,000, and each partner is personally
insolvent, Partner Macki will eventually receive cash of
A.$0.
B.$10,000.
C.$12,000.
D.$20,000.
Answer:
Which one of the following below is not a factor that influences a business’s control
environment?
A.management’s philosophy and operating style
B.organizational structure
C.proofs and security measurers
D.personnel policies
Answer:
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
Answer:
A check drawn by a company for $340 in payment of a liability was recorded in the
journal as $430. This item would be included on the bank reconciliation as a(n)
A.addition to the balance per the company’s records
B.addition to the balance per the bank statement
C.deduction from the balance per the bank statement
D.deduction from the balance per the company’s records
Answer:
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months were: January – 200,000 units; February –
180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company
wishes to maintain a desired ending finished goods inventory of 20% of the following
months sales.
What would be the budgeted production for February?
A.186,000
B.181,000
C.222,000
D.174,000
Answer:
Which of the following is considered to be an accrued expense?
A.A computer technician has installed the latest software updates and was paid on the
same day.
B.A computer technician has been paid in advance to install software updates as they
become available.
C.A computer technician has just signed an agreement with you regarding pricing for
future work.
D.A computer technician has installed the latest software updates, but you have not
received their invoice for payment.
Answer:
For accounting purposes, the business entity should be considered separate from its
owners if the entity is
A.a corporation
B.a proprietorship
C.a partnership
D.all of the above
Answer:
The process of transferring the cost of metal ores and other minerals removed from the
earth to an expense account is called
A.depletion
B.deferral
C.amortization
D.depreciation
Answer:
Which of the following expressions is termed the profit margin factor as used in
determining the rate of return on investment?
A.Sales/Income From Operations
B.Income From Operations/Sales
C.Invested Assets/Sales
D.Sales/Invested Assets
Answer:
At the end of the current year, Accounts Receivable has a balance of $700,000;
Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the
year total $3,500,000. Bad debt expense is estimated at 1/2 of 1% of net sales.
Determine (a) the amount of the adjusting entry for bad debt expense; (b) the adjusted
balances of Accounts Receivable, Allowance of Doubtful Accounts; and Bad Debt
Expense; and (c) the net realizable value of accounts receivable.
Answer:
Month-end posting to controlling accounts in a computerized accounting system is not
required because
A.controlling accounts are not used in computerized systems.
B.transactions are posted to accounts immediately.
C.the input operator can choose to post to accounts at any time.
D.computerized accounting posts entry at the end of the financial year.
Answer:
Which of the following situations increase owner’s equity?
A.Supplies are purchased on account.
B.Services are provided on account.
C.Cash is received from customers.
D.Utility bill will be paid next month.
Answer:
The cash flows from operating activities are reported by the direct method on the
statement of cash flows. Determine the following:
Answer:
A number of major structural repairs completed at the beginning of the current fiscal
year at a cost of $1,000,000 are expected to extend the life of a building 10 years
beyond the original estimate. The original cost of the building was $6,552,000, and it
has been depreciated by the straight-line method for 25 years. Estimated residual value
is negligible and has been ignored. The related accumulated depreciation account after
the depreciation adjustment at the end of the preceding fiscal year is $4,550,000.
(a) What has the amount of annual depreciation been in past years?
(b) What was the original life estimate of the building?
(c) To what account should the $1,000,000 be debited?
(d) What is the book value of the building after the extraordinary repairs have been
made?
(e) What is the expected remaining life of the building after the extraordinary repairs
have been made?
(f) What is the amount of straight-line depreciation for the current year, assuming that
the repairs were completed at the very beginning of the current year? Round to the
nearest dollar.
Answer:
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 into Department 2 during the period for
applied overhead is:
A.Factory Overhead–Department 280,000
Work in Process–Department 280,000
B.Work in Process–Department 2230,000
Factory Overhead–Department 2230,000
C.Work in Process–Department 280,000
Factory Overhead–Department 280,000
D.Work in Process–Department 2150,000
Factory Overhead–Department 2150,000
Answer:
The cost of a manufactured product generally consists of which of the following costs?
A.Direct materials cost and factory overhead cost
B.Direct labor cost and factory overhead cost
C.Direct labor cost, direct materials cost, and factory overhead cost
D.Direct materials cost and direct labor cost
Answer:
The standard costs and actual costs for direct labor for the manufacture of 2,500 actual
units of product are as follows:
The amount of the direct labor rate variance is:
A.$2,960 unfavorable
B.$4,500 favorable
C.$2,960 favorable
D.$4,500 unfavorable
Answer:
Production and sales estimates for June are as follows:
The number of units expected to be manufactured in June is:
A.15,500
B.17,500
C.16,500
D.13,500
Answer:
During a bank reconciliation process,
A.Outstanding checks and deposits in transit are added to the bank statement balance.
B.Outstanding checks are subtracted and deposits in transit are added to the bank
statement balance.
C.Outstanding checks and deposits in transit are subtracted from the bank statement
balance.
D.Outstanding checks are added and deposits in transit are subtracted from the bank
statement balance.
Answer:
The document authorizing the issuance of materials from the storeroom is the:
A.materials requisition
B.purchase requisition
C.receiving report
D.purchase order
Answer:
On July 1st, Hartford Construction purchases a bulldozer for $228,000. The equipment
has a 9 year life with a residual value of $16,000. Hartford uses units-of-production
method depreciation and the bulldozer is expected to yield 26,500 operating hours.
(a) Calculate the depreciation expense per hour of operation.
(b) The bulldozer is operated 1,250 hours in the first year, 2,755 hours in the second
year, and 1,225 hours in the third year of operations. Journalize the depreciation
expense for each year.
Answer:
The management of Wyoming Corporation is considering the purchase of a new
machine costing $375,000. 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 net present value for this investment is:
A.Negative $118,145
B.Positive $118,145
C.Positive $19,875
D.Negative $19,875
Answer:
Which one of the following accounts below would likely be included in a deferral
adjusting entry?
A.Interest Revenue
B.Unearned Revenue
C.Salaries Payable
D.Accounts Receivable
Answer:
Countries outside the U.S. use financial accounting standards issued by the:
A.AICPA
B.SEC
C.IASB
D.FASB
Answer:
Department W had 2,400 units, one-third completed at the beginning of the period,
16,000 units were transferred to Department X from Department W during the period,
and 1,800 units were one-half completed at the end of the period. Assume the
completion ratios apply to direct materials and conversion costs.
What is the equivalent units of production used to compute unit conversion cost on the
cost of production report for Department W (Assuming the company uses FIFO)?
A.16,100 units
B.13,600 units
C.15,000 units
D.18,500 units
Answer:
Department E had 4,000 units in Work in Process that were 40% completed at the
beginning of the period at a cost of $12,500. 14,000 units of direct materials were added
during the period at a cost of $28,700. 15,000 units were completed during the period,
and 3,000 units were 75% completed at the end of the period. All materials are added at
the beginning of the process. Direct labor was $32,450 and factory overhead was
$18,710.
The number of equivalent units of production for the period for conversion if the
average cost method is used to cost inventories was:
A.15,650
B.14,850
C.18,000
D.17,250
Answer:
Benson and Orton are partners who share income in the ratio of 2:3 and have capital
balances of $60,000 and $40,000 respectively. Ramsey is admitted to the partnership
and is given a 10% interest by investing $20,000. What is Orton’s capital balance after
admitting Ramsey?
A.$44,800
B.$35,200
C.$20,000
D.$16,000
Answer:
If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the
break-even point in units if variable costs are decreased by $.50 a unit?
A.66,000
B.70,125
C.74,800
D.60,000
Answer:
When Bayou Corporation was formed on January 1, 20xx, the corporate charter
provided for 100,000 share of $10 par value common stock. The following transaction
was among those engaged in by the corporation during its first month of operation: The
corporation issued 9,000 shares of stock at a price of $23 per share.
The entry to record the above transaction would include a
A.debit to Cash for $90,000
B.credit to Common Stock for $207,000
C.credit to Paid in Capital in Excess of Par for $117,000
D.debit to Common Stock for $90,000
Answer:
Below is a table for the present value of $1 at Compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, what would be the present value of $10,000 (rounded to the
nearest dollar) to be received three years from today, assuming an earnings rate of 6%?
A.$8,400
B.$8,900
C.$7,920
D.$11,905
Answer:
Woodpecker Co. has $296,000 in accounts receivable on January 1. Budgeted sales for
January are $860,000. Woodpecker Co. expects to sell 20% of its merchandise for cash.
Of the remaining 80% of sales on account, 75% are expected to be collected in the
month of sale and the remainder the following month. The January cash collections
from sales are:
A.$812,000
B.$688,000
C.$468,000
D.$984,000
Answer:
In which order are the accounts listed in the chart of accounts?
A.assets, expenses, liabilities, owner’s equity, revenues
B.owners’ equity, assets, liabilities, revenues, expenses
C.assets, liabilities, owner’s equity, revenues, expenses
D.assets, liabilities, revenues, expenses, owners’ equity
Answer:
Ramierez Company received their first electric bill in the amount of $60 which will be
paid next month. How will this transaction affect the accounting equation?
Answer:
The discovery and correction of errors is important in a computerized system. What
kind of error(s) might occur in these systems? What type of error(s) will be prevented in
a computerized system?
Answer:
Gull Corp. is considering selling its old popcorn machine and replacing it with a newer
one. The old machine has a book value of $5,000 and its remaining useful life is 5
years. Annual costs are $4,000. A high school is willing to buy it for $2,000. New
equipment would cost $18,000 and annual operating costs would be $1,500. The new
machine has an estimated useful life of 5 years. Should the machine be replaced?
Support your answer with calculations.
Answer:
Answer:
Flagler Company allocates overhead based on machine hours. They estimated overhead
costs for the year to be $420,000. Estimated machine hours were 50,000. Actual hours
and costs for the year were 46,000 machine hours and $380,000 of overhead.
a. Calculate the overhead application rate for the year.
b. What is the amount of applied overhead for the year?
c. What is the amount of under or overapplied overhead for the year? Indicate whether
it is over- or underapplied.
Answer:
Answer:
The total assets and the total liabilities of a business at the beginning and at the end of
the year appear below. During the year, the owner had withdrawn $55,000 for personal
use and had made an additional investment of $33,000 in the business.
Calculate the net income for the year.
Answer:
After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the
following balances are taken from the ledger of Taylor Pool Service Company:
Journalize the four entries required to close the accounts
Answer:
An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40
hours per week. Assume that the employee worked 60 hours during the week, and that
the gross pay prior to the current week totaled $58,000. Assume further that the social
security tax rate was 7.0% (on earnings up to $100,000), the Medicare tax rate was
1.5%, and the federal income tax to be withheld was $614.
Answer:
Cost of merchandise sold reported on the income statement was $155,000. The accounts
payable balance increased $5,000, and the inventory balance increased by $11,000 over
the year. Determine the amount of cash paid for merchandise.
Answer:
Krammer Company has liabilities equal to one fourth of the total assets. Krammer’s
owner’s equity is $45,000. Using the accounting equation, what is the amount of
liabilities for Krammer?
Answer:
Derek and Hailey, partners sharing net income in the ratio of 2:1, admit Ben to the
partnership in accordance with the following agreement:
Answer:
Discuss how job order cost information is used in decision making. What are some
possible reasons that actual cost of materials would exceed expected costs for a job?
Answer:
An analysis of the general ledger accounts indicates that equipment, with an original
cost of $134,000 and accumulated depreciation of $105,000 on the date of sale, was
sold for $20,000 during the year. Using this information, indicate the items to be
reported on the statement of cash flows using the indirect method.
Answer:
After the tangible assets have been adjusted to current market prices, the capital
accounts of Harper and Kahlil have balances of $60,000 and $90,000, respectively. Fay
is to be admitted to the partnership, contributing $45,000 cash, for which she is to
receive an ownership equity of $60,000. All partners share equally in income.
(1) Journalize the entry to record the admission of Fay, who is to receive a bonus of
$15,000.
(2) What are the capital balances of each partner after the admission of the new partner?
Answer:
During 2012, its first year of operations, Makala Company purchased two
available-for-sale investments as follows:
Assume that as of December 31, 2012, the Oceanna Company stock had a market value
of $49 per share and Rockledge, Inc. stock had a market value of $20 per share.
Makala had 10,000 shares of no par stock outstanding that was issued for $150,000. For
the year ending December 31, 2012, Makala had a net income of $105,000. No
dividends were paid.
Answer:
The Torre Company has the following balances in stockholders equity on December
31st.
Common Stock – $5.00 par, 60,000 issued $300,000
Additional paid in capital – common 600,000
Preferred stock – $100 par, 5,000 issued 500,000
Additional paid in capital – preferred 100,000
Retained earnings 200,000
Treasury stock (cost – $12.00 per share) 60,000
Answer the following questions:
1.)How many shares of treasury stock are owned?
2) What was the average market price per share at which common stock was issued?
3) What was the average market price per share at which preferred stock was issued?
4) What is the total value of the Paid in Capital portion of stockholders equity?
5) What is the total value of stockholders equity?
6) How many shares of common stock are outstanding?
7) If net income for the year was $75,000 and a preferred stock dividend of $20,000
was paid,
what was the beginning value of retained earnings? How much is earnings per share for
the year?
Answer: