1) Capital expenditures are costs that are charged to Stockholders’ Equity accounts.
2) The seller records the sales tax as part of the sales amount.
3) The closing process is sometimes referred to as closing the books.
4) Other receivables include non trade receivables such as loans to company officers.
5) A company must choice either a standard system or nonfinancial performance
measures to evaluate the performance of a company.
6) All owners equity accounts record increases to the accounts with credits.
7) The work sheet is not considered a part of the formal accounting records.
8) In using the total cost concept of applying the cost-plus approach to product pricing,
selling expenses, administrative expenses, and profit are covered in the markup.
9) A personal withdrawal of cash is recorded in the general journal.
10) A rental cost of $20,000 plus $.70 per machine hour of use is an example of a mixed
cost.
11) Though favorable volume variances are usually good news, if inventory levels are
too high, additional production could be harmful.
12) Callable bonds can be redeemed by the issuing corporation at the fair market price
of the bonds.
13) An extraordinary item must be either unusual in nature or infrequent in occurrence.
14) Which of the following accounts is an owner’s equity account?
A.Cash
B.Accounts Payable
C.Prepaid Insurance
D.Ross Morris, Capital
15) ABC Corporation has three service departments with the following costs and
activity base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
What will the income of the Macro Division be after all service department allocations?
A.$780,000
B.$375,000
C.$575,000
D.$435,000
16) Sineath Industries had a fire and some of its accounting records were destroyed.
Available information is presented below for the year ended December 31, 2011.
Additional information is as follows:
Factory overhead is 150% of direct labor cost.
Finished goods inventory decreased by $18,000 during the year.
Work in process inventory increased by $12,000 during the year.
Calculate:
a) materials inventory, January 1, 2011
b) direct labor cost
c) factory overhead incurred
d) cost of goods sold
17) A series of equal cash flows at fixed intervals is termed a(n):
A.present value index
B.price-level index
C.net cash flow
D.annuity
18) The phase of accounting system installation in which the information needs of
people in the organization are taken into account is
A.analysis
B.design
C.implementation
D.installation
19) Truliant co. sells a product called Withall and has predicted the following sales for
the first four months of the current year:
Ending inventory for each month should be 20% of next months sales, and the
December 31 inventory is consistent with that policy. How many units should be
purchased in February?
A.1,940
B.1,800
C.1,900
D.1,850
20) Target costing is arrived at by
A.taking the selling price and subtracting desired profit
B.taking the selling price and adding desired profit
C.taking the selling price and subtracting the budget standard cost
D.taking the budget standard cost and reducing it by 10%
21) Inventory controls start when the merchandise is shelved in the store area.
22) Under the equity method, the receipt of cash dividends on an investment in
common stock of Vallerio Corporation is accounted for as a debit to Cash and a credit to
A.Investment in Vallerio
B.Retained Earnings
C.Dividend Revenue
D.Dividend Receivables
23) Which of the following is not a characteristic of a general partnership?
A.the partnership is created by a contract
B.mutual agency
C.partners share equally in net income or net losses unless an agreement states
differently
D.dissolution occurs only when all partners agree
24) Bentz Co. has two divisions, A and B. Invested assets and condensed income
statement data for each division for the past year ended December 31 are as follows:
25) Indirect labor and indirect materials are classified as:
A.factory overhead and product costs
B.factory overhead and period costs
C.operating costs and period costs
D.operating costs and product costs
26) Martin Services Company provides their employees vacation benefits and a defined
contribution pension plan. Employees earned vacation pay of $39,500 for the period.
The pension plan requires a contribution to the plan administrator equal to 9% of
employee salaries. Salaries were $750,000 during the period. Provide the journal entry
for (a.) the vacation pay and (b.) the pension benefit.
27) Which of the following is not one of the common types of responsibility centers?
A.Cost Center
B.Profit Center
C.Investment Center
D.Revenue Center
28) The Waterfall Company sells a product for $150 per unit. The variable cost is $80
per unit, and fixed costs are $270,000. Determine the (a) break-even point in sales units,
and (b) break-even points in sales units if the company desires a target profit of
$36,000. Round your answer to the nearest whole number.
29) Which of the following types of transactions would be reported as a cash flow from
investing activity on the statement of cash flows?
A.issuance of bonds payable
B.issuance of capital stock
C.purchase of treasury stock
D.purchase of noncurrent assets
30) Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of Xs and
35,000 units of Ys. Related data are:
What was Rusty Co.s weighted average unit contribution margin?
A.$60.00
B.$20.00
C.$40.00
D.$22.50
31) Match the following terms to the most appropriate answer:
1>the rate printed on the bond certificate A. amortization
2>the allocation of a premium or discount over the life of a bond B. interest expense
3>the return required by the market on the day of issuance C. effective rate
4>if the contract rate exceeds the effective rate D. bond premium
5>face value times contract rate E. contract rate
6>if the contract rate is less than the effective rate F. bond discount
7>the value reported on the income statement G. interest payment
32) Which account will be included in both service and merchandising companies
closing entries?
A.Sales
B.Cost of Merchandise Sold
C.Purchase Discounts
D.Sales Returns and Allowances
33) The exclusive right to use a certain name or symbol is called a
A.goodwill
B.patent
C.trademark
D.copyright
34) Golden Sales has bought $135,000 in fixed assets on January 1st associated with
sales equipment. The residual value of these assets is estimated at $10,000 after they
service their 4 year service life. Golden Sales managers want to evaluate the options of
depreciation.
(a) Compute the annual straight-line depreciation and provide the sample depreciation
journal entry to be posted at the end of each of the years.
(b) Write the journal entries for each year of the service life for these assets using the
double- declining balance method.
35) The following errors took place in journalizing and posting transactions:
Journalize the entries to correct the errors. Omit the explanations.
36) A pension plan which requires the employer to make annual pension contributions,
with no promise to employees regarding future pension payments, is termed
A.funded
B.unfunded
C.defined benefit
D.defined contribution
37) The natural business year
A.is a fiscal year that ends when business activities are at its lowest point
B.is a calendar year that ends when business activities are at its lowest point
C.is a fiscal year that ends when business activities are at its highest point
D.is a calendar year that ends when business activities are at its highest point
38)
39) Which of the following manufacturing costs is an indirect cost of producing a
product?
A.Oil lubricants used for factory machinery
B.Commissions for sales personnel
C.Hourly wages of an assembly worker
D.Memory chips for a microcomputer manufacturer
40) Anthony Company sold Madison Company merchandise on account FOB shipping
point, 2/10, net 30, for $10,000. Anthonyprepaid the $300 shipping charge. Which of
the following entries does Anthony make to record this sale?
A.Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000
B.Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000, and
Accounts Receivable-Madison, debit $300; Cash, credit $300
C.Accounts Receivable-Madison, debit $10,300; Sales, credit $10,300
D.Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000, and
41) A favorable cost variance occurs when
A.Actual costs are more than standard costs
B.Standard costs are more than actual costs
C.Standard costs are less than actual costs
D.None of the above
42) Payroll taxes levied against employees become liabilities
A.the first of the following month
B.when salary is accrued
C.when data is entered in a payroll register
D.at the end of an accounting period
43) 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
44) Skyline, Inc. purchased a portfolio of trading securities during 2012. The cost and
fair value of this portfolio on December 31, 2012, was as follows:
Required:
Provide the journal entry to record the adjustment of the trading security portfolio to
fair value on December 31, 2012.
Where will the information from the journal entry be reported on the financial
statements?
45) Kennedy, Inc. reported the following data:
Prepare the cash flows for operating activities under the indirect method as it would
appear on the statement of cash flows.
46) On January 1, 2012, Valuation Allowance for Available-for-Sale Investments had a
zero balance. On December 31, 2012, the cost of the available-for-sale securities was
$48,700, and the fair value was $39,200. Prepare the adjusting entry to record the
unrealized gain or loss for available-for-sale investments on December 31, 2012.
47) Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting
journal entry that is required if the month ends on Thursday.
48) The board of directors declared cash dividends total $168,000 during 2014. The
comparative balance sheet indicated dividends payable of $46,000 at the beginning of
the year and $42,000 at the end of the year. What was the amount of cash payment to
stockholders during the year?