1) Which of the following steps in the accounting cycle may be performed most
frequently?
a.Prepare a post-closing trial balance
b.Journalize closing entries
c.Post closing entries
d.Prepare a trial balance
2) The largest companies in the United States are primarily organized as
a.limited partnerships
b.partnerships
c.corporations
d.proprietorships
3) Budget development for the coming year usually starts
a.a year in advance
b.the first month of the year to be budgeted
c.several months before the end of the current year
d.the last month of the previous year
4) If companies have identical inventoriable costs but use different inventory flow
assumptions when the price of goods have not been constant, then the
a.cost of goods sold of the companies will be identical
b.cost of goods available for sale of the companies will be identical
c.ending inventory of the companies will be identical
d.net income of the companies will be identical
5) Elliott Smith is a lawyer who requires that his clients pay him in advance of legal
services rendered. Elliott routinely credits Service Revenue when his clients pay him in
advance. In June Elliott collected $15,000 in advance fees and completed 70% of the
work related to these fees. What adjusting entry is required by Elliott’s firm at the end
of June?
a.Unearned Service Revenue 10,500
Service Revenue 10,500
b.Unearned Service Revenue 4,500
Service Revenue 4,500
c.Cash 15,000
Service Revenue 15,000
d.Service Revenue 4,500
Unearned Service Revenue 4,500
6) The principles of internal control activities are used in the
a.U.S. but not globally
b.internationally but not in the U.S
c.in the U.S. and Canada but not globally
d.globally
7) Adjusting entries are
a.not necessary if the accounting system is operating properly
b.usually required before financial statements are prepared
c.made whenever management desires to change an account balance
d.made to balance sheet accounts only
8) An (x) below the “Other Accounts” column in a cash receipts journal indicates the
a.total has been posted to the general ledger
b.total is not posted to the general ledger
c.column has been footed
d.column has been cross-footed
9) Stone Roses Candies paid employee wages on and through Friday, January 26, and
the next payroll will be paid in February. There are three more working days in January
(2931). Employees work 5 days a week and the company pays $1,500 a day in wages.
What will be the adjusting entry to accrue wages expense at the end of January?
a.Salaries and Wages Expense1,500
Salaries and Wages Payable1,500
b.Salaries and Wages Expense7,500
Salaries and Wages Payable7,500
c.Salaries and Wages Expense4,500
Salaries and Wages Payable4,500
d.No adjusting entry is required.
10) Which one of the following accounts is not closed at the end of an accounting
period?
a.Owner’s Capital account
b.Service Revenue account
c.Owner’s Drawing account
d.Insurance Expense account
11) In the month of April, a department had 500 units in the beginning work in process
inventory that were 60% complete. These units had $1,000 of materials costs and $900
of conversion costs. Materials are added at the beginning of the process and conversion
costs are added uniformly throughout the process. During April, 10,000 units were
completed and transferred to the finished goods inventory and there were 2,000 units
that were 25% complete in the ending work in process inventory on April 30 . During
April, manufacturing costs charged to the department were: Materials $25,400;
Conversion costs $32,700. The cost assigned to the units in the ending work in process
inventory on April 30 was:
a.$2,700
b.$4,800
c.$6,000
d.$10,800
12) The total units accounted for equals units in
a.beginning work in process units transferred out
b.beginning work in process + ending work in process
c.ending work in process + units transferred out
d.ending work in process units started into production
13) If a petty cash fund is established in the amount of $250, and contains $153 in cash
and $94 in receipts for disbursements when it is replenished, the journal entry to record
replenishment should include credits to the following accounts
a.Petty Cash, $94
b.Petty Cash, $97
c.Cash, $94; Cash Over and Short, $3
d.Cash, $97
14) Managerial accounting is also called
a.management accounting
b.controlling
c.analytical accounting
d.inside reporting
15) During 2014, Zuma Company had $150,000 in cash sales and $1,240,000 in credit
sales. The accounts receivable balances were $180,000 and $215,000 at December 31,
2013 and 2014, respectively. Using the direct method of reporting cash flows from
operating activities, what was the total cash collected from all customers during 2014?
a.$1,205,000
b.$1,425,000
c.$1,390,000
d.$1,355,000
16) Lamask Industries makes and sells widgets. The company is in the process of
preparing its Selling and Administrative Expense Budget for the month. The following
budget data are available:
ItemVariable Cost Per Unit SoldMonthly Fixed Cost
Sales commissions$1 $10,000
Shipping$2
Advertising$4
Executive salaries$120,000
Depreciation on office equipment$3,000
Other$3$6,000
Expenses are paid in the month incurred. If the company has budgeted to sell 80,000
widgets in October, how much is the total budgeted selling and administrative expenses
for October?
a.$939,000
b.$139,000
c.$930,000
d.$800,000
17) A flexible budget depicted graphically
a.is identical to a CVP graph
b.differs from a CVP graph in the way that fixed costs are shown
c.differs from a CVP graph in the way that variable costs are shown
d.differs from a CVP graph in that sales revenue is not shown
18) The net income reported on the income statement for the current year was
$245,000. Depreciation was $40,000. Account receivable and inventories decreased by
$12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased,
respectively, by $1,000 and $8,000. How much cash was provided by operating
activities?
a.$296,000
b.$339,000
c.$323,000
d.$311,000
19) Inventory accounting under IFRS differs from GAAP in regard to
a.neither the use of LIFO nor lower-of-cost-or-market
b.the use of LIFO but not lower-of-cost-or-market
c.the use of lower-of-cost-or-market but not LIFO
d.the use of LIFO and lower-of-cost-or-market
20) G. Jones Corporation was organized on January 1, 2014, with authorized capital of
1,000,000 shares of $10 par value common stock. During 2014, Jones issued 40,000
shares at $12 per share, purchased 4,000 shares of treasury stock at $13 per share, and
sold 4,000 shares of treasury stock at $14 per share. What is the amount of additional
paid-in capital at December 31, 2014?
a.$0
b.$4,000
c.$80,000
d.$84,000
21) A debit is not the normal balance for which account listed below?
a.Drawings
b.Cash
c.Accounts Receivable
d.Service Revenue
22) The organization(s) primarily responsible for establishing generally accepted
accounting principles is(are) the
FASBSEC
a.nono
b.yesno
c.noyes
d.yesyes
23) Dole Company is planning to sell 300,000 hammers for $3 per unit. The
contribution margin ratio is 20%. If Dole will break even at this level of sales, what are
the fixed costs?
a.$180,000
b.$420,000
c.$600,000
d.$720,000
24) The respective normal account balances of Purchases, Purchase Discounts, and
Freight-in are
a.credit, credit, debit
b.debit, credit, credit
c.debit, credit, debit
d.debit, debit, debit
25) Shane Company gathered the following reconciling information in preparing its
April bank reconciliation:
Cash balance per books, 4/30$19,800
Deposits in transit2,700
Notes receivable and interest collected by bank6,600
Bank charge for check printing150
Outstanding checks13,500
NSF check1,260
The adjusted cash balance per books on April 30 is
a.$12,930
b.$14,190
c.$23,730
d.$24,990
26) A company developed the following per-unit standards for its product: 2 pounds of
direct materials at $4.25 per pound. Last month, 1,500 pounds of direct materials were
purchased for $5,700. The direct materials price variance for last month was
a.$5,700 favorable
b.$675 favorable
c.$338 favorable
d.$675 unfavorable
27) Instructions: Each of the events below may have an effect on the indirect statement
of cash flows. Designate how the event should be reported within the statement of cash
flows using the codes provided below. Codes may be used more than once, or not at all.
Codes
A.Investing activity; cash inflow
B.Investing activity; cash outflow
C.Financing activity; cash inflow
D.Financing activity; cash outflow
E.Operating activity; cash inflow
F.Operating activity; cash outflow
G.Noncash investing and financing activity
Events
_____1>Issued bonds payable for cash
_____2>Paid an account payable
_____3>Issued checks for the weekly payroll
_____4>Purchased treasury stock for cash
_____5>Paid cash for a new car for a traveling salesperson
_____6>Declared and paid a cash dividend
_____7>Converted bonds payable into common stock
_____8>Received interest on a long-term bond investment
_____9>Paid cash for 40% interest in another company
_____10>Sold a long-term stock investment for cash at book value
28) Trolley Industries expects to purchase $130,000 of materials in March and
$140,000 of materials in April. Three-quarters of all purchases are paid for in the month
of purchase, and the other one-fourth are paid for in the month following the month of
purchase. In addition, a 2% discount is received for payments made in the month of
purchase. How much will April’s cash disbursements for materials purchases be?
a.$95,550
b.$102,900
c.$135,400
d.$130,000
29) In the Elise Company, contribution margin per unit is $33 for Product S and $25 for
Product T. Product S requires 3 machine hours and Product T requires 4 machine hours.
What is the contribution margin per unit of limited resource for each product?
S T
a.$11.00$6.25
b.$8.25$8.33
c.$22.00$12.50
d.$12.50$12.50
30) The retailer considers Visa and MasterCard sales as
a.cash sales
b.promissory sales
c.credit sales
d.contingent sales
31) If bonds have been issued at a discount, over the life of the bonds, the
a.carrying value of the bonds will decrease
b.carrying value of the bonds will increase
c.interest expense will increase, if the discount is being amortized on a straight-line
basis
d.unamortized discount will increase
32) The usual ordering of accounts in the general ledger is
a.assets, liabilities, owner’s capital, drawings, revenues, and expenses
b.assets, liabilities, drawings, owner’s capital, expenses, and revenues
c.liabilities, assets, owner’s capital, revenues, expenses, and drawings
d.owners capital, assets, liabilities, drawings, expenses, and revenues
33) Mezzita Inc. is considering purchasing equipment costing $12,000 with a 6-year
useful life. The equipment will provide cost savings of $3,100 and will be depreciated
straight-line over its useful life with no salvage value. Mezzita requires a 10% rate of
return.
Present Value of an Annuity of 1
Period 8% 9% 10% 11% 12% 15%
64.6234.4864.3554.2314.1113.784
What is the approximate net present value of this investment?
a.$13,116
b.$1,501
c.$2,116
d.$13,501
34) The use of IFRS results in more transactions affecting
a.net income but not other comprehensive income
b.other comprehensive income, but not net income
c.but net income and other comprehensive income
d.neither net income nor other comprehensive income
35) The lower-of-cost-or-market basis of accounting for inventories should be applied
when the ______________ cost of the goods is lower than its cost.
36) OReiley Companys projected sales are as follows:
August$470,000
September$540,000
October$660,000
OReiley estimates that it will collect 30% in the month of sale, 50% in the month after
the sale, and 18% in the second month following the sale. Two percent of all sales are
estimated to be bad debts.
Instructions
How much are OReiley Companys budgeted cash receipts for October?
37) Sasha Isles has been a manager at MoonBeam, a large telecommunications
company, for ten years. She has worked very hard, but she had to take two unpaid
leaves of absence to assist her sick mother, and then later, she took unpaid leave when
her children needed care. As a result, she has received only two promotions during that
time. She realizes that she probably will not receive any more promotions, since the
company views her as somewhat unstable.
Last week, a newly promoted manager bragged that he could just ‘sniff out” accounting
errors. Sasha, angered at his arrogance, deliberately recorded sales salaries as rent
expense. Other accountants were present when she did so. The dollar amounts of her
changes were not significant.
Required:
Has there been a violation of ethical standards? Explain.
38) At the end of the year, any balance in the Manufacturing Overhead account should
be eliminated as an adjustment to ___________________.
39) Seaver Books, a small book publishing company, wrote off the debt of The
Learning Center, and the Academy of Basic Education, both small private schools, after
it determined that the schools were facing serious financial difficulty. No notice of the
action was sent to the schools; Seaver Books simply stopped sending bills. Nearly a
year later, The Learning Center was given a large endowment and a government grant.
The resulting publicity brought the school to the attention of Seaver Books, which
immediately reinstated the account, and sent a new bill to the school, including interest
for the entire time the debt was outstanding. No further action was taken regarding the
Academy of Basic Education, which was still operational.
Required:
Did Seaver Books act ethically in reinstating the debt of one client, and not the other?
Explain.
40) Pride Company is considering investing in an annuity contract that will return
$150,000 annually at the end of each year for 20 years. What amount should Pride
Company pay for this investment if it earns an 8% return? (Round to the nearest dollar.)