Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1) Unrealized gains and losses on trading securities are reported on the income
statement.
2) The idea that a business will continue to operate instead of being closed or sold
underlies the going-concern assumption.
3) Traditional two-stage cost allocation means that indirect costs are first allocated to
both operating and service departments, then operating department costs are allocated
to service departments.
4) Harry's Bikes' current ratio is 1.3. The industry average for the current ratio is 1.2.
This indicates that Harry's Bikes can cover its short term liabilities with its short term
assets.
5) A disadvantage of an investment with a short payback period is that it will produce
revenue for only a short period of time.
6) If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10
days and the discount period is 60 days.
7) Installment accounts receivable is another name for aging of accounts receivable.
8) Three transactions that would be recorded in the sales journal are: (1) recording sales
taxes (2) recording sales returns and allowances and (3) recording purchases discounts.
9) Promissory notes are nonnegotiable meaning that they cannot be transferred from
party to party.
10) Trend analysis is a form of horizontal analysis that can reveal patterns in data across
successive periods.
11) Intracompany analysis is based on comparisons with competitors.
12) Adjusting entries result in a better matching of revenues and expenses for the
period.
13) The future value of an ordinary annuity is the accumulated value of each annuity
payment with interest one period after the date of the final payment.
14) Common stock always carries a preference for receiving dividends over preferred
stock.
15) Trend analysis of financial statement items can include comparisons of relations
between items on different financial statements.
16) Raw materials that become part of a product and are identified with specific units or
batches of a product are called direct materials.
17) The merchandise purchases budget depends on information provided by the sales
budget.
18) Stated value of no-par stock is:
A.Another name for redemption value
B.An amount assigned to par value stock by the state of incorporation
C.The market value of the stock on the date of issuance
D.The difference between the par value of stock and the amount below or above par
value paid-in by the stockholder
E.An amount assigned to no-par stock by the corporation's board of directors
19) All of the following statements related to goods on consignment are true except:
A.Goods on consignment are goods provided by the owner, call the consignor
B.A consignee sells goods for the owner
C.The consignor continues to own the consigned goods
D.The consignee reports the goods in its inventory until sold
E.The consignor reports the goods in its inventory until sold
20) An accounts payable ledger is:
A.A subsidiary ledger that contains an account for each supplier (creditor)
B.A list of the balances of all the accounts in the accounts receivable ledger that is
added to show the total amount of accounts receivable outstanding
C.A book of original entry that is designed and used for recording only a specific type
of transaction
D.The ledger that contains the financial statement accounts of a business
E.A subsidiary ledger that contains a separate account for each party that grants both
short-term and long-term credit on account to the company
21) A dividend preference for preferred stock means that:
A.Preferred stockholders are allocated their dividends before dividends are allocated to
common shareholders
B.Preferred shareholders are guaranteed dividends
C.Dividends are paid quarterly
D.Preferred stockholders prefer dividends more than common stockholders
E.Dividends must be declared on preferred stock
22) The control principle for accounting information systems requires that the:
A.Benefits from an activity outweigh the costs of the activity
B.System report useful, understandable, timely, and pertinent information for effective
decision making
C.System must have internal controls
D.System adapts to changes in the company, business environment, and needs of
decision makers
E.System conforms to a company's activities, personnel, and structure
23) The ability to meet short-term obligations and to efficiently generate revenues is
called:
A.Liquidity and efficiency
B.Solvency
C.Profitability
D.Market prospects
E.Creditworthiness
24) A credit entry:
A.Increases asset and expense accounts, and decreases liability, owner's capital, and
revenue accounts
B.Is always a decrease in an account
C.Decreases asset and expense accounts, and increases liability, owner's capital, and
revenue accounts
D.Is recorded on the left side of a T-account
E.Is always an increase in an account
25) Flexibility of practice when applied to managerial accounting means that
A.The information must be presented in electronic format so that it is easily changed
B.Managers must be willing to accept the information as the accountants present it to
them, rather than in the format they ask for
C.The managerial accountants need to be on call twenty-four hours a day
D.The design of a company's managerial accounting system largely depends on the
nature of the business and the arrangement of the internal operations of the company
E.Managers must be flexible with information provided in varying forms and using
inconsistent measures
26) Activities that involve the production or purchase of merchandise and the sale of
goods and services to customers, including expenditures related to administering the
business, are classified as:
A.Financing activities
B.Investing activities
C.Operating activities
D.Direct activities
E.Indirect activities
27) Prior to June 1, a company has never had any treasury stock transactions. A
company repurchased 100 shares of its common stock on June 1 for $5,000. On July 1,
it reissued 50 of these shares at $52 per share. On August 1, it reissued the remaining
treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury
Stock account on August 2?
A.$5,050
B.$2,600
C.$100
D.$50
E.$0
28) A company issued 8%, 15-year bonds with a par value of $550,000. The current
market rate is 8%. The journal entry to record each semiannual interest payment is:
A.Debit Bond Interest Expense $22,000; credit Cash $22,000
B.Debit Bond Interest Expense $44,000; credit Cash $44,000
C.Debit Bond Interest Expense $36,667; credit Cash $36,667
D.Debit Bond Interest Expense $660,000; credit Cash $660,000
E.No entry is needed, since no interest is paid until the bond is due
29) The inventory valuation method that identifies each item in ending inventory with a
specific purchase and invoice is the:
A.Weighted average inventory method
B.First-in, first-out method
C.Last-in, first-out method
D.Specific identification method
E.Retail inventory method
30) Labor costs that are clearly associated with specific units or batches of product
because the labor is used to convert raw materials into finished products are called:
A.Sunk labor.
B.Direct labor
C.Indirect labor
D.Finished labor
E.All of these
31) A plan that lists the types and amounts of selling expenses expected during the
budget period is called a(n):
A.Sales budget
B.Operating budget
C.Capital expenditures budget
D.Selling expense budget
E.Purchases budget
32) A trial balance prepared before any adjustments have been recorded is:
A.An adjusted trial balance
B.Used to prepare financial statements
C.An unadjusted trial balance
D.Correct with respect to proper balance sheet and income statement amounts
E.Only prepared once a year
33) A payroll register includes:
A.Pay period dates
B.Hours worked
C.Gross pay and net pay
D.Deductions
E.All of these
34) Under IFRS, the term provision:
A.Refers to expense.
B.Usually refers to a liability whose amount or timing is uncertain
C.Means establishing a provision for bad debts
D.Means establishing a contra-asset account
E.Means establishing an asset account
35) A U.S. company makes a sale to a foreign customer payable in 30 days in the
customer's currency. The sale would be recorded by the U.S. company on the date:
A.Of sale using a projected estimate of the U.S. dollar value at payment date
B.Of sale using a 30-day average U.S. dollar value
C.Of sale using the current dollar value
D.Of sale using the foreign currency value
E.When payment is received
36) A columnar working paper used to prepare a company's unadjusted trial balance,
adjusting entries, adjusted trial balance, and financial statements, and which is an
optional tool in the accounting process is a(n):
A.Adjusted trial balance
B.Work sheet
C.Post-closing trial balance
D.Unadjusted trial balance
E.General ledger
37) A company purchased equipment costing $32,000 on credit. Identify the journal the
transaction would be recorded in.
A.Cash disbursements journal
B.Sales journal
C.Cash receipts journal
D.Purchases journal
E.General journal
38) Stock that was reacquired and is still held by the issuing corporation is called:
A.Capital stock
B.Treasury stock
C.Redeemed stock
D.Preferred stock
E.Callable stock
39) An account linked with another account that has an opposite normal balance and
that is subtracted from the balance of the related account is a(n):
A.Accrued expense
B.Contra account
C.Accrued revenue
D.Intangible asset
E.Adjunct account
40) The difference between the actual cost incurred and the standard cost is called the:
A.Flexible variance
B.Price variance
C.Cost variance
D.Controllable variance
E.Volume variance
41) Wilson Engineering purchased a depreciable asset costing $45,000 on January 1,
Year 1. The asset is estimated to have a salvage value of $5,000 and an estimated useful
life of 8 years. Straight-line depreciation is used. If the asset is sold on July 1, Year 5 for
$20,000, the journal entry to record the sale will include:
A.A credit to cash for $20,000.
B.A debit to accumulated depreciation for $22,500
C.A debit to loss on sale for $10,000
D.A credit to loss on sale for $10,000
E.A debit to gain on sale for $2,500
42) Cabot Company collected the following data regarding production of one of its
products. Compute the direct materials price variance.
A.$2,430 unfavorable
B.$3,570 unfavorable
C.$2,430 favorable
D.$6,000 unfavorable
E.$3,570 favorable
43) Loma Company estimates uncollectible accounts using the allowance method at
December 31. It prepared the following aging of receivables analysis.
a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of
accounts receivable method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part
a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $550
credit.
c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part
a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $300
debit.
44) A plan that lists dollar amounts to be received from disposing of plant assets and
dollar amounts to be spent on purchasing additional plant assets is called a:
A.Cash budget
B.Capital expenditures budget
C.Rolling budget
D.Sales budget
E.Production budget
45) It is obvious that an error occurred in the preparation and/or posting of closing
entries if:
A.all revenue and expense accounts have zero balances
B.the owner's capital account is debited for the amount of the net loss for the period
C.the income summary account is debited for the amount of net income for the period
D.all balance sheet accounts have zero balances
E.only permanent accounts appear on the post-closing trial balance
46) Using the following year-end information for Breanna Boutique, calculate the
current ratio and acid-test ratio for the boutique:
A.1.8 and 1
B.1.97 and 1.52
C.2.73 and 1.52
D.3.50 and 0.90
E.None of these
47) Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are
$260,000 and variable costs are $24.00 per unit. Winthrop can buy a new production
machine that will increase fixed costs by $11,400 per year, but will decrease variable
costs by $3.50 per unit. Compute the contribution margin per unit if the machine is
purchased.
A.$22.50
B.$26.00
C.$29.50
D.$28.50
E.$27.50
48) Which of the following does not apply to enterprise resource planning (ERP)
software:
A.ERP refers to programs that help manage a company's vital operations
B.ERP can include programs that extend from order taking to manufacturing to
accounting
C.ERP can speed up business decision making and help reduce costs
D.ERP can not be used to share data with customers and suppliers
E.ERP can be designed to link every part of a company's operations
49) A report that lists accounts and their balances, in which the total debit balances
should equal the total credit balances, is called a(n):
A.Account balance
B.Trial balance
C.Ledger
D.Chart of accounts
E.General Journal
50) _______________ are beliefs that distinguish right from wrong.
51) Sam's Wholesale shows the following account balances in its ledger on June 30, its
fiscal year-end. Sam's Wholesale uses the perpetual inventory system.
A physical count of its June 30 year-end inventory discloses that the cost of the
merchandise inventory still available is $57,160. Prepare the entry to record any
inventory shrinkage.
52) A company traded an old forklift for a new forklift, receiving a $10,500 trade-in
allowance and paying the remaining $37,200 in cash. The old forklift had cost $39,000,
and straight-line accumulated depreciation of $27,200 had been recorded as of the
exchange date under the assumption it would last five years and have a $5,000 salvage
value.
1> What was the book value of the old forklift on the date of the exchange?
2> What amount of gain or loss (indicate which) should be recognized in recording the
exchange, assuming the transaction has commercial substance?
3> What amount should be recorded as the cost of the new forklift?
53) When you reach retirement age, you will have one fund of $100,000 from which
you are going to make annual withdrawals of $14,702. The fund will earn 6% per year.
For how many years will you be able to draw an even amount of $14,702?
54) The collection of job cost sheets for all jobs in process makes up the subsidiary
ledger controlled by the _____________________ inventory.
