Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1) Hill Co. can further process Product O to produce Product P. Product O is currently
selling for $60 per pound and costs $42 per pound to produce. Product P would sell for
$82 per pound and would require an additional cost of $13 per pound to produce.
The differential revenue of producing Product P is $82 per pound.
2) Net sales is equal to sales minus cost of merchandise sold.
3) If direct materials cost per unit increases, the break-even point will increase.
4) While separation of duties may play a strong role in the internal control of inventory,
it is not significant in controlling payroll.
5) If 16,000 units of materials enter production during the first year of operations,
12,000 of the units are finished, and 4,000 are 75% completed, the number of
equivalent units of production would be 15,000.
6) Interpreting financial analysis should be considered in light of conditions peculiar to
the industry and the general economic conditions.
7) The maturity value of a 12%, 60-day note for $5,000 is $5,600.
8) Of the two methods of accounting for uncollectible receivables, the allowance
method provides in advance for uncollectible receivables.
9) A company pays $360 for a yearly trade magazine on August 1. The adjusting entry
on December 31 is debit Unearned Subscription Revenue, $150 and credit Subscription
Revenue, $150.
10) In calculating the net present value of an investment in equipment, the required
investment and its terminal residual value should be subtracted from the present value
of all future cash inflows.
11) In order to maintain the original value of a trading security, the fair value
adjustments are debited or credited to the account Valuation Allowance for Trading
Investments.
12) A corporation has 12,000 shares of $20 par value stock outstanding that has a
current market value of $150. If the corporation issues a 4-for-1 stock split, the market
value of the stock will fall to approximately $50.
13) The total net pay for a period is determined from the payroll register.
14) An equal stream of periodic payments is called an annuity.
15) A corporation is a business that is legally separate and distinct from its owners.
16) Costs associated with normal research and development activities should be treated
as intangible assets.
17) Journalizing and posting the adjustments and closing entries updates the ledger for
the new accounting period.
18) Real accounts are not permanent accounts.
19) A company realizes that the last two day's revenue for the month was billed but not
recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit
Fees Earned.
20) The excess of divisional income from operations over a minimum amount of
divisional income from operations is termed:
A.profit margin
B.residual income
C.rate of return on investment
D.gross profit
21) A business issues 20-year bonds payable in exchange for preferred stock. This
transaction would be reported on the statement of cash flows in
A.a separate schedule
B.the cash flows from financing activities section
C.the cash flows from investing activities section
D.the cash flows from operating activities section
22) Journalize each of the following transactions:
(a) A wing costing $2,345,000 was added to the building. A new mortgage was issued
for the cost.
(b) Equipment was upgraded to increase its capacity to produce widgets. The upgrade
cost of $11,500 was paid in cash.
(c) A major overhaul costing $8,000 on a machine increased the useful life by 4 years.
The payment was made in cash.
23) Which of the following is the proper adjusting entry, based on a prepaid insurance
account balance before adjustment of $14,000 and unexpired insurance of $3,000, for
the fiscal year ending on April 30?
A.debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000
B.debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000
C.debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000
D.debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000
24) The management of Nebraska Corporation is considering the purchase of a new
machine costing $490,000. The company's desired rate of return is 10%. The present
value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826,
0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the
following data in determining the acceptability in this situation:
The average rate of return for this investment is:
A.18%
B.16%
C.58%
D.10%
25) Computer equipment was acquired at the beginning of the year at a cost of $57,000
that has an estimated residual value of $9,000 and an estimated useful life of 5 years.
Determine the 2nd years depreciation using straight-line depreciation.
A.$13,200
B.$19,200
C.$ 9,600
D.$ 9,000
26) The budgeted finished goods inventory and cost of goods sold for a manufacturing
company for the year 2012 are as follows: January 1 finished goods, $765,000;
December 31 finished goods, $540,000; cost of goods sold for the year, $2,560,000.
The budgeted costs of goods manufactured for the year is?
A.$1,255,000
B.$2,335,000
C.$2,785,000
D.$3100,000
27) When job 711 was completed, direct materials totaled $4,000; direct labor, $5,600;
and factory overhead, $2,400 respectively. Units produced totaled 1,000. Unit costs are:
A.$12,000
B.$1,200
C.$120
D.$12
28) Which one of the following below would not be classified as an operating activity?
A.interest expense
B.income taxes
C.payment of dividends
D.selling expenses
29) Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling
prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20;
$50; and $15, respectively. Each product must go through the same processing in a
machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales
take 7 hours, and Wales take 1 hour.
What is the contribution margin per machine hour for Bales?
A.$5
B.$7
C.$35
D.$28
30) Which of the following statements is false?
A.There is no overlap between financial and managerial accounting
B.Managerial accounting sometimes relies on past information
C.Managerial accounting does not need to conform to GAAP
D.Financial accounting must conform to GAAP
31) In which section of the financial statements would Paid-In Capital from Sale of
Treasury Stock be reported?
A.other expense on income statement
B.intangible asset on balance sheet
C.stockholders' equity on balance sheet
D.other income on income statement
32) In a job order cost accounting system, the entry to record the flow of direct
materials into production is:
A.debit Work in Process, credit Materials
B.debit Materials, credit Work in Process
C.debit Factory Overhead, credit Materials
D.debit Work in Process, credit Supplies
33) Selected accounts with some debits and credits omitted are presented as follows:
If the balance of Work in Process at August 31 is $220,000, what was the amount
debited to Work in Process for factory overhead in August, assuming a factory overhead
rate of 30% of direct labor costs?
A.$135,000
B.$10,000
C.$120,000
D.$70,000
34) Match each of the following terms with the best definition given below.
1>The investment analysis method that is most often used by large U.S. companies. A.
Time value of money concept
2>Initial cost divided by Annual net cash inflow of an investment B. Net present value
method
3>Average income as a percentage of average investment C. Capital investment
analysis
4>Recognizes that a dollar today is worth more than a dollar tomorrow. D. Average rate
of return
5>Capital budgeting E. Cash payback period
35) Product costs
A.appear only on the balance sheet
B.appear only on the income statement
C.are expensed as costs are incurred for direct labor, direct material and factory
overhead
D.appear on both the income statement and balance sheet
36) 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
What is Cost of Goods Manufactured?
A.$178,000
B.$132,000
C.$122,000
D.$142,000
37) 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.
38) Which of the following accounts should be closed to Income Summary at the end of
the fiscal year?
A.Merchandise Inventory
B.Accumulated Depreciation
C.Drawing
D.Cost of Merchandise Sold
39) Match each statement to the item listed below.
1>Each partner may act on behalf of the entire partnership so that the liabilities created
by one partner become the liabilities of all partners. A. statement of partnership equity
2>Where the share of loss on realization is greater than the balance in partner capital. B.
deficiency
3>A step during liquidation when partnership assets are sold. C. mutual agency
4>The winding up process of a partnership. D. partnership
5>Place where changes in partner capital accounts for a period of time are reported. E.
proprietorship
6>Simple to form. F. realization
7>An association of two or more persons to own and manage a business for profit. G.
income sharing ratio
8>Used to divide the excess of allowances over loss when net losses occur. H.
liquidation
40) A corporation has 50,000 shares of $25 par value stock outstanding. If the
corporation issues a 3-for-1 stock split, the number of shares outstanding after the split
will be
A.150,000 shares
B.50,000 shares
C.100,000 shares
D.16,666 shares
41) In recording the cost of merchandise sold for cash, based on data available from
perpetual inventory records, the journal entry is
A.debit Cost of Merchandise Sold; credit Sales
B.debit Cost of Merchandise Sold; credit Merchandise Inventory
C.debit Merchandise Inventory; credit Cost of Merchandise Sold
D.debit Accounts Receivable; credit Merchandise Inventory
42) Materials used by Square Yard Products Inc. in producing Division 3's product are
currently purchased from outside suppliers at a cost of $5 per unit. However, the same
materials are available from Division 6. Division 6 has unused capacity and can
produce the materials needed by Division 3 at a variable cost of $3 per unit. A transfer
price of $3.20 per unit is established, and 40,000 units of material are transferred, with
no reduction in Division 6's current sales.
How much would Division 6's income from operations increase?
A.$8,000
B.$15,000
C.$80,000
D.$150,000
43) Using a perpetual inventory system, the entry to record the return from a customer
of merchandise sold on account includes a
A.credit to Sales Returns and Allowances
B.debit to Merchandise Inventory
C.credit to Merchandise Inventory
D.debit to Cost of Merchandise Sold
44) The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable
factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of
80,000 machine hours. The standard cost and the actual cost of factory overhead for the
production of 15,000 units during August were as follows:
What is the amount of the factory overhead volume variance?
A.$12,000 unfavorable
B.$12,000 favorable
C.$14,000 unfavorable
D.$26,000 unfavorable
45) The units of Product Green-2 available for sale during the year were as follows:
There are 17 units of the product in the physical inventory at Sep 30. The periodic
inventory system is used. Determine the cost of merchandise sold by (a) FIFO, (b)
LIFO, and (c) average cost methods.
46) The cost of production of completed and finished goods during the period amounted
to $450,000, and the finished products shipped to customers had total production costs
of $357,000. From the following, select the entry to record the transfer of costs from
work in process to finished goods.
A.Finished Goods357,000
Work in Process357,000
B.Finished Goods450,000
Work in Process450,000
C.Work in Process450,000
Finished Goods450,000
D.Work in Process357,000
Finished Goods357,000
47) In evaluating the profit center manager, the income from operations should be
compared:
A.across profit centers
B.to historical performance or budget
C.to the competitor's net income
D.to the total company earnings per share
48) The three identical units of Product Basic H are purchased during July, as shown
below.
Assume one unit sells on July 28 for $45.
Determine the gross profit, cost of merchandise sold, and ending inventory on July 31
using (a) first in first out, (b) last in last out, (c) average cost flow methods.
49) All of the following are advantages of decentralization except:
A.Managers make better decisions when closer to the operation of the company
B.Expertise in all areas of the business is difficult, decentralization makes it better to
delegate certain responsibilities
C.Each decentralized operation purchases their own assets and pays for operating costs
D.Decentralized managers can respond quickly to customer satisfaction and quality
service
50) The chart of accounts is designed to
A.alphabetize the accounts to make reading easier for its financial statement users
B.analyze the accounts and organize them in order of dollar amount to simplify the
accounting information for users
C.summarize the transactions and determine their ending balances
D.meet the information needs of a company and other financial statement users
51) Under a perpetual inventory system
A.accounting records continuously disclose the amount ofinventory
B.increases in inventory resulting from purchases are debitedto Purchases
C.there is no need for a year-end physical count
D.the purchase returns and allowances account is credited when goods are returned to
vendors
52) A company is preparing its their Cash Budget. The following data has been
provided for cash receipts and payments.
The companys cash balance at January 1st is $290,000. This company desires a
minimum cash balance of $340,000.
What is the amount of excess cash or deficiency of cash (after considering the
minimum cash balance required) for January?
A.$26,700 excess
B.$136,700 deficiency
C.$356,700 excess
D.$60,000 excess
53) Expenses are recorded when
A.cash is paid for services rendered
B.a bill is received in advance of services rendered
C.assets are used in the process of earning revenue
D.none of these
54) A company reports the following:
Determine the (a) accounts receivable turnover, and (b) number of days sales in
receivables. Round your answer to one decimal place.
55) Organize the following accounts into the usual sequence of a chart of accounts.
Miscellaneous Expense
Accounts Payable
Accounts Receivable
Cash
Alecia Morris, Capital
Fees Earned
Prepaid Rent
Salaries Expense
Unearned Revenue
Alecia Morris, Drawing
56) The Cavy Company estimates that the factory overhead for the following year will
be $1,250,000. The company has decided that the basis for applying factory overhead
should be machine hours, which is estimated to be 40,000 hours. The machine hours for
the month of April for all of the jobs was 4,780. If the actual factory overhead totaled
$141,800, determine the over or under applied amount for the month.
57) Complete the following data taken from the condensed income statements for
merchandising Companies X, Y, & Z.
58) 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.
59) The Internet creates opportunities for improving the speed and efficiency of
transactions. Name and describe three key areas besides e-commerce where the Internet
is being used for business purposes.
60) On the first day of the fiscal year, a company issues a $1,000,000, 7%, 5 year bond
that pays semi-annual interest of $35,000 ($1,000,000 7% 1/2), receiving cash of
$884,171. Journalize the first interest payment and the amortization of the related bond
discount using the straight-line method. Round answer to the nearest dollar.
61) On March 29th, customers who owe $10,500.00 for purchases made on Sonic Sales
Company submit payments of $4,250.00. Journalize this event.
