1) Using the job order cost system, service organizations are able to bill customers on a
weekly or monthly basis, even when the job has not been completed.
2) Large batch sizes increase lead time.
3) Variable costs are costs that remain constant on a per-unit basis as the level of
activity changes.
4) Though favorable volume variances are usually good news, if inventory levels are
too high, additional production could be harmful.
5) Equivalent units of production are the number of units that could have been
manufactured from start to finish during an accounting period.
6) The denominator of the rate of return on total assets ratio is the average total assets.
7) Cross-referencing is useful in assuring that the debits and credits are in balance.
8) Interpreting financial analysis should be considered in light of conditions peculiar to
the industry and the general economic conditions.
9) The ratio that indicates the percentage of each sales dollar available to cover the
fixed costs and to provide operating income is termed the contribution margin ratio.
10) A budget procedure that provides for the maintenance at all times of a twelve-month
projection into the future is called master budgeting.
11) The main objective for all businesses is to maximize unrealized profits.
12) 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
13) Too much inventory on hand
A.reduces solvency
B.increases the cost to safeguard the assets
C.increases the losses due to price declines
D.all of the above
14) Calzone Co. has budgeted salary increases to factory supervisors totaling 8%. If
selling prices and all other cost relationships are held constant, next year’s break-even
point:
A.will decrease by 8%
B.will increase by 8%
C.cannot be determined from the data given
D.will increase at a rate greater than 8%
15) Which of the following accounts would be increased with a credit?
A.Land, Accounts Payable, Dividends
B.Accounts Payable, Unearned Revenue, Capital Stock
C.Capital Stock, Accounts Receivable, Unearned Revenue
D.Cash, Accounts Receivable, Capital Stock
16) The year-end balance of the retained earnings account appears in
A.both the retained earnings statement and the income statement
B.only the retained earnings statement
C.both the retained earnings statement and the balance sheet
D.both the retained earnings statement and the statement of cash flows
17) A ten-year bond was issued at par for $250,000 cash. This transaction should be
shown on a statement of cash flows under
A.investing activities
B.financing activities
C.noncash investing and financing activities
D.operating activities
18) When the market rate of interest was 11%, Valley Corporation issued $100,000, 8%,
10-year bonds that pay interest semiannually. Using the straight-line method, the
amount of discount or premium to be amortized each interest period would be
A.$4,000
B.$896
C.$17,926
D.$1,793
19) Managerial accountants would be responsible for providing which of the following?
A.Tax reports to government agencies
B.Profit reports to owners and management
C.Expansion of a product line report to management
D.Consumer reports to customers
20) The details concerning the costs incurred on each job order are accumulated in a
work in process account, which is supported by a:
A.stock ledger
B.materials ledger
C.cost ledger
D.creditors ledger
21) Which of the following costs incurred by a paper manufacturer would be included
in the group of costs referred to as conversion costs?
A.Advertising costs
B.Raw lumber (direct materials)
C.Machine operator’s wages (direct labor)
D.Sales salaries
22) Based on the information below, journalize the entries for the Seller and the Buyer.
Both use a perpetual inventory system.
(a) Seller sold merchandise on account to the buyer, $4,750, terms 2/10, net 30, FOB
shipping point. The cost of the merchandise is $2,850. The seller prepays the freight of
$75.
(b) Buyer returns $ 700 of merchandise as defective. The cost of the merchandise is
$420.
(c) Buyer pays within the discount period.
23) After the accounts are adjusted and closed at the end of the fiscal year, Accounts
Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a
balance of $51,000. What is the net realizable value of the accounts receivable?
A.$51,000
B.$289,000
C.$340,000
D.$391,000
24) Which of the following are basic phases of the management process?
A.Supervising and directing
B.Decision making and supervising
C.Organizing and directing
D.Planning and controlling
25) Select the proper journal entry to record the movement of 1,700 units of part
number 116B to work in process when each unit of 116B has a value of $2.00.
A.Raw Material Inventory 3,400
Work in Process 3,400
B.Work in Process 3,400
Factory Overhead 3,400
C.Work in Process 3,400
Raw Material Inventory 3,400
D.Work in Process 3,400
Cash 3,400
26) Variances from standard costs are usually reported to:
A.suppliers
B.stockholders
C.management
D.creditors
27) Which of the following is not an external failure cost?
A.warranty work
B.processing returned merchandise
C.rework
D.correcting invoice errors
28) Accounts receivable resulting from sales to customers amounted to $40,000 and
$31,000 at the beginning and end of the year, respectively. Income reported on the
income statement for the year was $120,000. Exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of
cash flows is
A.$120,000
B.$129,000
C.$151,000
D.$111,000
29) A debit may signify a(n)
A.decrease in an asset account
B.decrease in a liability account
C.increase in the retained earnings account
D.decrease in the dividends account
30) All of the following are normally found in a corporation’s stockholders’ equity
section except
A.Common Stock
B.Paid-In Capital in Excess of Par
C.Dividends in Arrears
D.Retained Earnings
31) Computer equipment was acquired at the beginning of the year at a cost of $63,000
that has an estimated residual value of $3,000 and an estimated useful life of 5 years.
Determine the (a) depreciable cost (b) double-declining-balance rate, and (c)
double-declining-balance depreciation for the first year.
32) Extreme Wreaths, Inc. makes wreaths in batch sizes of 15 at a time. The cutting &
assembly process takes 10 minutes per wreath, and the decorating process time is 7
minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly
process to the decorating process.
In a effort to improve the lead time, the company has tried reducing the batch size to 10
units. The new process is as follows: cutting & assembly process – 8 minutes. The
decorating process is still 7 minutes per wreath. It takes 5 minutes to move the wreaths
from the cutting & assembly process to the decorating process.
(a) Compute the value-added, non-value-added, and the total lead time of the wreath
process for both the old and the new manufacturing process.
(b) Compute the value-added ratio for both the old and new process. Round to the
nearest decimal.
33) Selected transaction data of a business for September are summarized below.
Determine the following amounts for September: (a) total revenue, (b) total expenses,
(c) net income.
34) The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead
at 100% production capacity. Production was budgeted to be 12,000 units. The standard
hours for production were 5 hours per unit. The variable overhead rate was $3 per hour.
Actual fixed overhead was $360,000 and actual variable overhead was $170,000.
Actual production was 11,700 units.
Compute the factory overhead volume variance.
A.$9,000F
B.$9,000U
C.$5,500F
D.$5,500U
35) Poobah Manufacturers Inc. has estimated total factory overhead costs of $95,000
and 10,000 direct labor hours for the current fiscal year. If job number 117 incurred
2,300 direct labor hours, the work in process account will be debited and factory
overhead will be credited for:
A.$21,850
B.$2,300
C.$95,000
D.cannot be determined
36) On April 3rd, Snappy Sales decides to establish a $135.00 Petty Cash Account to
relieve the burden on Accounting.
(a) Journalize this event.
(b) On April 11th, the petty cash fund has receipts for mail and postage of $32.75,
contributions and donations of $25.25, meals and entertainment of $68.00 and $9.75 in
cash. Journalize the replenishment of the fund.
(c) On April 12th, Snappy Sales decides to increase petty cash to $175.00. Journalize
this event.
37) When a corporation completes a 3-for-1 stock split
A.the ownership interest of current stockholders is decreased
B.the market price per share of the stock is decreased
C.the par value per share is decreased
D.b and c
38) 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.
39) Internal control does not consist of policies and procedures that
A.protect assets from misuse
B.aid management in directing operations toward achieving business goals
C.guarantee the company will not go bankrupt
D.ensure that business information is accurate
40) Scott Manufacturing Co.’s static budget at 10,000 units of production includes
$40,000 for direct labor and $4,000 for electric power. Total fixed costs are $25,000. At
12,000 units of production, a flexible budget would show:
A.variable costs of $52,800 and $30,000 of fixed costs
B.variable costs of $44,000 and $25,000 of fixed costs
C.variable costs of $52,800 and $25,000 of fixed costs
D.variable and fixed costs totaling $69,000
41) For each of the following notes receivables held by Rogers Company determine the
interest revenue to be reported on the income statements for 2011 and 2012. Round
answers to nearest whole dollar.
42) If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000,
break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of
sales, what is the margin of safety expressed as a percentage of sales?
43) The following data were gathered to use in reconciling the bank statement of
Build-A-Lot:
Required:
(1) What is the adjusted balance on the bank reconciliation?
(2) Journalize any necessary entries for Build-A-Lot based on the bank reconciliation.
44) Steven Company has fixed costs of $160,000. The unit selling price, variable cost
per unit, and contribution margin per unit for the companys two products are provided
below.
The sales mix for product X and Y is 60% and 40% respectively. Determine the
break-even point in units of X and Y.
45) Prepare a trial balance, listing the following accounts in proper sequence. The
accounts (all normal balances) were taken from the ledger of Sophie Designs Co. on
April 30, 2014.
46) The units of Manganese Plus available for sale during the year were as follows:
There are 15 units of the product in the physical inventory at November 30. The
periodic inventory system is used. Determine the difference in gross profit between the
LIFO and FIFO inventory cost systems.
47) The following two situations are independent of each other.
1> On June 1, the cash account balance was $45,750. During June, cash payments
totaled $243,910 and the June 30 balance was $53,200. Determine the cash receipts
during June and show your calculation.
2> On March 1, the supplies account balance was $1,800. During March, supplies of
$2,450 were purchased and $630 of supplies were on hand as of March 31. Determine
the supplies expense for March and show your calculation.
48) The following two problems are independent of one another.
49) Amos Moving Services account balances at March 31, 2014, the end of the current
year, are listed below. The Retained Earnings balance was $180,000 at April 1, 2013,
the beginning of the current year.
Based on the data provided for Amos Moving Services, prepare a retained earnings
statement for the year ended March 31, 2014.