1) Which of the following accounts is not included in the calculation of a company’s
ending owner’s equity?
A.Revenues.
B.Expenses.
C.Withdrawals.
D.Owner investments.
E.Cash.
2) The formula to compute annual straight-line depreciation is:
A.Depreciable cost divided by useful life in units.
B.(Cost plus salvage value) divided by the useful life in years.
C.(Cost minus salvage value) divided by the useful life in years.
D.Cost multiplied by useful life in years.
E.Cost divided by useful life in units.
3) The process of planning future business actions and expressing them as a formal plan
is called:
A.Budgeting.
B.Cost accounting.
C.Managerial accounting.
D.Variance analysis.
E.Standard cost analysis.
4) A company’s beginning Work in Process inventory consisted of 20,000 units that
were 80% complete with respect to direct labor. A total of 90,000 were finished during
the period and 25,000 remaining in Work in Process inventory were 40% complete with
respect to direct labor at the end of the period. Using the weighted-average method, the
equivalent units of production with regard to direct labor were:
A.46,000.
B.100,000.
C.76,000.
D.90,000.
E.116,000.
5) On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as
follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable,
$8,500. What is the amount of owner’s equity as of August 31 of the current year?
A.$49,100
B.$32,100
C.$12,100
D.$10,900
E.$30,900
6) Use the following data to determine the cost of goods manufactured.
A.$102,000.
B.$110,100.
C.$96,600.
D.$113,700.
E.$100,200.
7) An employee earned $128,500 working for an employer in the current year. The
current rate for FICA Social Security is 6.2% payable on earnings up to $117,000
maximum per year and the rate for FICA Medicare 1.45%. The employer’s total FICA
payroll tax for this employee is:
A.$9,117.25.
B.$9,830.25.
C.$879.75.
D.$8,950.50.
E.$0, since the FICA tax is only deducted from an employee’s pay.
8) A company buys a machine for $76,000 that has an expected life of 6 years and no
salvage value. The company anticipates a yearly after tax net income of $1,805. What is
the accounting rate of return?
A.2.85%.
B.4.75%.
C.6.65%.
D.9.50%.
E.42.75%.
9) Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The
equipment 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 equipment 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.Debit to accumulated depreciation for $22,500.
C.Debit to loss on sale for $10,000.
D.Credit to loss on sale for $10,000.
E.Debit to gain on sale for $2,500.
10) The Federal Insurance Contributions Act (FICA) requires that each employer file a:
A.W-4.
B.Form 941.
C.Form 1040.
D.Form 1099.
E.W-2.
11) 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.
12) At December 31, Yarrow Company reports the following results for its calendar
year from the adjusted trial balance.
a. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are
estimated to be 1.1% of credit sales.
b. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are
estimated to be .8% of total sales.
c. Prepare the adjusting entry to record Bad Debts Expense assuming uncollectibles are
estimated to be 7.0% of year-end accounts receivable.
13) Ash Company reported sales of $400,000 for Year 1, $450,000 for Year 2, and
$500,000 for Year 3. Using Year 1 as the base year, what were the percentage increases
for Year 2 and Year 3 compared to the base year?
A.80% for Year 2 and 90% for Year 3.
B.88% for Year 2 and 80% for Year 3.
C.88% for Year 2 and 90% for Year 3.
D.112.5% for Year 2 and 125% for Year 3.
E.125% for Year 2 and 112.5% for Year 3.
14) A company needed a new building. It found a suitable location with an existing old
building on the land. The company reached an agreement to buy the land and the
building for $960,000 cash. The old building was demolished to make way for the
needed new building. Following is information regarding the demolition of the old
building and construction of the new one:
Prepare a single journal entry to record the above costs assuming all transactions are
paid in cash.
15) A company reported the following stockholders’ equity on January 1 of the current
year:
Prepare journal entries for the following selected transactions related to this company’s
stock during the current year:
16) The first three steps in preparing a departmental income statement are: (1)
accumulate __________________ of the department, (2) allocate
__________________ to the department, and (3) allocate _____________________ to
the operating departments.
17) Why is the sales budget usually prepared first?
18) Rowan, Inc.’s, income statement is shown below. Based on this income statement
and the other information provided, calculate the net cash provided by operations using
the indirect method.
Additional information:
19) A company’s ending inventory of finished goods has a cost of $45,000 and consists
of 750 units. If the overhead applicable to these goods is $8,400, and overhead is
applied at the rate of 60% of direct labor, what is the cost of the direct materials used to
produce these units?
20) The fixed overhead variance can be broken down into the _________________
variance and the _________________ variance.