Saturn Corporation has 13,000 shares of 14%, $84 par noncumulative preferred stock
outstanding and 20,000 shares of no-par common stock outstanding. At the end of the
current year, the corporation declares a dividend of $180,000. How is the dividend
allocated between preferred and common stockholders?
A) The dividend is allocated $8,107 to preferred stockholders and $109,091 to common
stockholders.
B) The dividend is allocated $152,880 to preferred stockholders and $27,120 to
common stockholders.
C) The dividend is allocated $70,909 to preferred stockholders and $109,091 to
common stockholders.
D) The dividend is allocated $235,200 to preferred stockholders and $55,200 to
common stockholders.
________ are categorized as either current assets or long-term assets on the balance
sheet, depending on the maturity date.
A) Equity investments
B) Matured investments
C) Trading investments
D) Held-to-maturity investments
KRD Supplies Corporation provided the following information for the year:
What was the amount of the manufacturing overhead costs?
A) $313,000
B) $45,000
C) $292,000
D) $491,000
Accounts Receivable is a(n) ________ account and has a normal ________ balance.
A) liability; debit
B) asset; debit
C) liability; credit
D) asset; credit
A way to account for petty cash by maintaining a constant balance in the petty cash
account and which at any time requires that cash plus petty cash tickets must total the
amount allocated to the petty cash fund, is known as the ________.
A) control system
B) voucher system
C) balanced system
D) imprest system
The purchasing manager was able to bring down the cost of direct materials by
purchasing direct materials of a slightly lower grade quality than the company had used
previously. The lower grade of direct materials, however, meant a higher defect rate on
the assembly line and higher wastage of direct materials during production, which in
turn lowered operating income. This would have led to a(n) ________.
A) unfavorable direct materials cost variance
B) favorable direct labor cost variance
C) favorable direct labor efficiency variance
D) unfavorable direct materials efficiency variance
Which of the following items would require an adjusting entry after preparation of the
bank reconciliation?
A) errors made by the bank revealed by the bank reconciliation
B) all items on the bank’s side
C) errors made on the books revealed by the bank reconciliation
D) outstanding checks
Which of the following is true of the Premium on Bonds Payable account?
A) It is added to the Bonds Payable balance and shown with long-term liabilities on the
balance sheet.
B) It is added to the Bonds Payable balance and shown with stockholders’ equity on the
balance sheet.
C) It is subtracted from the Bonds Payable balance and shown with long-term liabilities
on the balance sheet.
D) It is subtracted from the Bonds Payable balance and shown with the current
liabilities on the balance sheet.
The Accounts Payable account of Golden, Inc. has the following postings:
Calculate the ending balance of the account.
A) $12,000 credit
B) $18,000 debit
C) $18,000 credit
D) $5,000 debit
Priestly Automobiles Company fabricates automobiles. Each vehicle includes one
wiring harness, which is currently made in-house. Details of the harness fabrication are
as follows:
An Indonesian factory has offered to supply Priestly with ready-made units for a price of
$14 per wiring harness. Assume that Priestly’s fixed costs are unavoidable, but that Priestly
could use the vacated production facilities to earn an additional $9,500 of profit per month.
If Priestly decides to outsource, monthly operating income will ________.
A) increase by $4,600
B) decrease by $16,000
C) increase by $9,500
D) decrease by $24,200
Nevada Manufacturing has two processing departments, Department I and Department
II. The raw materials processed at Department I are sent to Department II for further
processing. During June, direct materials worth $40,000 purchased on account were
assigned to Department I. The journal entry to record the issue of direct materials to
production is ________.
A) debit Work-in-Process Inventory—Department I, $40,000; credit Raw Materials
Inventory, $40,000
B) debit Raw Materials Inventory, $40,000; credit Work-in-Process Inventory—
Department I, $40,000
C) debit Work-in-Process Inventory—Department I, $40,000; credit Accounts Payable,
$40,000
D) debit Accounts Payable, $40,000; credit Work-in-Process Inventory—Department I,
$40,000
FOB destination refers to a situation where title to goods while in transit belongs to the
________.
A) buyer
B) seller
C) transport agency
D) insurance agency
On July 31, 2016, Colora Printers purchased a printer for $57,000. It expects the printer
to last for four years and have a residual value of $11,000. Compute the depreciation
expense on the printer for the year ended December 31, 2016, using the straight-line
method.
A) $11,500
B) $4,792
C) $14,250
D) $6,708
Which of the following is a cash inflow from an operating activity on a statement of
cash flows prepared using the direct method?
A) sold treasury stock for cash
B) issued common stock
C) received interest revenue in cash
D) borrowed money on a long-term note
The management of Delta Pet Supplies has calculated the following variances:
When determining the total production cost flexible budget variance, what is the fixed
overhead cost variance of the company?
A) $3,500 F
B) $13,500 U
C) $11,000 U
D) $12,000 F
Which of the following is a reason companies use standard costs?
A) to enhance customer loyalty
B) to ensure the accuracy of the financial records
C) to share best practices with other companies
D) to identify performance standards
Which of the following is the correct formula for measuring the efficiency variance?
A) Efficiency Variance = (Actual Quantity + Standard Quantity) – Standard Cost
B) Efficiency Variance = (Actual Quantity × Standard Quantity) / Standard Cost
C) Efficiency Variance = (Actual Quantity / Standard Quantity) × Standard Cost
D) Efficiency Variance = (Actual Quantity – Standard Quantity) × Standard Cost
Accord Corporation purchased land for $100,000 by making a cash payment of $30,000
and promising to pay the remaining amount in a later accounting period. What is the net
effect of this transaction on Accord’s accounting equation?
A) assets increase by $100,000 and liabilities decrease by $30,000
B) assets increase by $100,000 and liabilities decrease by $70,000
C) assets and equity increase by $70,000
D) assets and liabilities increase by $70,000
Which of the following statements is true of the direct write-off method?
A) GAAP requires public companies to follow the direct write-off method.
B) It provides better matching of revenues with expenses.
C) It results in more accurate net income than any other method.
D) It is only suitable for small companies that have very few uncollectible receivables.
Which of the following would be considered the weakest current ratio?
A) 0.75
B) 0.80
C) 1.25
D) 2.20
Regarding discontinued operations, which of the following statements is incorrect?
A) Gain and losses on the sale of plant assets are not reported as discontinued
operations.
B) A loss on discontinued operations is reported with an addition for the applicable
income tax.
C) Most analysts do not include the results of discontinued operations in financial
analysis.
D) The discontinued operations heading of the income statement includes segments of
the business that have been sold.
A merchandiser purchased inventory on account for $10,000. Under the periodic
inventory system, the journal entry to record the purchase would include ________.
A) a debit to Purchases for $10,000 and a credit to Accounts Payable for $10,000
B) a debit to Accounts Payable for $10,000 and a credit to Purchases for $10,000
C) a debit to Merchandise Inventory for $10,000 and a credit to Accounts Payable for
$10,000
D) a debit to Accounts Payable for $10,000 and a credit to Merchandise Inventory for
$10,000
Newman Automobiles Manufacturing is considering two alternative investment
proposals with the following data:
Calculate the payback period for Proposal X.
A) 5 years
B) 4 years
C) 9 years
D) 8 years
The net income of Avid Camera Services is $20,000. The beginning and ending
stockholders’ equity balances were $36,000 and $54,000, respectively. The company
issued no common stock. Calculate the amount of dividends.
A) $12,000
B) $2,000
C) $16,000
D) $15,000
A company has a cash ratio of 2.3. What does this imply?
A) The company has an unnecessarily large amount of cash supply.
B) The company does not have enough cash supply.
C) The company is not in a position to pay off its long-term liabilities.
D) The company is not in a position to pay off its current liabilities.
The four-steps of tracking product costs in a process costing system are ________.
A) verify, analyze, record, and adjust
B) assign, analyze, approximate, and allocate
C) accumulate, assign, allocate, and adjust
D) arrive, analyze, assume, and allocate
Dallkin Corporation issued 10,000 shares of common stock on January 1, 2017. The
stock has no par value and was issued at $17 per share. The journal entry for this
transaction includes a ________.
A) debit to Cash for $170,000 and a credit to Common Stock—No-Par Value for
$170,000
B) debit to Cash for $170,000 and a credit to Paid-In Capital in Excess of Par—
Common for $170,000
C) credit to Cash for $170,000 and a debit to Common Stock—No-Par Value for
$170,000
D) credit to Cash for $170,000, a debit to Paid-In Capital in Excess of Par—Common
for $10,000, and a debit to Common Stock—No-Par Value for $160,000
Watson, Inc. has collected the following data for the current year:
The beginning Finished Goods Inventory costs were $3,800 under absorption costing and
$2,000 under variable costing.
What is the operating income using absorption costing? (Round any intermediate
calculations to the nearest cent, and your final answer to the nearest dollar.)
A) $56,619
B) $38,849
C) $52,349
D) $3,800
Maurice Corporation invested $100,000 to acquire 20,000 shares of Delta Technologies,
Inc. on March 1, 2017. Delta pays a cash dividend of $0.25 per share on July 2, 2018.
The investment is classified as available-for-sale. Based on these two transactions,
which of the following is true of the accounting equation as of July 2, 2018?
A) Total assets in the balance sheet will remain unchanged.
B) Current assets in the balance sheet will remain unchanged.
C) Equity in the balance sheet will increase.
D) Total liabilities in the balance sheet will increase.
Which of the following is a key performance indicator of the internal business
perspective in a balanced scorecard?
A) hours of employee training
B) number of warranty claims received
C) percentage of market share
D) return on investment
Peter Newton, a production supervisor at BeThink, Inc., uses variable costing for any
cost control decisions that he has to make. Which of the following is the reason for his
choice?
A) Fixed costs are not relevant in the long run.
B) Only variable costs are controllable in the long and short run.
C) Absorption costing is not relevant for long-run decisions.
D) Lower management usually does not have control over most fixed costs.
Taylor Chemicals Company follows the indirect method to prepare its statement of cash
flows. Refer to the following portion of the comparative balance sheet:
Taylor Company
Comparative Balance Sheet
December 31, 2017 and 2016
Net Income for the year was $89,000.
Based on the above information, determine the amount of dividends declared during 2016.
A) $3,100
B) $89,000
C) $62,000
D) $27,000
Groovelex, Inc. has collected the following data for the current year:
What is the unit product cost using absorption costing? (Round your answer to the nearest
cent.)
A) $130.14
B) $67.00
C) $101.82
D) $61.82
Rickman, Inc. reports the following information:
There are no beginning inventories. What is the ending balance in Finished Goods
Inventory using variable costing?
A) $4,900
B) $3,500
C) $5,500
D) $7,697