1) In a job order costing system, indirect labor costs are debited to the Factory
Overhead account.
2) A premium on bonds occurs when bonds carry a contract rate greater than the market
rate at issuance.
3) Accounting standards require companies to include a statement of cash flows in a
complete set of financial statements.
4) The statement of cash flows explains the difference between the beginning and
ending balances of cash and cash equivalents.
5) Conversion cost per equivalent unit is the combined costs of direct materials and
factory overhead.
6) The base amount for a common-size balance sheet is usually total assets.
7) The following journal entry would be made to record the use of $6,100 of direct
labor in a production department during the reporting period:
8) Financing activities include receiving cash from issuing debt and receiving cash
dividends from investments in other companies’ stocks.
9) When materials are used as indirect materials, their cost is debited to the Factory
Overhead account.
10) Alvez Company reports net income of $305,000 for the year ended December 31. It
also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment.
Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a
$10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a
$12,500 decrease in wages payable, and a $100,000 decrease in notes payable.
Calculate the cash provided (used) in operating activities using the indirect method.
A.$461,800.
B.$371,400.
C.$381,400.
D.$351,000.
E.$361,000.
11) Which of the following is not one of the policies and procedures that make up an
internal control system?
A.Protect assets.
B.Ensure reliable accounting.
C.Guarantee a return to investors.
D.Urge adherence to company policies.
E.Promote efficient operations.
12) A company uses the weighted average method for inventory costing. During a
period, Department B finished and transferred 50,000 units to Department C. Also in
Department B during the period, 10,000 units were started but brought only to a stage
of being 60% completed. The number of equivalent units produced by Department B
during the period was:
A.44,000 units.
B.50,000 units.
C.54,000 units.
D.56,000 units.
E.60,000 units.
13) Portofino Corporation uses the following activity rates from its activity-based
costing to assign overhead costs to products:
Data concerning two products appear below:
How much overhead cost would be assigned to Product KJ22 using the activity-based
costing system?
A.$157.87
B.$91,722.47
C.$10,385.22
D.$5,485.50
E.$16,640.87
14) A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On
July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due.
The correct journal entry to record the payment on July 28 is:
A.Debit Merchandise Inventory $1,600; credit Cash $1,600.
B.Debit Cash $1,600; credit Accounts Payable $1,600.
C.Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash
$1,568.
D.Debit Accounts Payable $1,800; credit Cash $1,800.
E.Debit Accounts Payable $1,600; credit Cash $1,600.
15) Selected balances from a company’s financial statements are shown below.
Calculate the following ratios for 2016:
(a) accounts receivable turnover
(b) inventory turnover
(c) days’ sales uncollected
(d) days’ sales in inventory
(d) profit margin
(e) return on total assets.
16) The price of one currency stated in terms of another currency is called a(n):
A.Foreign exchange rate.
B.Currency transaction.
C.Historical exchange rate.
D.International conversion rate.
E. Currency rate.
17) A budget system based on expected activities and their levels that enables
management to plan for resources required to perform the activities is:
A.Traditional budgeting.
B.Management budgeting.
C.Master budgeting.
D.Activity-based budgeting.
E.Cash budgeting.
18) Match each of the following terms with the appropriate definitions.
A. Goodwill
B. Revenue expenditure
C. Betterment
D. Accelerated depreciation
E. Ordinary repairs
F. Depletion
G. Total asset turnover
H. Amortization
I. Units-of production method
J. Intangible assets
19) The following information is taken from Reagan Company’s December 31 balance
sheet:
If net credit sales for the current year were $612,000, the firm’s days’ sales uncollected
for the year is:
A.60 days
B.85 days
C.42 days
D.154 days
E.70 days
20) Zhang Company reported Cost of goods sold of $835,000 and average Inventory of
$41,750. The Inventory turnover ratio is:
A.0.5 times.
B.418 times.
C.20 times.
D.56 times.
E.19 times.
21) A company may retire bonds by all but which of the following means?
A.Exercising a call option.
B.The holders converting them to stock.
C.Purchasing the bonds on the open market.
D.Paying them off at maturity.
E.Paying all future interest and cancelling the debt.
22) A _______________________ is a written promise to pay a specified amount on a
definite future date within one year or the company’s operating cycle, whichever is
longer.
23) Using the information given below, prepare a balance sheet for Rapid Car Services
from the adjusted trial balance. Owner Stella Grafton did not make any additional
investments in the company during the year.
24) Describe the flow of materials in a process costing system, including accounts used.
25) When preferred stock is cumulative and the directors either do not declare a
dividend to preferred stockholders or declare one that does not cover the total amount
of cumulative dividends, the unpaid amount is called
____________________________.
26) A company had net sales of $1,540,500 in 2015 and $1,495,000 in 2016. Its average
assets were $810,000 for 2015 and $800,000 for 2016. (1) Calculate the total asset
turnover for each year. (2) Interpret and comment on the company€s efficiency in the
use of its assets.
27) A company purchased equipment on June 28 of the current year and placed it in
service on August 1. The following costs were incurred in acquiring the equipment:
1,500
Determine the amount to be recorded as cost for the equipment.
28) A company is considering two alternative investment opportunities, each of which
requires an initial cash outlay of $110,000. The expected net cash flows from the two
projects follow:
Required:
(1) Based on a comparison of their net present values, and assuming the same discount
rate (greater than zero) is required for both projects, which project is the better
investment? (2) Use the table values below to find the net present value of the cash
flows associated with Project A, discounted at 12%:
29) Using the information presented below, prepare a statement of owner’s equity and
balance sheet from the adjusted trial balance of Dodson Containers. Mr. Dodson’s
capital account balance of $40,340 consists of a $30,340 beginning-year balance plus a
$10,000 investment during the current year.
