A corporation had 50,000 shares of $20 par value common stock outstanding on July 1.
Later that day the board of directors declared a 10% stock dividend when the market
value of each share was $27. The entry to record this dividend is:
A.
B.
C.
D.
E. No entry is made until the stock is issued
Answer:
A special bank account used solely for the purpose of paying employees is created by
depositing the amount of each employees net pay into the account every pay period.
This account is referred to as a(n):
A. Federal depository bank account.
B. Employee’s individual earnings account.
C. Employees’ bank account.
D. Payroll register account.
E. Payroll bank account.
Answer:
A corporation issued 5,000 shares of $10 par value common stock in exchange for
some land with a market value of $60,000. The entry to record this exchange is:
A.
B.
C.
D.
E.
Answer:
Which of the following budgets is not an operating budget?
A. Sales budget.
B. Cash budget.
C. General and administrative expense budget.
D. Selling expenses budget.
E. Merchandise purchases.
Answer:
A management concept that encourages all managers and employees to be in tune with
the wants and needs of customers, and which leads to flexible product designs and
production processes, is called:
A. Continuous improvement.
B. Customer orientation.
C. Just-in-time.
D. Theory of constraints.
E. Total quality management.
Answer:
The difference between the amount received from issuing a note payable and the
amount repaid is referred to as:
A. Interest
B. Principle
C. Face value
D. Cash
E. Accounts payable
Answer:
The Accounts Payable account in the general ledger is:
A. A controlling account for the subsidiary accounts payable ledger.
B. The account that controls the purchases journal.
C. The subsidiary account to the purchases journal.
D. Part of a special journal.
E. Part of a subsidiary ledger.
Answer:
Hondo Company has a machine with a book value of $50,000 and a five-year remaining
life. A new machine is available at a cost of $108,000 and Rocko can also receive
$38,000 for trading in the old machine. The new machine will reduce variable
manufacturing costs by $14,000 per year over its five-year life. Should the machine be
replaced?
A. Yes, because income will increase by $14,000 per year.
B. Yes, because income will increase by $52,000 immediately.
C. No, because the company will be $108,000 worse off.
D. No, because the income will decrease by $14,000 per year.
E. Hondo will not be better or worse off by replacing the machine.
Answer:
Companies A, B, C, and D are competitors in the same industry. Assume that all have
adequate quantities of raw materials to meet production needs.
Which company has the best raw materials inventory turnover?
A. Company A
B. Company B
C. Company C
D. Company D
E. Company E
Answer:
Use the following data to find the total direct labor cost variance:
A. $6,125 unfavorable
B. $7,000 unfavorable
C. $7,000 favorable
D. $12,250 favorable
E. $6,125 favorable
Answer:
A company had net income of $43,000, net sales of $380,500, and average total assets
of $220,000. Its profit margin and total asset turnover were, respectively:
A. 11.3%; 73
B. 11.3%; 19.5
C. 1.7%; 19.5
D. 1.7%; 3
E. 19.5%; 11.3
Answer:
In accounting for noninfluential securities:
A. The GAAP concept of trading securities is commonly referred to as financial
assets at fair value through profit and loss under IFRS.
B. The IFRS concept of trading securities is commonly referred to as financial
assets at fair value through profit and loss under GAAP.
C. The GAAP concept of available-for-sale securities is commonly referred to as
available-for-sale financial assets under IFRS.
D. The IRFS concept of available-for-sale securities translates as available-for-sale
financial assets under GAAP.
E. Both A and C above are true statements.
Answer:
A company expects to produce and sell 20,000 units of a single product. Management
desires a 22% return on assets of $3,000,000. The following additional company
information is available:
Compute selling price per unit given that markup percentage equals desired profit
divided by total costs.
A. $137.50
B. $33.00
C. $170.50
D. $114.00
E. $122.50
Answer:
Fischer Company identified the following activities, costs, and activity drivers:
a. Compute a plantwide overhead rate assuming the company assigns overhead based
on 70,000 budgeted direct labor hours (Round to two decimals).
b. Compute separate rates for each of the four activities using the activity based costing.
Answer:
A company issued 7%, five-year bonds with a par value of $100,000. The market rate
when the bonds were issued was 7.5%. The company received $97,947 cash for the
bonds. Using the effective interest method, the amount of interest expense for the first
semiannual interest period is:
A. $3,750.00
B. $3,673.01
C. $3,705.30
D. $3,428.15
E. $7,346.03
Answer:
When preparing the cash budget, all the following should be considered except:
A. Cash receipts from customers.
B. Cash payments for merchandise.
C. Depreciation expense.
D. Cash payments for income taxes.
E. Cash payments for capital expenditures.
Answer:
FastForward had cash inflows from operations of $62,500; cash outflows from
investing activities of $47,000; and cash inflows from financing of $25,000. The net
change in cash was:
A. $40,500 increase
B. $40,500 decrease
C. $134,500 decrease
D. $134,000 increase
E. $9,500 increase
Answer:
A company is considering an investment that will return $20,000 at the end of each
semiannual period for four years. If the company requires an annual return of 10%,
what is the maximum amount it is willing to pay for this investment?
A. Not more than $63,398
B. Not more than $126,796
C. Not more than $80,000
D. Not more than $129,264
E. Not more than $160,000
Answer:
Classify the following activities according to the appropriate section of the statement of
cash flows:
A) Investing activity
B) Financing activity
C) Operating activity
D) Financing activity
E) Operating activity
F) Investing activity
Answer:
In year 1 a company had net sales of $50,000 and ending accounts receivable of
$2,000. In year 2 this company had net sales of $80,000 and ending accounts receivable
of $4,000. Use days’ sales uncollected to determine which of the following statements is
true:.
A. Days’ sales uncollected in year 1 is 14.6 days and in year 2 is 18.25 days. This
measure indicates that the company’s liquidity is declining.
B. Days’ sales uncollected in year 1 is 14.6 days and in year 2 is 18.25 days. This
measure indicates that the company’s liquidity is improving.
C. Days’ sales uncollected in year 1 is 25 days and in year 2 is 20 days. This measure
indicates that the company’s liquidity is declining.
D. Days’ sales uncollected in year 1 is 25 days and in year 2 is 20 days. This measure
indicates that the company’s liquidity is improving.
E. Days’ sales uncollected in year 1 is .04 days and in year 2 is .05 days. This measure
indicates that the company’s liquidity is improving.
Answer:
Based on the following information, what would be the balance in the Retained
Earnings Account, assuming all accounts have a normal balance?
A. $0
B. $13,718
C. $13,155
D. $13,284
E. $2,563
Answer:
A company manufactures and sells a product for $91 per unit. The company’s fixed
costs are $859,716 and its variable costs are $25 per unit. What is the company’s
break-even point in dollars? (Round all calculations to 2 decimal places.)
A. $627,592.68
B. $1,177,693.15
C. $622,982.60
D. $1,091,839.30
E. $66.00
Answer:
A company is considering the purchase of new equipment costing $91,000. The
machine has a useful life of four years and no salvage value. The company requires a
12% return on its investments. The factors for the present value of an annuity of 1 for
different periods follow:
Assuming all revenue is to be received at the end of each year, what are the net cash
flows for this investment if net present value equals ($11,790)?
A. $78,210
B. $10,920
C. $25,750
D. $237,547
E. $33,513
Answer:
Below is accounting information for Cascade Company for 2013:
What were the total assets at year-end?
A. $320,000
B. $296,000
C. $316,000
D. $457,000
E. $116,000
Answer:
A company has the following accounts. What is the acid test ratio?
A. 4.50%
B. 2.30%
C. 1.75%
D. 4.00%
E. 1.50%
Answer:
Coffer Co. is analyzing two projects for the future. Assume that only one project can be
selected.
If the company is using the payback period method and it requires a payback of three
years or less, which project should be selected?
A. Project Y.
B. Project X.
C. Both X and Y are acceptable projects.
D. Neither X nor Y is an acceptable project.
E. Project Y because it has a lower initial investment.
Answer:
Match the following terms with the appropriate definition:
1) Statements that show the effects of proposed transactions as if the transactions had
already occurred.
2) Entries recorded at the end of each accounting period to transfer end-of-period
balances in revenue, expense and dividends accounts to retained earnings.
3) A spreadsheet used to draft an unadjusted trial balance, adjusting entries, adjusted
trial balance and financial statements.
4) The time span from when cash is used to acquire goods and services until cash is
received from the sale of those goods and services.
5) Accounts that are used to record transactions and events for one accounting period
only; they include revenues, expenses and dividends.
6) Accounts that reflect on activities related to one or more future periods; they include
all balance sheet accounts.
7) Recurring steps performed each accounting period, starting with analyzing and
recording of transactions in the journal and continuing through the post-closing trial
balance.
8) Analyses and other informal reports prepared by accountants when organizing the
information presented in reports and financial statements.
9) A list of permanent accounts and their balances from the ledger after all closing
entries are journalized and posted.
A) Working papers
B) Operating cycle C) Income summary
D) Work sheet
E) Post-closing trial balance
F) Accounting cycle
G) Closing entries
H) Pro forma
I) Permanent accounts
J) Temporary accounts
Answer:
Stocks that pay relatively large cash dividends on a regular basis are referred to as:
A. Small capital stocks
B. Mid capital stocks
C. Growth stocks
D. Large capital stocks
E. Income stocks
Answer:
When recording variances in a standard cost system:
A. Only unfavorable material variances are debited.
B. Only unfavorable material variances are credited.
C. Both unfavorable material and labor variances are credited.
D. All unfavorable variances are debited.
E. All unfavorable variances are credited.
Answer:
Midwest Rocks receives and produces an order. What is the companys cycle efficiency
assuming the following times were measured during production of this order?
Process time: .7 days Inspection time: .25 days Move time: 1.05 days Wait time: .5 days
A. 10%
B. 28%
C. 42%
D. 20%
E. 50%
Answer:
The principle prescribing that financial statements reflect the assumption that the
business will continue operating instead of being closed or sold, unless evidence shows
that it will not continue, is the:
A. Going-concern principle
B. Business entity principle
C. Objectivity principle
D. Cost principle
E. Monetary unit principle
Answer:
A company uses activity-based costing to determine the costs of its three products: A, B
and C. The budgeted cost and activity for each of the companys three activity cost pools
are shown in the following table:
How much overhead will be assigned to Product B using activity-based costing?
A. $56,500
B. $78,000
C. $62,500
D. $197,000
E. $70,000
Answer:
A cost that remains the same in total even when volume of activity varies is a:
A. Fixed cost
B. Curvilinear cost
C. Variable cost
D. Step-wise variable cost
E. Standard cost
Answer:
A company purchased equipment valued at $825,000 on January The equipment has an
estimated useful life of seven years or 6 million units. The equipment is estimated to
have a salvage value of $35,000. Assuming the double-declining-balance method of
depreciation, what is depreciation for the second year?
Answer:
Smitty Museum purchased the copyright to a piece of artwork for $922,000. Smitty
plans to reproduce 1.8 million posters of the artwork over a period of 12 years.
Calculate the amortization for the year assuming the Museum plans to reproduce and
sell 130,000 posters the first year.
A $78,633
B. $76,833
C. $66,589
D. $74,125
E.$ 0, copyrights are not amortized.
Answer:
_________________ are probable future payments of assets or services that a company
is currently obligated to make as a result of past transactions or events.
Answer:
Time tickets for factory employees during the month of August are summarized as
follows:
Prepare the necessary journal entries to record factory payroll.
Answer:
A machine was purchased for $37,000 and depreciated for five years on a straight-line
basis under the assumption it would have a ten-year life and a $1,000 salvage value. At
the beginning of the machine’s sixth year it was recognized the machine had three years
of remaining life instead of five and that at the end of the remaining three years its
salvage value would be $1,600. What amount of depreciation should be recorded in
each of the machine’s remaining three years?
Answer:
A company paid its employees $90,000 in cash for wages earned during the past two
weeks. Enter the appropriate amounts for this transaction into the accounting equation
format shown below:
Answer:
An ________________________ requires a future outlay of cash and is relevant for
current future decision making.
Answer:
Identify the users and uses of accounting information.
Answer:
Profit margin equals ___________________ divided by net sales.
Answer:
________________________ is a costing method that includes all manufacturing costs
in unit product costs.
Answer:
Describe how to account for and report on contingent liabilities.
Answer:
_________________________ is the electronic transfer of cash from one party to
another.
Answer:
Briefly describe both the payback period method and the net present value method of
comparing investment alternatives.
Answer:
A company is considering purchasing a machine for $600,000. The machine is expected
to generate a net after-tax income of $15,000 per year. Depreciation expense would be
$60,000. What is the payback period for this machine?
Answer:
A fixed budget is also called a _____________ budget.
Answer:
On October 31, Mayfair Co. received cash dividends of $0.15 per share from its
investment in Carter Corp.’s common stock. Mayfair owned 1,200 shares of Carter
Corp.’s stock on October 31. The investment is considered available for sale. Prepare
the investor’s journal entry to record the receipt of the cash dividends.
Answer:
Describe the flow of materials in a process cost accounting system, including accounts
used.
Answer:
A petty cash fund was originally established with a check for $150. In the petty cash
fund on December 31 (the period-end), you find the following:
Prepare the general journal entry to record the replenishment of the petty cash fund on
December 31.
Answer: