Eliasen, Inc. invests its excess cash in Creative Technologies, Inc. and acquires 3,300
shares for $32.50 per share. Eliasen, Inc. owns less than 2% of Creative’s voting stock
and plans to hold the stock for two years. Which of the following is the correct journal
entry for the transaction?
A)
B)
C)
D)
Hawkeye Corporation has acquired a property that included both land and a building for
$570,000. The corporation hired an appraiser who has determined that the market value
of the land is $300,000 and that of the building is $430,000. At what amount should the
corporation record the cost of land? (Round any intermediate calculations to two
decimal places, and your final answer to the nearest dollar.)
A) $444,600
B) $123,000
C) $285,000
D) $233,700
The current portion of long-term notes payable is ________.
A) the amount of principal that will be paid within five years
B) typically included with the long-term liabilities on the balance sheet
C) recorded as an adjusting entry
D) reclassified as current for reporting purposes on the balance sheet
On June 30, 2017, Stephans, Inc. showed the following data on the equity section of
their balance sheet:
On July 1, 2017, the company declared and distributed a 6% stock dividend. The market
value of the stock at that time was $14 per share. Following this transaction, what is total
stockholders’ equity?
A) $1,376,000
B) $1,558,140
C) $1,302,860
D) $1,208,840
Which of the following is considered a fiscal year?
A) six months
B) three months
C) twelve months
D) four months
Which one of the following is an example of investment income from securities?
A) deferred tax assets
B) depreciation of long-term assets
C) gain on the sale of fixed assets
D) interest earned from debt securities
A market-based transfer price considers the ________ when determining the transfer
price.
A) variable costs
B) sales price of goods
C) cost of the goods
D) contribution margin
Sales revenue growth, gross margin growth, and return on investment are the key
performance indicators for the ________.
A) financial perspective
B) customer perspective
C) internal business perspective
D) learning and growth perspective
Bridge Company makes special equipment used in cell towers. Each unit sells for $410.
Bridge uses just-in-time inventory procedures; it produces and sells 12,000 units per
year. It has provided the following income statement data:
A foreign company has offered to buy 100 units for a reduced sales price of $300 per unit.
The marketing manager says the sale will have no negative impact the company’s regular
sales. The sales manager says that this sale will not require any additional selling and
administrative costs, as it is a one-time deal. The production manager reports that there is
plenty of excess capacity to accommodate the deal without requiring any additional fixed
costs. If Bridge accepts the deal, how will this impact operating income? (Round any
intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
A) Operating income will increase by $29,917.
B) Operating income will decrease by $29,917.
C) Operating income will increase by $30,000.
D) Operating income will decrease by $30,000.
The face value is $82,000, the stated rate is 10%, and the term of the bond is eight
years. The bond pays interest semiannually. At the time of issue, the market rate is 8%.
What is the present value of the bond at the market rate?
Present value of $1:
Present value of annuity of $1:
A) $91,561
B) $47,773
C) $43,673
D) $84,788
Regarding the flow of costs through the inventory accounts, which of the following
statements is incorrect?
A) The final amount at each stage is added at the beginning of the next stage.
B) The costs flow from Raw Materials Inventory to Work-in-Process Inventory to
Finished Goods Inventory.
C) Purchases and freight in are debited to the Work-in-Process Inventory account.
D) The format for computing the amount used, manufactured, or sold is the same for all
three inventory accounts.
Myoung Company, a manufacturer of small appliances, had the following activities,
allocated costs, and allocation bases:
The above activities are carried out at two of its regional offices.
What is the cost per hour for the account inquiry activity? (Round your answer to the
nearest cent.)
A) $0.65
B) $25.42
C) $11.00
D) $2.06
CM Company manufactures a component used in the production of one of its main
products. The following cost information is available:
A supplier has offered to sell the component to CM for $650 per unit. If CM buys the
component from the supplier, the released facilities can be used to manufacture a product
that would generate a contribution margin of $10,000 annually. Assuming that CM needs
4,000 components annually and that the fixed manufacturing overhead is unavoidable,
what would be the impact on operating income if CM outsources?
A) Operating income would decrease by $150,000.
B) Operating income would increase by $10,000.
C) Operating income would decrease by $10,000.
D) Operating income would increase by $160,000.
The following information is provided by Horowitz Systems:
What is the profitability index for Project C? (Round your answer to two decimal places.)
A) 1.48
B) 1.38
C) 1.26
D) 1.23
Based on the following, what is the total manufacturing overhead variance for the total
production cost flexible budget variance?
A) $725 F
B) $350 U
C) $725 U
D) $425 F
Assume the following information for Petra Sales, Inc.:
• Common Stock, $1.00 par, 232,000 shares issued, 186,000 shares outstanding
• Paid-In Capital in Excess of Par—Common: $1,770,000
• Retained Earnings: $2,450,000
• Treasury Stock: 26,000 shares purchased at $12 per share
If Petra Sales purchases an additional 13,000 shares of treasury stock at $18 per share,
what number of shares will be shown as issued and outstanding?
A) 18 issued; 186,000 outstanding
B) 219,000 issued; 186,000 outstanding
C) 232,000 issued; 173,000 outstanding
D) 232,000 issued; 186,000 outstanding
For Revenues, the category of account and its normal balance is ________.
A) equity and a credit balance
B) assets and a debit balance
C) assets and a credit balance
D) equity and a debit balance
Which of the following is used by companies to separate cash duties and establish
stronger control over cash receipts?
A) an encryption system
B) an imprest system
C) a lock-box system
D) a firewall system
Transactions are first record in a ________.
A) chart of accounts
B) trial balance
C) journal
D) ledger
On September 30, the Sorting Department of Tea Works had ending Work-in-Process
Inventory of 30,000 units that was 46% complete for materials and 36% complete for
conversion costs. This means that for the beginning Work-in-Process Inventory,
________% of the materials and ________% of conversion costs were added during
October.
A) 46; 36
B) 64; 54
C) 54; 64
D) 36; 46
Reducing expenses to increase operating profit is representative of ________.
A) safeguarding assets
B) following company policies
C) promoting operational efficiency
D) ensuring accurate, reliable accounting records
Green Services, Inc. invests its excess cash in Creative Technologies, Inc. and acquires
6,000 shares for $61.75 per share. Green Services, Inc. owns less than 2% of Creative’s
voting stock and plans to hold the stock for two years. While preparing the journal entry
to record this transaction, ________.
A) Long-term Investments—Available-for-Sale is debited for $370,500
B) Long-term Investments—Held-to-Maturity is debited for $370,500
C) Long-term Investments—Trading Investments is credited for $370,500
D) Long-term Investments—Significant Interest Investments is debited for $370,500
Which of the following items are reconciling items on the bank side of the
reconciliation?
A) outstanding checks and correction of book error
B) deposit in transit and NSF check
C) deposit in transit and outstanding checks
D) bank service charge and correction of book error
At the beginning of 2017, Smoothie Town, Inc. has the following account balances:
Accounts receivable $44,000 (Debit)
Allowance for Bad Debts $7,000 (Credit)
During the year, credit sales were $820,000. Cash collected on credit sales was
$750,000, and $18,000 was written off. Smoothie Town uses the aging-of-receivables
method to record bad debts expense. The amount estimated as uncollectible was
$26,000. The amount of Bad Debts Expense for 2017 is ________.
A) $37,000
B) $26,000
C) $11,000
D) $8,000
Which of the following statements is true of the accounting cycle?
A) It takes place only at the end of an accounting period.
B) It involves preparation of adjusting entries after the closing entries.
C) It ignores the beginning balances of accounts.
D) It is a process by which financial statements for a period are produced.
Ivorycoast, Inc. purchased a van on January 1, 2017, for $880,000. Estimated life of the
van was five years, and its estimated residual value was $101,000. Ivorycoast uses the
straight-line method of depreciation. Calculate the book value of the van at the end of
2017.
A) $715,000
B) $825,000
C) $779,000
D) $724,200
Allain, Inc. has the following budgeted figures:
Calculate the ending merchandise inventory for the month of March.
A) $32,800
B) $68,400
C) $33,580
D) $53,400
Maroon, Inc. uses a standard cost system. On December 31, the last day of the
accounting period, the account balances include the following:
What is the standard net operating income of the company for the year ended December
31?
A) $8,780
B) $6,290
C) $8,470
D) $7,530
Williams Enterprises prepaid six months of office rent totaling $8,000 on October 1,
2017. Assuming Williams records deferred expenses using the alternative treatment,
what would be the entry on October 1, 2017?
A) Debit Prepaid Rent and credit Cash for $8,000
B) No entry is needed until the expense is incurred
C) Debit Cash and credit Unearned Rent for $8,000
D) Debit Rent Expense and credit Cash for $8,000
Which one of the following is true of a signature card?
A) It shows each authorized person’s signature for a bank account.
B) It is the same as a deposit receipt and acts as a proof of the deposit transaction.
C) It can be used as a debit card.
D) It can only be used for bank accounts of individuals, not for the bank accounts of
businesses.
Which of the following is an important aspect of control over payroll?
A) controls to limit salaries and wages so that they are no higher than competitors
B) controls for efficiency in payroll procedures
C) controls to screen potential employees for criminal records
D) controls to monitor employee behavior, such as use of security cameras
The percentage of assets that are financed with liabilities can be calculated using the
________.
A) accounting equation
B) debt ratio
C) journal
D) ledger