All property, plant, and equipment assets are depreciated over time.
Answer:
The master budget of a small manufacturer would normally include all component
budgets that impact on the financial statements.
Answer:
Once an account has been closed for the period, inserting a line in the balance columns
zeros out the account, making it ready for the following period.
Answer:
The recording of cash receipts to the cash account will be done by debiting the account.
Answer:
Employers are required to compute and report payroll taxes on a calendar-year basis,
even if a different fiscal year is used for financial reporting and income tax purposes.
Answer:
One of the differences in accounting for a process costing system compared to a job
order system is that the amounts used to transfer goods from one department to the next
comes from the cost of production report instead of job cost cards.
Answer:
The budget procedure that requires all levels of management to start from zero in
estimating sales, production, and other operating data is called continuous budgeting.
Answer:
Cost systems using detailed estimates of each element of manufacturing cost entering
into the finished product are called budgeted cost systems.
Answer:
Period costs are costs that are incurred for the production requirements of a certain
period.
Answer:
Preferred stockholders must receive their current year dividends before the common
stockholders can receive any dividends.
Answer:
The use of the lower-of-cost-or-market method of inventory valuation increases net
income for the period in which the inventory replacement price declined.
Answer:
The normal balance of revenue accounts is a credit.
Answer:
The first step in determining the cost of goods completed and ending inventory
valuation using process costing is to calculate equivalent units of production.
Answer:
A law firm would use a job order cost system to accumulate all of the costs associated
with a particular client engagement, such as lawyer time, copying charges, filing fees,
and overhead.
Answer:
A budget can be an effective means of communicating management’s plans to the
employees of a business.
Answer:
A cost that will not be affected by later decisions is termed an opportunity cost.
Answer:
The budget procedure that requires all levels of management to start from zero in
estimating sales, production, and other operating data is called zero-based budgeting.
Answer:
Factory overhead includes all manufacturing costs except direct materials and direct
labor.
Answer:
The objectives of budgeting are (1) establishing specific goals for future operations, (2)
executing plans to achieve the goals, and (3) periodically comparing actual results with
these goals.
Answer:
The financial statements measure precisely the financial condition and results of
operations of a business.
Answer:
A qualitative characteristic that may impact upon capital investment analysis is
employee morale.
Answer:
Separating the responsibilities for purchasing, receiving, and paying for equipment is an
example of the control procedure: separating operations, custody of assets, and
accounting.
Answer:
The owner’s rights to the assets rank ahead of the creditors’ rights to the assets.
Answer:
Adjusting journal entries are recorded in a special journal.
Answer:
The work sheet is not considered a part of the formal accounting records.
Answer:
Methods that ignore present value in capital investment analysis include the internal
rate of return method.
Answer:
When a note is received from a customer on account, it is recorded by debiting Notes
Receivable and crediting Accounts Receivable.
Answer:
Managerial accounting uses only past data in reports to aid management in the decision
making process.
Answer:
The unamortized Discount on Bonds Payable account is a contra-liability account.
Answer:
Direct materials and direct labor costs are examples of variable costs of production.
Answer:
Comprehensive income is all changes in stockholders’ equity during the period except
those resulting from dividends and stockholders’ investments.
Answer:
The acquisition costs of property, plant, and equipment should include all normal,
reasonable and necessary costs to get the asset in place and ready for use.
Answer:
Job cost sheets can provide information to managers for all but the following:
A.cost impact of materials changes
B.cost impact of continuous improvement in the manufacturing process
C.cost impact of materials price or direct labor rate changes over time
D.utilities, managerial salaries, and depreciation of computers in the corporate office
Answer:
The chart of account for the Corning Company includes some of the following
accounts:
On the journal page 3, the following transaction was found:
What is the post reference that will be found on the journal entry?
A.15, 11
B.15
C.11
D.3
Answer:
The inventory costing method that reports the most current prices in ending inventory is
A.FIFO
B.Specific identification
C.LIFO
D.Average cost
Answer:
The following is a measure of a manager’s performance working in a cost center.
A.budget performance report
B.rate of return and residual income measures
C.divisional income statements
D.balance sheet
Answer:
The entry to record the issuance of 150 shares of $5 par common stock at par to an
attorney in payment of legal fees for organizing the corporation includes a credit to
A.Organizational Expenses
B.Goodwill
C.Common Stock
D.Cash
Answer:
Which of the following would most likely use a job order costing system?
A.A paper mill
B.A swimming pool installer
C.A company that manufactures chlorine for swimming pools
D.An oil refinery
Answer:
The amount of time spent by each employee and the labor cost incurred for each
individual job or for factory overhead are recorded on:
A.pay stubs.
B.in-and-out cards.
C.time tickets.
D.employees’ earnings records.
Answer:
A department store has budgeted sales of 12,000 men’s suits in September. Management
wants to have 6,000 suits in inventory at the end of the month to prepare for the winter
season. Beginning inventory for September is expected to be 4,000 units. What is the
dollar amount of the purchase of suits? Each suit has a cost of $75.
A.$900,000
B.$1,050,000
C.$1,350,000
D.$1,200,000
Answer:
Journalize the following merchandise transactions:
Answer:
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months were: January – 200,000 units; February –
180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company
wishes to maintain a desired ending finished goods inventory of 20% of the following
months sales.
What would be the budgeted production for March?
A.256,000
B.206,000
C.214,000
D.298,000
Answer:
The following is a measure of a manager’s performance working in a profit center.
A.balance sheet
B.rate of return and residual income measures
C.budget performance report
D.divisional income statements
Answer:
Which of the following types of transactions would be reported as a cash flow from
investing activity on the statement of cash flows?
A.issuance of bonds payable
B.issuance of capital stock
C.purchase of treasury stock
D.purchase of noncurrent assets
Answer:
Which of the following is most associated with managerial accounting?
A.Must follow GAAP
B.May rely on estimates and forecasts
C.Is prepared for users outside the organization.
D.Always reports on the entire entity
Answer:
The calculation for annual depreciation using the units-of-production method is
A.(initial cost/estimated output) * the actual yearly output
B.(depreciable cost / yearly output) * estimated output
C.depreciable cost / yearly output
D.(depreciable cost / estimated output) * the actual yearly output
Answer:
Department B had 3,000 units in Work in Process that were 25% completed at the
beginning of the period at a cost of $12,500. 13,700 units of direct materials were added
during the period at a cost of $28,700. 15,000 units were completed during the period,
and 1,700 units were 95% completed at the end of the period. All materials are added at
the beginning of the process. Direct labor was $32,450 and factory overhead was
$18,710.
The number of equivalent units of production for the period for conversion if the
first-in, first-out method is used to cost inventories was:
A.14,365
B.13,615
C.12,000
D.15,865
Answer:
Proof that the dollar amount of the debits equals the dollar amount of the credits in the
ledger means
A.all of the information from the journal was correctly transferred to the ledger
B.all accounts have their correct balances in the ledger
C.only the journal is accurate; the ledger may be incorrect
D.only that the debit dollar amounts equal the credit dollar amounts
Answer:
The objectivity concept requires that
A.business transactions must be consistent with the objectives of the entity
B.the Financial Accounting Standards Board must be fair and unbiased in its
deliberations over new accounting standards
C.accounting principles must meet the objectives of the Security and Exchange
Commission
D.amounts recorded in the financial statements must be based on independently
verifiable evidence
Answer:
In which journal would the payment of salaries be posted?
A.cash receipts journal
B.special journal
C.cash payments journal
D.expense journal
Answer:
For the manufacturing business, inventory which is in the process of being
manufactured is referred to as:
A.supplies inventory
B.work in process inventory
C.finished goods inventory
D.direct materials inventory
Answer:
The chart of accounts is designed to
A.alphabetize the accounts to make reading easier for its financial statement users.
B.analyze the accounts and organize them in order of dollar amount to simplify the
accounting information for users.
C.summarize the transactions and determine their ending balances.
D.meet the information needs of a company and other financial statement users.
Answer:
Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with
an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000
cash. (Appropriate entries for depreciation had been made for the first six years of use.)
Journalize the following entries:
(a) Record the depreciation for the one-half year prior to the sale, using the straight-line
method.
(b) Record the sale of the equipment.
(c) Assuming that the equipment had been sold for $25,000 cash, prepare the entry for
(b) above to record the sale.
Answer:
Which of the following is not a reason standard costs are separated in two components?
A.the price and quantity variances need to be identified separately to correct the actual
major differences.
B.identifying variances determines which manager must find a solution to major
discrepancies.
C.if a negative variance is over-shadowed by a favorable variance, managers may
overlook potential corrections.
D.variances brings attention to discrepancies in the budget and requires managers to
revise budgets closer to actual.
Answer:
A minimum cash balance required by a bank is called
A.cash in bank
B.cash equivalent
C.compensating balance
D.EFT
Answer:
If the price paid per unit differs from the standard price per unit for direct materials, the
variance is termed a:
A.variable variance
B.controllable variance
C.price variance
D.volume variance
Answer:
Xavier and Yolonda have original investments of $50,000 and $100,000 respectively in
a partnership. The articles of partnership include the following provisions regarding the
division of net income: interest on original investment at 15%, salary allowances of
$22,000 and $20,000 respectively, and the remainder equally. How much of the net
income of $90,000 is allocated to Xavier?
A.$30,250
B.$47,750
C.$45,000
D.$42,250
Answer:
Ruby Company produces a chair that requires 5 yds. of material per unit. The standard
price of one yard of material is $7.50. During the month, 8,400 chairs were
manufactured, using 43,700 yards at a cost of $7.30 per yard. Determine the (a) price
variance, (b) quantity variance, and (c) cost variance.
Answer:
Which of the following entries records the investment of cash by Ron York, owner of a
proprietorship?
A.debit Ron York, Capital; credit Accounts Receivable
B.debit Cash; credit Ron York, Capital
C.debit Ron York, Drawing; credit Cash
D.debit Cash; credit Ron York, Drawing
Answer:
The two most widely used methods for determining the cost of inventory are
A.FIFO and LIFO
B.FIFO and average
C.LIFO and average
D.gross profit and average
Answer:
Answer:
On November 10th, JumpStart Co. provides $2,900 in services to clients. At the time of
service, the clients paid $600.00 in cash and put the balance on account.
(a) Journalize this event.
(b) On November 20th, JumpStart Co. clients paid an additional $900 on their accounts
due. Journalize this event.
(c) Calculate the amount of accounts receivable on November 30th.
Answer:
If Beginning Inventory (BI) + Purchases (P) – Ending Inventory (EI) = Cost of Goods
Sold (COGS), an equivalent equation can be written as?
A.BI + P = COGS – EI
B.BI – P = COGS + EI
C.BI + P = COGS + EI
D.EI + P = COGS – BI
Answer:
An entity that is organized according to state or federal statutes and in which ownership
is divided into shares of stock is a
A.proprietorship
B.corporation
C.partnership
D.governmental unit
Answer:
The cost of direct materials transferred into the Bottling Department of the Mountain
Springs Water Company is $27,225. The conversion cost for the period in the Bottling
Department is $7,596. The total equivalent units for direct materials and conversion are
60,500 and 63,300 respectively. Determine the direct materials and conversion cost per
equivalent unit.
Round answers to nearest cent.
Answer:
If working papers are not considered part of the formal accounting records, then why
are they used?
Answer:
Brubeck Co. issued $10,000,000 of 30-year, 8% bonds on May 1 of the current year,
with interest payable on May 1 and November 1. The fiscal year of the company is the
calendar year. Journalize the entries to record the following selected transactions for the
current year:
Answer:
Describe the major differences in preparing the financial statements for a service
business and a merchandising business.
Answer:
The following are the current assets from Hanes Co. as of December 31, 2014:
Prepare the current asset section of the balance sheet.
Answer:
On January 1st, Power House Co. prepays the year’s rent, $10,140 to its landlord.
Prepare the journal entry by recording the prepayment to an asset account.
Answer:
While taking a physical inventory, a company counts their inventory as less than the
actual amount on hand. How will this error affect the income statement?
Answer:
Greyson Company produced 8,300 units of their product that required 4.25 standard
hours per unit. Determine the standard fixed overhead cost per unit at 27,000 hours,
which is 100% of normal capacity, if the favorable fixed factory overhead volume
variance is $14,895.
Answer:
Condensed data taken from the ledger of Joplin Company at December 31, 2012 and
2011, are as follows:
Prepare a comparative balance sheet, with horizontal analysis, for December 31, 2012
and 2011. (Round percents to one decimal point.)
Answer:
Sampson Co. sold merchandise to Batson Co. on account, $46,000, terms 2/15, net 45.
The cost of the merchandise sold is $38,500. Sampson Co. issued a credit memo for
$1,500 for merchandise returned that originally cost $950. The Batson Co. paid the
invoice within the discount period. Prepare the entries that both Sampson and Batson
Companies would record for the above. Assume both Sampson and Batson use a
perpetual inventory system.
Answer:
The balance of Material Q on May 1 and the receipts and issuances during May are as
follows:
Determine the cost of each of the issuances under a perpetual system, using the first-in,
first-out method.
Answer:
Balances of the current asset and current liability accounts at the end and beginning of
the year are as follows:
Use the direct method to prepare the cash flows from operating activities section of a
statement of cash flows.
Answer:
At the beginning of the period, the Cutting Department budgeted direct labor of
$30,000 and supervisor salaries of $20,000 for 3,000 hours of production. The
department actually completed 5,000 hours of production. Determine the budget for the
department assuming that it uses flexible budgeting?
Answer:
The Mountain Springs Water Company has two departments. Purifying and Bottling.
The Bottling Department received 58,000 liters from the Purifying Department. During
the period, the Bottling Department completed 56,000 liters, including 4,000 liters of
work in process at the beginning of the period. The ending work in process was 6,000
liters. How many liters were started and completed during the period?
Answer:
Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Prepare a statement of owner’s equity.
Answer:
Collins Landscape Company purchased various landscaping supplies on account to be
used for landscape designs for their customers. How will this business transaction affect
the accounting equation?
Answer: