1) The trial balance may be listed on the work sheet instead of being prepared
separately.
2) When a partnership dissolves, a new partnership is formed and a new partnership
agreement should be prepared.
3) Direct materials and direct labor costs are examples of variable costs of production.
4) In establishing a petty cash fund, a check is written for the amount of the fund and is
recorded as a debit to Accounts Payable and a credit to Petty Cash.
5) A budget procedure that provides for the maintenance at all times of a twelve-month
projection into the future is called master budgeting.
6) In a partnership liquidation, if a partner has a debit capital balance in his or her
capital account, he or she is responsible for contributing personal assets sufficient to
eliminate the deficit.
7) The accumulated depreciation account is closed to the income summary account.
8) Updating information in a computerized accounting system happens at the end of the
month.
9) Revenue per employee may be used to measure partnership (LLC) efficiency.
10) Period costs can be found in the balance sheet or in the income statement.
11) If bonds are sold for a discount, the carrying value of the bonds is equal to the face
value less the unamortized discount.
12) Cavy Company estimates that total factory overhead costs will be $660,000 for the
year. Direct labor hours are estimated to be 100,000. Determine (a) the predetermined
factory overhead rate, (b) the amount of factory overhead applied to Job 345 if the
amount of direct labor hours is 560 and Job 777 if the amount of direct labor hours is
800, and (c) prepare the journal entry to apply factory overhead in April according to
the predetermined overhead rate.
13) Tanning Company analyzes its receivables to estimate bad debt expense. The
accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of
accounts receivable shows that approximately 5% of the outstanding receivables will be
uncollectible. What adjusting entry will Tanning Company make if the Allowance for
Doubtful Accounts has a credit balance of $2,500 before adjustment?
A.Bad Debt Expense 17,000
Allowance for Doubtful Accounts 17,000
B.Bad Debt Expense 19,500
Allowance for Doubtful Accounts 19,500
C.Bad Debt Expense 22,000
Allowance for Doubtful Accounts 22,000
D.Bad Debt Expense 65,000
Allowance for Doubtful Accounts 65,000
14) The Winston Company estimates that the factory overhead for the following year
will be $1,250,000. The company has decided that the basis for applying factory
overhead should be machine hours, which is estimated to be 50,000 hours. The total
machine hours for the year was 54,300. The actual factory overhead for the year was
$1,375,000.
a) Determine the total factory overhead amount applied.
b) Calculate the over or under applied amount for the year.
c) Prepare the journal entry to close factory overhead into Cost of Goods Sold.
15) Match the following stockholders equity concepts to the appropriate answer.
1>creditors cannot pursue stockholders personal assets to satisfy claims A. corporation
2>a legal entity, separate from the people who create and operate it publicly held B.
corporation
3>a company whose shares can be bought and sold on a stock exchange C. bylaws
4>rules and procedures for corporate conduct of its affairs D. privately held corporation
5>responsible for establishing corporate policies E. articles of incorporation
6>formally creates a corporation F. limited liability
7>company whose shares are not bought or sold on a stock exchange G. board of
directors
8>earnings of a company distributed to stockholders H. dividends
16) On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is
equal to the
A.Uncollectible accounts expense for the year
B.total of the accounts receivables written-off during the year
C.total estimated uncollectible accounts as of the end of the year
D.sum of all accounts that are past due
17) The budgeting process does not involve which of the following activities:
A.Specific goals are established
B.Periodic comparison of actual results to goals
C.Execution of plans to achieve goals
D.Increase in sales by increasing marketing efforts
18) Damaged merchandise that can be sold only at prices below cost should be valued
at
A.net realizable value
B.LIFO
C.FIFO
D.average
19) The adjusting entry to record the amortization of a discount on bonds payable is
A.debit Discount on Bonds Payable, credit Interest Expense
B.debit Interest Expense, credit Discount on Bonds Payable
C.debit Interest Expense, credit Cash
D.debit Bonds Payable, credit Interest Expense
20) Identify each of the following reconciling items as (a) an addition to the cash
balance according to the bank statement, (b) deduction from the cash balance according
to the bank statement, (c) an addition to the cash balance according to the companys
records, or (d) a deduction from the cash balance according to the companys records.
Assume that none of the transactions reported by bank debit and credit memos have
been recorded by the company. Also, indicate by writing (Entry) those items that will
require a journal entry in the companys accounts.
21) Using the following information, what is the amount of net sales?
A.$28,970
B.$63,130
C.$63,000
D.$62,090
22) A special form on which is recorded pertinent data about a liability and the
particulars of its payment is called a(n)
A.invoice
B.voucher
C.debit memo
D.remittance advice
23) Which of the items below is not a business entity?
A.entrepreneurship
B.proprietorship
C.partnership
D.corporation
24) Ecco Company sold $150,000 of kitchen appliances during September under a 6
month warranty. The cost to repair defects under the warranty is estimated at 6% of the
sales price. On October 15 a customer required a $200 part replacement, plus $85 labor
under the warranty.
Provide the journal entry for (a.) the estimated expense on September 30 and (b.) the
October 15 warranty work.
25) The work sheet at the end of July has $5,950 in the Balance Sheet credit column for
Accumulated Depreciation. The work sheet at the end of August has $7,600 in the
Balance Sheet credit column for Accumulated Depreciation. What was the amount of
the depreciation expense adjustment for the month of August?
A.amount can not be determined
B.$7,600
C.$5,950
D.$1,650
26) Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. Work in process at the beginning of the period for Department 1
was $75,000, and work in process at the end of the period totaled $60,000. The records
indicate that direct materials, direct labor, and applied factory overhead for Department
2 were $50,000, $60,000, and $70,000, respectively. In addition, work in process at the
beginning of the period for Department 2 totaled $75,000, and work in process at the
end of the period totaled $60,000. The journal entry to record the flow of costs into
Department 3 during the period is:
A.Work in Process–Department 3585,000
Work in Process–Department 2585,000
B.Work in Process–Department 3570,000
Work in Process–Department 2570,000
C.Work in Process–Department 3555,000
Work in Process–Department 2555,000
D.Work in Process–Department 3165,000
Work in Process–Department 2165,000
27) A negative fixed overhead volume variance can be caused due to the following
except:
A.Sales orders at a low level
B.Machine breakdowns
C.Employee inexperience
D.Increase in utility costs
28) Financing activities include
A.lending money
B.acquiring investments
C.issuing debt
D.acquiring long-lived assets
29) An example of a period cost is:
A.advertising expense
B.indirect materials
C.depreciation on factory equipment
D.property taxes on plant facilities
30) Which one of the steps below is not aided by the preparation of the work sheet?
A.preparing the adjusted trial balance
B.posting to the general ledger
C.preparing the financial statements
D.preparing the closing entries
31) If accounts payable have increased during a period
A.revenues on an accrual basis are less than revenues on a cash basis
B.expenses on an accrual basis are less than expenses on a cash basis
C.expenses on an accrual basis are the same as expenses on a cash basis
D.expenses on an accrual basis are greater than expenses on a cash basis
32) On January 1, 2011, Zero Company obtained a $52,000, four-year, 6.5% installment
note from Regional Bank. The note requires annual payments of $15,179, beginning on
December 31, 2011. The December 31, 2013 carrying amount in the amortization table
for this installment note will be equal to:
A.$0
B.$13,000
C.$14,252
D.$16,603
33) An anticipated purchase of equipment for $600,000, with a useful life of 8 years and
no residual value, is expected to yield the following annual net incomes and net cash
flows:
What is the cash payback period?
A.5 years
B.4 years
C.6 years
D.3 years
34) Everett, Miguel, and Ramona are partners, sharing income 1:2:3. After selling all of
the assets for cash, dividing losses on realization, and paying liabilities, the balances in
the capital accounts are as follows: Everett, $50,000 Cr.; Miguel, $40,000 Dr.; and
Ramona, $30,000 Cr. How much cash is available for distribution to the partners?
A.$120,000
B.$30,000
C.$40,000
D.$90,000
35) What is the amount of Direct Materials used?
A.$2,000
B.$4,000
C.$8,000
D.$14,000
36) Accounts Receivable Turnover measures
A.how frequently during the year the accounts receivable are converted to cash
B.the number of days of accounts receivable outstanding
C.the fair market value of accounts receivable
D.the efficiency of the accounts payable function
37) The chart of account for the Miguel 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.41
B.3
C.11, 41
D.11
38) Miriah Inc. has 10,000 shares of 5%, $100 par value, cumulative preferred stock
and 50,000 shares of $1 par value common stock outstanding at December 31, 2014.
What is the annual dividend on the preferred stock?
A.$50 per share
B.$50,000 in total
C.$10,000 in total
D.$0.50 per share
39) Which of the following is not a reason to invest excess cash in temporary
investments?
A.earn interest revenue
B.influence the operations of another company
C.receive dividends
D.realize gains from the increase in market value of the securities
40) List the four basic types of accounts that require adjusting entries and give an
example of each.
41) Using the following accounts and their amounts, prepare in good format a Balance
Sheet for Bright Futures Company, month ended August 31, 2011:
42) Differentiate between:
43) The Dickinson Company reported net income of $155,000 for the current year.
Depreciation recorded on buildings and equipment amounted to $65,000 for the year. In
addition, a building with an original cost of $250,000 and accumulated depreciation of
$190,000 on the date of the sale, was sold for $75,000. Balances of the current asset and
current liability accounts at the beginning and end of the year are as follows:
Instructions
Prepare the cash flows from the operating activities section of the statement of cash
flows using the indirect method.
44) Crow Manufacturers, Inc. projected sales of 75,000 bicycles for 2012. The
estimated January 1, 2012, inventory is 5,000 units, and the desired December 31, 2012,
inventory is 8,000 units. What is the budgeted production (in units) for 2012?
45) Determine the amount to be paid in full settlement of each invoice, assuming that
credit for returns and allowances was received prior to payment and that all invoices
were paid within the discount period.
46) Discuss the similarities and differences between accounts receivables, notes
receivables and other receivables.