1) The following information is available regarding Grace Smit’s capital account in
Enterprise Consulting Group, a general partnership, for a recent year:
What is Smit’s partner return on equity during the year in question?
A.36.6%
B.34.7%
C.10.8%
D.11.4%
E.55.7%
2) Changes in retained earnings are commonly reported in the:
A.Statement of cash flows.
B.Balance sheet.
C.Statement of stockholders’ equity.
D.Multiple-step income statement.
E.Single-step income statement.
3) A company’s flexible budget for 48,000 units of production showed variable
overhead costs of $72,000 and fixed overhead costs of $64,000. The company incurred
overhead costs of $122,800 while operating at a volume of 40,000 units. The total
controllable cost variance is:
A.$1,200 favorable.
B.$1,200 unfavorable.
C.$13,200 favorable.
D.$13,200 unfavorable.
E.$15,200 favorable.
4) An increase in the accounts receivable account during the year should be reported on
the statement of cash flows as:
A.An increase in cash flows from operating activities
B.An increase in cash flows from investing activities
C.A decrease in cash flows from operating activities
D.A decrease in cash flows from investing activities
E.An increase in cash flows from financing activities
5) Dividing Accounts receivable, net by Net sales and multiplying the result by 365 is
the:
A.Profit margin.
B.Days’ sales uncollected.
C.Accounts receivable turnover ratio.
D.Average accounts receivable ratio.
E.Current ratio.
6) Adonis Corporation issued 10-year, 8% bonds with a par value of $200,000. Interest
is paid semiannually. The market rate on the issue date was 7.5%. Adonis received
$206,948 in cash proceeds. Which of the following statements is true?
A.Adidas must pay $200,000 at maturity and no interest payments.
B.Adidas must pay $206,948 at maturity and no interest payments.
C.Adidas must pay $200,000 at maturity plus 20 interest payments of $8,000 each.
D.Adidas must pay $206,948 at maturity plus 20 interest payments of $8,000 each.
E.Adidas must pay $200,000 at maturity plus 20 interest payments of $7,500 each.
7) A set of procedures and approvals for verifying, approving and recording obligations
for eventual cash disbursement, and for issuing checks for payment only of verified,
approved, and recorded obligations is referred to as a(n):
A.Internal cash system.
B.Petty cash system.
C.Cash disbursement system.
D.Voucher system.
E.Cash control system.
8) Part 7B costs the Midwest Division of Frackle Corporation $30 to make, of which
$21 is variable. Midwest Division sells Part 7B to other companies for $47. The
Northern Division of Frackle Corporation can use Part 7B in one of its products. The
Midwest Division has enough idle capacity to produce all of the units of Part 7B that
the Northern Division would require. What is the lowest transfer price at which the
Midwest Division should be willing to sell Part 7B to the Northern Division?
A.$30
B.$21
C.$47
D.$17
E.$20
9) Last year, Wesson Company sold 10,000 units of its only product. If sales increase by
12% in the current year, how will unit variable cost and unit fixed cost be affected?
A.Choice A
B.Choice B
C.Choice C
D.Choice D
E.Choice E
10) A management concept based on an understanding of the changing 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.
11) Pleasant Hills Properties is developing a golf course subdivision that includes 250
home lots; 100 lots are golf course lots and will sell for $95,000 each; 150 are street
frontage lots and will sell for $65,000. The developer acquired the land for $1,800,000
and spent another $1,400,000 on street and utilities improvement. Compute the amount
of joint cost to be allocated to the golf course lots using value basis.
A.$1,920,000.
B.$720,000.
C.$1,620,800.
D.$1,579,200.
E.$1,080,000.
12) A company uses a process costing system and the weighted average method for
inventory costs. The following information is available regarding direct labor for the
current year:
(a) Calculate the equivalent units of production for direct labor for the year.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest
cent).
13) The following data has been collected about Keller Company’s stockholders’ equity
accounts:
Assuming the treasury shares were all purchased at the same price, the cost per share of
the treasury stock is:
A.$1.15.
B.$1.28.
C.$11.50.
D.$10.50.
E.$10.00.
14) During November, the production department of a process operations system
completed and transferred to finished goods 35,000 units that were in process at the
beginning of November and 110,000 units that were started and completed in
November. November’s beginning inventory units were 100% complete with respect to
materials and 55% complete with respect to conversion. At the end of November,
40,000 additional units were in process in the production department and were 100%
complete with respect to materials and 30% complete with respect to conversion.
Compute the number of equivalent units with respect to materials for November using
the weighted-average method.
A.145,000.
B.40,000.
C.105,000.
D.112,000.
E.185,000.
15) Furniture World is required by law to collect and remit sales taxes to the state. If
Furniture World has $78,000 of cash sales that are subject to a 6% sales tax, what is the
journal entry to record the cash sales?
A.Debit Cash $82,680; credit Sales $78,000; credit Sales Taxes Payable $4,680.
B.Debit Sales Taxes Payable $4,680; debit Cash $73,220; credit Sales $78,000.
C.Debit Cash $78,000; credit Sales $78,000; and record the taxes when paid.
D.Debit Cash $78,000; credit Sales $73,320; credit Sales Taxes Payable $4,680.
E.Debit Accounts Receivable $82,680; credit Sales $78,000; credit Sales Taxes Payable
$4,680.
16) A company’s calendar-year financial data are shown below. The company had total
assets of $339,000 and total equity of $144,400 for the prior year. No additional shares
of common stock were issued during the year. The December 31 market price per share
is $49.50. Cash dividends of $19,500 were paid during the year. Calculate the following
ratios for the company:
(a) profit margin ratio
(b) gross margin ratio
(c) return on total assets
(d) return on common stockholders’ equity
(e) book value per common share
(f) basic earnings per share
(g) price earnings ratio
(h) dividend yield.
17) During March, the production department of a process operations system completed
and transferred to finished goods 25,000 units that were in process at the beginning of
March and 110,000 units that were started and completed in March. March’s beginning
inventory units were 100% complete with respect to materials and 55% complete with
respect to conversion. At the end of March, 30,000 additional units were in process in
the production department and were 100% complete with respect to materials and 30%
complete with respect to conversion. Compute the number of equivalent units with
respect to both materials and conversion respectively for March using the
weighted-average method.
A.165,000; 165,000.
B.135,000; 119,000.
C.140,000; 130,250.
D.165,000; 144,000.
E.144,000; 144,000.
18) Following is a partial process cost summary for Mitchell Manufacturing’s Canning
Department.
The total materials costs transferred out of the Canning Department should be:
A.$135,500.
B.$136,000.
C.$176,500.
D.$176,150.
E.$196,000.
19) The depreciation method that recognizes equal amounts of annual depreciation over
the life of an asset is _______________________________.
20) The fourth step in accounting for production activity in a period is to prepare a cost
reconciliation, which reconciles __________________ with the
___________________.
21) If a 90-day note receivable is dated July 12, what is the maturity date of the note?
22) Refer to the following information about the Shaping Department of the Minnesota
Factory for the month of August. Minnesota Factory uses the FIFO method of inventory
costing.
The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of
labor and overhead is $22.00. Compute the cost that should be assigned all units that
were completed and transferred during August.
23) Define the return on total assets and explain how it is used to measure a company’s
financial performance.
24) The third step in accounting for production activity in a period, before assigning
and reconciling costs, is to compute the ______________________.
25) Valley Company shows the following customer accounts in its subsidiary ledger and
the Accounts Receivable account in the general ledger for the month of July. Prepare a
schedule of accounts receivable as proof that the subsidiary ledger balances equals the
Accounts Receivable controlling account balance.
26) A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1,
at a selling price of $885,295 when the annual market interest rate was 12%. The
company uses the effective interest amortization method. Interest is paid semiannually
each June 30 and December 31.
(1) Prepare an amortization table for the first two payment periods using the format
shown below:
(2) Prepare the journal entry to record the first semiannual interest payment.
