At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to
employees was omitted. Which of the following statements is true?
A.Salary Expense for the year was understated.
B.The total of the liabilities at the end of the year was overstated.
C.Net income for the year was understated.
D.Owner’s equity at the end of the year was understated.
Answer:
Using the data from the Coffee & Cocoa Company,
Answer:
For each of the following, identify whether it would be disclosed as an operating (O),
financing (F), or investing (I) activity on the statement of cash flows under the indirect
method.
a. Purchased treasury stock
b. Sold equipment at book value
c. Net income
d. Sold long-term investments
e. Issued common stock
f. Depreciation expense
Answer:
A $135 petty cash fund has cash of $28 and receipts of $110. The journal entry to
replenish the account would include a
A.credit to Petty Cash for $110.
B.debit to Cash for $110.
C.credit to Cash Over and Short for $3.
D.credit to Cash for $82.
Answer:
A fiscal year
A.ordinarily begins on the first day of a month and ends on the last day of the following
twelfth month
B.for a business is determined by the federal government
C.always begins on January 1 and ends on December 31 of the same year
D.should end at the height of the business’s annual operating cycle
Answer:
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
Answer:
Southern Company is preparing a cash budget for April. The company has $12,000 cash
at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash
disbursements during April. Southern Company has an agreement with its bank to
maintain a cash balance of at least $10,000. To maintain the $10,000 required balance,
during April the company must:
A.borrow $4,500.
B.borrow $2,500.
C.borrow $7,500.
D.borrow $5,000.
Answer:
Production and sales estimates for June are as follows:
The budgeted total sales for June is:
A.$200,000
B.$400,000
C.$380,000
D.$250,000
Answer:
The process of developing budget estimates by requiring all levels of management to
estimate sales, production, and other operating data as though operations were being
initiated for the first time is referred to as:
A.flexible budgeting
B.continuous budgeting
C.zero-based budgeting
D.master budgeting
Answer:
Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a
customer on account. (Assume a 360-day year when calculating interest.)
a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entry to record the receipt of the payment of the note at maturity.
Answer:
In credit terms of 3/15, n/45, the “3” represents the
A.number of days in the discount period
B.full amount of the invoice
C.number of days when the entire amount is due
D.percent of the cash discount
Answer:
The three phases of setting up an accounting system are, in order
A.design, implementation, analysis
B.analysis, design, implementation
C.design, analysis, implementation
D.implementation, design, analysis
Answer:
When a corporation completes a 3-for-1 stock split
A.the ownership interest of current stockholders is decreased
B.the market price per share of the stock is decreased
C.the par value per share is decreased
D.b and c
Answer:
Analyze the following transactions as to their effect on the accounting equation.
(a) The company paid $725 to a vendor for supplies purchased previously on account.
(b) The company performed $850 of services and billed the customer.
(c) The company received a utility bill for $395 and will pay it next month.
(d) The owner of the company withdrew $145 of supplies for personal use.
(e) The company paid $315 in salaries to its employees.
(f) The company collected $730 of cash from its customers on account.
Some of the possible effects of a transaction on the accounting equation are listed
below:
Put the appropriate letter next to each transaction.
Answer:
Select the proper journal entry to record the movement of 1,700 units of part number
116B to work in process when each unit of 116B has a value of $2.00.
A.Raw Material Inventory 3,400
Work in Process 3,400
B.Work in Process 3,400
Factory Overhead 3,400
C.Work in Process 3,400
Raw Material Inventory 3,400
D.Work in Process 3,400
Cash 3,400
Answer:
The controllable variance measures:
A.operating results at less than normal capacity
B.the efficiency of using variable overhead resources
C.operating results at more than normal capacity
D.control over fixed overhead costs
Answer:
Complete the missing items in the following chart:
Answer:
Assuming a 360-day year, the interest charged by the bank, at the rate of 9%, on a
90-day, discounted note payable of $100,000 is
A.$9,000
B.$2,250
C.$750
D.$1,000
Answer:
Which of the following systems provides for a separate record of the cost of each
particular quantity of product that passes through the factory?
A.Job order cost system
B.General cost system
C.Replacement cost system
D.Process cost system
Answer:
The type of account and normal balance of Unearned Rent is
A.revenue, credit
B.expense, debit
C.liability, credit
D.liability, debit
Answer:
A business received an offer from an exporter for 20,000 units of product at $15 per
unit. The acceptance of the offer will not affect normal production or domestic sales
prices. The following data are available:
What is the differential revenue from the acceptance of the offer?
A.$300,000
B.$420,000
C.$120,000
D.$240,000
Answer:
For which of the following taxes is there no ceiling on the amount of employee annual
earnings subject to the tax?
A.only Social Security tax
B.only Medicare tax
C.only unemployment compensation tax
D.none of the above
Answer:
The Clydesdale Company has sales of $4,500,000. It also has invested assets of
$2,000,000 and operating expenses of $3,600,000. The company has established a
minimum rate of return of 7%.
What is Clydesdale Company’s residual income?
A.$252,000
B.$900,000
C.$1,400,000
D.$760,000
Answer:
Franco and Elisa share income equally. During the current year the partnership net
income was $40,000. Franco made withdrawals of $12,000 and Elisa made withdrawals
of $17,000. At the beginning of the year, the capital account balances were: Franco
capital, $40,000; Elisa capital, $58,000. Franco’s capital account balance at the end of
the year is
A.$74,500
B.$62,500
C.$60,000
D.$48,000
Answer:
Which of the following measures would not help managers to control and improve
operations?
A.Units produced per time period
B.Cost trends of a product
C.Yield trends
D.Commissions paid per time period
Answer:
The tendency of the rate earned on stockholders’ equity to vary disproportionately from
the rate earned on total assets is sometimes referred to as
A.leverage
B.solvency
C.yield
D.quick assets
Answer:
Harriet, Mickey, and Zack decide to liquidate their partnership. All assets are sold and
the liabilities are paid. Following these transactions, the capital balances and profit and
loss percentages are as follows: Harriet, $27,000 and 30%; Mickey, $(12,000) and 40%;
Zack, $43,000 and 30%. Mickey is unable to contribute any assets to reduce the deficit.
How much cash will Harriet receive as a results of the partnership liquidation?
A.$27,000
B.$21,000
C.$23,400
D.$15,000
Answer:
Which of the following statements is false?
A.Most computerized accounting systems use principles from manual systems.
B.Subsidiary ledgers and special journals are only useful when a business doesn’t have
a large number of similar transactions.
C.Even small companies use computerized accounting systems.
D.Large companies often integrate their accounting system with their automated
business systems.
Answer:
Assets are
A.always lower than liabilities
B.equal to liabilities less owner’s equity
C.the same as expenses because they are acquired with cash
D.financed by the owner and/or creditors
Answer:
Which is the best explanation for this journal entry?
A.Purchased equipment, paid cash of $5,000, with the remainder to be paid in
payments.
B.Purchased equipment, paid cash of $10,000, with the remainder to be received in the
future.
C.Purchased equipment, paid cash for the entire amount.
D.Purchased equipment on credit.
Answer:
Yakking Co. manufactures mobile cellular equipment and develops a price for the
product by using the variable cost concept. Yakking incurs variable costs of $1,900,000
in the production of 100,000 units while fixed costs total $50,000. The company
employs $4,725,000 of assets and wishes to earn a profit equal to a 10% rate of return
on assets.
Round your markup percentage to one decimal place, and other intermediate
calculations and final answer to two decimal places.
Answer: