Beachside Coffee Shop, in an effort to stream line its accounting system, has decided to
utilize a Cash Receipts Journal in its operation. If the company is to record the cash sale
of food for $18 which is the correct entry?
A.Cash Cr. $18, Food Revenue Dr. $18,
B.Cash Dr. $18, Food Revenue Dr. $18
C.Cash Dr. $18, Food Revenue Cr. $18
D.Cash Cr. $18, Food Revenue Cr. $18
Answer:
In which journal is the receipt of a promissory note from a customer on account
recorded?
A.Revenue journal
B.Cash Receipts journal
C.General journal
D.Purchases journal
Answer:
Samuel and Darci are partners. The partnership capital for Samuel is $50,000 and for
Darci is $60,000. Josh is admitted as a new partner by investing $50,000 cash. Josh is
given a 20% interest in return for his investment. The amount of the bonus to the old
partners is
A.$0
B.$18,000
C.$8,000
D.$10,000
Answer:
Below is a table for the present value of $1 at compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, if an investment is made now for $20,000 that will generate a
cash inflow of $7,000 a year for the next 4 years, what would be the present value
(rounded to the nearest dollar) of the investment cash inflows, (assuming an earnings
rate of 12%)?
A.$20,352
B.$3,969
C.$22,190
D.$21,259
Answer:
Just-in-time processing is a business philosophy that focuses on reducing time and cost
and eliminating poor quality. This is accomplished in manufacturing and
non-manufacturing processes by:
A.moving a product from process to process as each function is completed
B.combining processing functions into work centers and cross-training workers to
perform more than one function
C.having production supervisors attempt to enter enough materials into manufacturing
to keep all manufacturing departments operating
D.having workers typically perform one function on a continuous basis
Answer:
Relevant revenues and costs refer to:
A.activities that occurred in the past
B.monies already earned and/or spent
C.last year’s net income
D.differences between the alternatives being considered
Answer:
A company manufactured 50,000 units of a product at a cost of $450,000. They sold
40,000 units for $15 each. What is the gross margin?
A.$750,000
B.$240,000
C.$600,000
D.$450,000
Answer:
Classify the following costs as either a product cost or a period cost:
a) direct materials used
b) factory utilities
c) salespersons’ commissions
d) salary of plant manager
e) indirect materials used
f) depreciation on store equipment
g) indirect labor incurred
h) advertising expense
i) direct labor incurred
j) factory machinery repairs and maintenance
k) _____________ depreciation on factory machinery
l) plant insurance expired
Answer:
Zither Co. manufactures a product called Zens in a three-process series. All materials
are introduced at the beginning of the first process. Zither uses the first-in, first-out
method of inventory costing. Unit and cost data for the first process (Department A) for
the month of October 2012 follow:
Prepare Zither’s Department A cost of production report for October.
Answer:
The following data relate to direct materials costs for November:
What is the direct materials price variance?
A.$3,600 favorable
B.$160 favorable
C.$3,760 favorable
D.$3,600 unfavorable
Answer:
A firm operated at 80% of capacity for the past year, during which fixed costs were
$330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating
profit was:
A.$140,000
B.($30,000)
C.$370,000
D.$670,000
Answer:
The summary of the payroll for the monthly pay period ending July 15 indicated the
following:
Journalize the entries to record (a) the payroll and (b) the employer’s payroll tax
expense for the month. The state unemployment tax rate is 1%, and the federal
unemployment tax rate is 0.8%. Only $25,000 of salaries are subject to unemployment
taxes.
Answer:
If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually
with a face value of $250,000 will be
A.Equal to $250,000
B.Greater than $250,000
C.Less than $250,000
D.Greater than or less than $250,000, depending on the maturity date of the bonds
Answer:
A corporation, which had 18,000 shares of common stock outstanding, declared
a3-for-1 stock split.
(a) What will be the number of shares outstanding after the split?
(b) If the common stock had a market price of $240 per share before the stock split,
what would be an approximate market price per share after the split?
(c) Journalize the entry to record the stock split.
Answer:
The three identical units of Product Basic H are purchased during July, as shown below.
Assume one unit sells on July 28 for $45.
Determine the gross profit, cost of merchandise sold, and ending inventory on July 31
using (a) first in first out, (b) last in last out, (c) average cost flow methods.
Answer:
During times of rising prices, which of the following is notan accurate statement?
A.Average costing will yield results that are between those of FIFO and LIFO.
B.LIFO will result in a higher cost of goods sold than FIFO.
C.FIFO will result in a higher net income than LIFO.
D.LIFO will result in higher income taxes than FIFO.
Answer:
The following cash receipts headings have been suggested for Tower Tree-Trimming
Service Company. Which of the following statements is false?
A.The second column should be Account Credited.
B.The Cash column should be a debit.
C.The Other Accounts column should be a credit.
D.The Accounts Receivable column should be a debit.
Answer:
Below is a table for the present value of $1 at compound interest.
Below is a table for the present value of an annuity of $1 at compound interest.
Using the tables above, what is the present value of $6,000 (rounded to the nearest
dollar) to be received at the end of each of the next 4 years, assuming an earnings rate
of 10%?
A.$20,790
B.$19,020
C.$14,412
D.$25,272
Answer:
Deferred revenue is revenue that is
A.earned and the cash has been received
B.earned but the cash has not been received
C.not earned and the cash has not been received
D.not earned but the cash has been received
Answer:
Interest revenue on bonds is reported
A.as an addition to the Investment in Bonds account
B.as part of Comprehensive Income but not as part of Net Income.
C.as part of other income
D.as part of operating income
Answer:
Using the following partial table of present value of $1 at compound interest, determine
the present value of $30,000 to be received three years hence, with earnings at the rate
of 12% a year:
A.$14,240
B.$16,800
C.$21,360
D.$15,840
Answer:
At the end of the fiscal year, variances from standard costs are usually transferred to
the:
A.direct labor account
B.factory overhead account
C.cost of goods sold account
D.direct materials account
Answer:
One of the weaknesses of the direct write-off method is that it
A.understates accounts receivable on the balance sheet
B.violates the matching principle
C.is too difficult to use for many companies
D.is based on estimates
Answer:
The management of River Corporation is considering the purchase of a new machine
costing $380,000. The company’s desired rate of return is 6%. The present value factor
for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing
information, use the following data in determining the acceptability in this situation:
The net present value for this investment is:
A.Positive $20,140
B.Negative $20,140
C.Positive $19,875
D.Negative $19,875
Answer:
As of January 1 of the current year, the Grackle Company had accounts receivables of
$50,000. The sales for January, February, and March of 2012 were as follows:
$120,000, $140,000 and $150,000. 20% of each month’s sales are for cash. Of the
remaining 80% (the credit sales), 60% are collected in the month of sale, with
remaining 40% collected in the following month. What is the accounts receivable
balance as of March 31?
A.$72,000
B.$48,000
C.$58,720
D.$$60,000
Answer:
Which of the following would be added to the balance per books on a bank
reconciliation?
A.Service charges
B.Outstanding checks
C.Deposits in transit
D.Notes collected by the bank
Answer:
Which of the following would be considered an “Other Comprehensive Income” item?
A.net income.
B.extraordinary loss related to flood.
C.gain on disposal of discontinued operations.
D.unrealized loss on available-for-sale securities.
Answer:
Assuming a 360-day year, when a $40,000, 90-day, 9% interest-bearing note payable
matures, total payment will amount to:
A.$40,900
B.$43,600
C.$900
D.$3,600
Answer:
What effect will the following adjusting journal entry have on the accounting records?
A.Increase net income
B.Increase revenues
C.Decrease expenses
D.Decrease net book value
Answer:
Assume that social security taxes are payable at a 6% rate on the first $100,000 of
earnings and Medicare taxes are payable at a 1.5% rate with no maximum earnings, and
that federal and state unemployment compensation taxes total 4.6% on the first $7,000
of earnings. If an employee, George Jones, earns $2,500 for the current week and Jones’
year-to-date earnings before this week were $6,800, what is the total payroll taxes
related to the current week?
A.$187.50
B.$196.70
C.$344.50
D.$9.20
Answer:
What is the primary criterion for the preparation of managerial accounting reports?
A.Relevance of the reports
B.Meet the manager needs
C.Timing of the reports
D.Cost of the reports
Answer:
Selected transaction data of a business for September are summarized below. Determine
the following amounts for September: (a) total revenue, (b) total expenses, (c) net
income.
Answer:
An “Accounts Receivable Subsidiary Ledger” report shows
A.revenues by customer for a specified date range.
B.cash receipts by customer for a specified date range.
C.cash payments to creditors for a specific date range.
D.sales by customer as of a specific date.
Answer: