Archives: Quiz

1) A company has just received a special, one-time order for 1,000 units. Producing the order will have no effect on the production and sales of other units. The buyer’s name will be stamped on each unit, at a total […]

1) On January 1, a company issues bonds with a par value of $300,000. The bonds mature in 5 years and pay 8% annual interest each June 30 and December 31. On the issue date, the market rate of interest […]

1) When applying the lower of cost or market method of inventory valuation, market is defined as the _____________________. 2) What is the purpose of the petty cash account? Answer: The petty cash account is used to serve as a […]

1) Partner return on equity is calculated as ___________________________. 2) The sales mix of Palm Company is 5 units of A, 3 units of B, and 1 unit of C. Per unit sales prices for each product are $30, $40, […]

1) The tax rate for FICA-social security is 6.2% and the tax rate for FICA-Medicare is 1.45%. Calculate the total amount of FICA withholding for an employee whose pay is $2,400 and is entirely subject to these FICA taxes. 2) […]

1) Explain the use of a spreadsheet in the preparation of the statement of cash flows. 2) Thomas Co. provides the following fixed budget data for the year: Required: Prepare a flexible budget performance report for the year using the […]

1) Josephine’s Bakery had the following assets and liabilities at the beginning and end of the current year: If Josephine made no investments in the business but withdrew $5,000 during the year, what was the amount of net income earned […]

1) The ____________________ of a note is the day the principle plus interest of a note must be repaid. 2) List the steps in processing transactions. Answer: Business transactions and events are the starting point. Source documents are analyzed for […]

1) What is the maturity date of a 6-month note receivable dated February 5? 2) What are the types of adjusting entries used for accrued expenses and accrued revenues? Answer: Accrued expenses are expenses that have been incurred but not […]

1) A company reported the following year-end information: 2) Explain the purpose of reversing entries. Answer: Reversing entries are an optional step in the accounting cycle. They apply to accrued assets and accrued liabilities that were created by adjusting entries […]

1) How is the current ratio calculated? How is it used to evaluate a company? 2) Starling Company sells merchandise for $24,000 cash on March 31 (cost of merchandise is $12,300). The sales tax law requires Starling to collect 8.25% […]

1) Expenditures directly associated with the manufacture of finished goods that include direct materials and direct labor are _____________________ costs. 2) What are the four steps in the effective management of variance analysis? Answer: The four steps are: (1) prepare […]

1) On February 5, Textron Stores purchased a van that cost $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction. 2) […]

1) Refer to the following information about the Painting Department in the Richardson Factory for the month of June. Richardson Factory uses the FIFO method of inventory costing. Compute the equivalent cost per unit for direct materials, direct labor and […]

1) The ____________________ ratio reflects how much inventory is available in terms of days’ sales. 2) A company had net sales of $230,000 for 2010 and $288,000 for 2011. The company’s average total assets for 2010 were $150,000 and $180,000 […]

1) Identify whether each of the following items 1 through 10 would on appear on the bank side or the book side of a bank reconciliation. 2) Briefly explain the conditions under which job order cost accounting systems and process […]

1) A corporation had stockholders’ equity on January 1 as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,000,000; Retained Earnings, $3,000,000. Prepare journal entries to record […]

1) Paul and Peggy’s company is organized as a partnership. At the prior year-end, Paul’s equity balance was $352,000 and Peggy’s was $256,000. For the current year, partnership net income is $137,000 ($77,000 allocated to Paul and $60,000 allocated to […]

1) 2) The ____________________ describes a company’s revenues and expenses over a period of time due to earnings activities. Answer: Income Statement 3) What is meant by equivalent units of production, and why are they important when a process cost […]

1) Using the information given below for a company that uses a perpetual inventory system, calculate the ending inventory using weighted average. 2) For each of the independent cases below, identify the principle of internal control that is violated, and […]

1) If a U.S. company makes a credit sale to a foreign company, the sales price must be translated into dollars as of the date of ____________ 2) ________________ activities are the means organizations use to pay for resources such […]

1) Lipinski Company completed and transferred 90,000 units during the current period. Based on the following information, determine the cost of the goods completed during the current reporting period and journalize the transfer. 2) Blake Company pays its employees for […]

1) _________________________ has special rights that give it priority or senior status over common stock in one or more areas such as receiving dividends or for the distribution of assets if the corporation is liquidated. 2) A company issued 9.2%, […]

1) A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of 8 years? 2) _________________ is net income divided by average total assets. Answer: Return on […]

1) The following data is available for Osman Corp. for the current year: Calculate the equivalent units of production for the year using the weighted average method. 2) A company enters into an agreement to make 5 annual year-end payments […]

1) An ________________________ requires a future outlay of cash and is relevant for current and future decision making. 2) Explain the composition of retained earnings and identify the special items that are reported in it. Answer: Retained earnings generally consists […]

1) On January 1, 2011, Freder Corporation purchased 7,500 shares of SportTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of SportTech. Prepare the journal entries for Freder to […]

1) Explain the debt ratio and its use in analyzing a company’s financial condition. 2) A company’s payroll information for the month of May follows: On May 31 the company issued Check No. 335 payable to the Payroll Bank Account […]

1) Hess Co. manufactures a product that sells for $12 per unit. Total fixed costs are $96,000 and variable costs are $7 per unit. Hess can buy a newer production machine that will increase total fixed costs by $22,800 but […]

1) Manatee Corp. has developed standard costs based on a predicted operating level of 352,000 units of production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80 per unit. Fixed overhead is $440,000. […]

1) Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year. 2) Match each of the following terms with the appropriate formulas. Answer: A-5, B-4, C-3, D-10, E-1, F-8, G-9, H-7, I-2, J-6 3) […]

1) What is the purpose of a departmental accounting system? 2) Falcon Company’s output for a period was assigned the standard direct labor cost of $17,160. If the company had a favorable direct labor rate variance of $1,000 and an […]

1) The _______________ assumption requires that financial information is supported by independent, unbiased evidence. 2) Materials and labor costs that are clearly associated with a specific process are known as _________________. Those costs that are not clearly associated with a […]

1) A _______________________ is a contractual agreement between an employer and its employees for the employer to provide benefits (payments) to employees after they retire. 2) The assumption that requires that a business be accounted for separately from its owners […]

1) Using the information given below, prepare general journal entries to record the March 16 sale assuming a cash sale and the FIFO method is used. 2) Describe source documents and their purpose. Answer: Source documents are the sources of […]

1) Manning, Co. collected 6-months’ rent in advance from a tenant on November 1 of the current year. When it collected the cash, it recorded the following entry: Prepare the required adjusting entry at December 31 of the current year. […]

1) Why is the sales budget usually prepared first? 2) Vaughn Co. operates three separate departments (A, B, C). The data below is provided for the current year: Required: Prepare an income statement showing the departmental contributions to overhead for […]

1) The Sarbanes-Oxley Act (SOX) requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls. What are some of the specific requirements? 2) What are estimated liabilities? Cite […]

1) Describe the flow of labor costs in a job order costing system, and identify the documents used in the system. 2) Describe how materials flow through a job order cost accounting system, and identify the key documents in the […]

1) At the end of the current period, a company reported $475,000 in net credit sales and $75,000 in ending accounts receivable. Calculate this company’s days’ sales uncollected at the end of the current period. 2) Discuss the relation between […]

1) A ______________________ accounting system records production activities using a periodic inventory system. A ____________________ accounting system records production activities using a perpetual inventory system. 2) Detalo Co. held bonds of Schooner Corp. with a cost of $125,000 and a […]

1) Cheshire, Inc. allocates fixed overhead at a rate of $18 per direct labor hour. This amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units. During May, Cheshire produced 5,500 units. Budgeted fixed overhead […]

1) A company manufactures coats in a large facility. One area in the production facility is an underused storage space. The company has twice turned down offers to lease out this facility. This situation is an example of what costing […]

1) A ____________________ is a part of a company that is separately identified by its products, or services, or by the geographic market it serves. 2) A _______________________________________ is a listing of accounts from the accounts payable ledger with their […]

1) If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period, did the assets of the company increase or decrease? By what amount? 2) Keegan Co. […]

1) Sarbanes Oxley (SOX) demands that companies safeguard inventory and properly report it. List methods that companies should use to safeguard inventory and accounting procedures that should be used to properly report inventory. 2) Congress passed the ______________________ to help […]

1) Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. (All accounts have normal balances.) Prepare all the necessary closing entries for this company. 2) Under […]

1) The standards for comparisons in financial statement analysis include (1) _____________, (2) ______________, (3) _______________, and (4) _____________. 2) A machine costing $450,000 with a four-year life and an estimated $30,000 salvage value is installed by Lux Company on […]

1) What is interest? 2) A company’s ending inventory of finished goods has a cost of $35,000 and consists of 750 units. If the overhead applicable to these goods is $8,400, and overhead is applied at the rate of 60% […]

1) On December 31, of the current year, a company’s unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance). Prepare the adjusting […]