A company returned merchandise to a supplier because it did not meet their
specifications. This transaction would be recorded in which of the following journals?
A. Sales journal
B. Purchases journal
C. Cash disbursements journal
D. Cash receipts journal
E. General journal
Answer:
A source document that an employee uses to record the number of hours at work and
that is used to determine the total labor cost for each pay period is a:
A. Job cost sheet.
B. Hours-of-production sheet.
C. Time ticket.
D. Job order ticket.
E. Clock card.
Answer:
Operating activities:
A. Are the means organizations must use to pay for resources like land, buildings, and
equipment.
B. Involve using resources to research, develop, purchase, produce, distribute, and
market products and services.
C. Involve acquiring and disposing of resources that a business uses to acquire and sell
its products or services.
D. Are also called asset management.
E. Are also called strategic management.
Answer:
Lingstat Company is trying to decide how many units of merchandise to order each
month. The company’s policy is to have 15% of the next month’s sales in inventory at
the end of each month. Projected sales for August, September, and October are 5,000
units, 6,000 units, and 4,000 units, respectively. How many units must be purchased in
September?
A. 6,600
B. 6,150
C. 5,850
D. 5,700
E. 6,300
Answer:
A company sold equipment for $50,000. Total accumulated depreciation at the time of
the sale was $20,000 and a loss of $10,000 was recognized on the sale. What was the
original cost of the asset?
A. $60,000
B. $80,000
C. $70,000
D. $40,000
E. $30,000
Answer:
A company has 40,000 shares of common stock outstanding. The stockholders’ equity
applicable to common shares is $470,000 and the par value per common share is $10.
The book value per share is:
A. $0.09
B. $1.75
C. $10.00
D. $11.75
E. $47.50
Answer:
A system of accounting for manufacturing operations that produces timely information
about inventories and manufacturing costs per unit of product is a:
A. Finished goods accounting system.
B. General accounting system.
C. Manufacturing accounting system.
D. Cost accounting system.
E. Production accounting system.
Answer:
The credit terms 2/10, n/30 are interpreted as:
A. 2% cash discount if the amount is paid within 10 days, with the balance due in 30
days,
B. 10% cash discount if the amount is paid within 2 days, with balance due in 30 days,
C. 30% discount if paid within 2 days,
D. 30% discount if paid within 10 days,
E. 2% discount if paid within 30 days,
Answer:
When preparing an unadjusted trial balance using a periodic inventory system, the
amount shown for merchandise inventory is:
A. The ending inventory amount.
B. The beginning inventory amount.
C. Equal to the cost of goods sold.
D. Equal to the cost of goods purchased.
E. Equal to the gross profit.
Answer:
A company’s flexible budget for 12,000 units of production showed sales, $48,000;
variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the
company produces and sells 16,000 units is:
A. $2,667
B. $14,000
C. $18,667
D. $24,000
E. $35,000
Answer:
On August 1, 2013, Ace Corporation accepted a note receivable in place of an
outstanding accounts receivable in the amount of $123,965. The note is due in 90 days
and has an interest rate of 8%. What would be the total amount collected at the maturity
date? A. $123,965.00
B. $2,479.30
C. $126,444.30
D. $121,485.70
E. $133,882.20
Answer:
Reference: 17_03
Heritage Industries produces miniature models of farm equipment. These collectibles
are in great demand. It takes two operations, molding and finishing, to complete the
miniatures. Next years expected activities are shown in the following table:
Heritage Industries uses departmental overhead rates and is planning on a $3.20 per
machine hour overhead rate for the finishing department. Compute the estimated
manufacturing overhead cost for the finishing department given the information shown
in the table.
A. $208,000
B. $312,000
C. $520,000
D. $260,000
E. $572,000
Answer:
What decision rule should be followed when deciding if a business segment should be
eliminated?
A. Segments generating a net loss should always be eliminated.
B. Segments with revenues that are more than avoidable expenses should be considered
for elimination.
C. Segments with revenues that are more than unavoidable expenses should be
considered for elimination.
D. Segments with revenues that are less than avoidable expenses should be considered
for elimination.
E. Segments with revenues that are less than unavoidable expenses should be
considered for elimination.
Answer:
A post-closing trial balance includes:
A. All ledger accounts with balances, none of which can be temporary accounts.
B. All ledger accounts with balances, none of which can be permanent accounts.
C. All ledger accounts with balances, which include some temporary and some
permanent accounts.
D. Only revenue and expense accounts.
E. Only asset accounts.
Answer:
Swisher, Incorporated reports the following annual cost data for its single product:
This product is normally sold for $48 per unit. If Swisher increases its production to
50,000 units, while sales remain at the current 30,000 unit level, by how much would
the companys gross margin increase or decrease under variable costing?
A. $60,000 decrease.
B. $90,000 decrease.
C. There is no change in gross margin.
D. $90,000 increase.
E. $60,000 increase.
Answer:
Refer to: Figure 14_03
Use the following information for Acme, Inc., as of December 31 to answer the next
questions:
What is the correct amount of overhead?
A. $192,000.
B. $110,500.
C. $200,000.
D. $150,000.
E. $ 77,500.
Answer:
A plan that lists the types and amounts of general and administrative expenses expected
during the budget period is referred to as a:
A. General and administrative expense budget.
B. Sales budget.
C. Cash payments budget.
D. Overhead budget.
E. Selling expense budget.
Answer:
Rice, Hepburn and DiMarco formed a partnership with Rice contributing $60,000,
Hepburn contributing $50,000, and DiMarco contributing $40,000. Their partnership
agreement called for the income (loss) division to be based on the ratio of capital
investments. If the partnership had income of $75,000 for its first year of operation,
what amount of income (rounded to the nearest dollar) would be credited to DiMarco’s
capital account?
A. $20,000
B. $25,000
C. $30,000
D. $40,000
E. $75,000
Answer:
A given project requires a $25,000 investment and is expected to generate end-of-period
annual cash inflows as follows:
Assuming a discount rate of 10%, what is the net present value of this investment?
Selected present value factors for a single sum are shown in the table below:
A. $6,217.50
B. ($4,459.80)
C. ($6,217.50)
D. $8,275.00
E. $0.00
Answer:
A company’s inventory balance was $200,000 at 12/31/11 and $188,000 at 12/31/12. Its
accounts payable balance was $80,000 at 12/31/11 and $84,000 at 12/31/12, and its cost
of goods sold for 2012 was $720,000. The company’s total amount of cash payments for
merchandise in 2012 equals:
A. $704,000
B. $712,000
C. $720,000
D. $728,000
E. $736,000
Answer:
Presented below are terms preceded by letters (a) through (f) and followed by a list of
definitions (1) through (6). Match the letter of the terms with the definitions. Use the
space provided preceding each definition.
(a) Discounting
(b) Break-even time
(c) Return on average investment
(d) Net present value
(e) Uneven cash flows
(f) Accounting rate of return
__________ (1) Annual after-tax net income divided by annual average investment.
__________ (2) A rate used to evaluate the acceptability of an investment; equals the
after-tax periodic income divided by the average investment in the asset.
__________ (3) An estimate of an asset’s value to the company; calculated by
discounting the future cash flows from the investment at a satisfactory rate and then
subtracting the initial cost of the investment.
__________ (4) Cash flows that are not all equal in amount.
__________ (5) The process of restating future cash flows in terms of their present
value.
__________ (6) A measure of the amount of time needed for the present value of the
net cash flows to equal the initial cost of an investment.
Answer:
The following information is from the annual financial statements of Nancy Company.
What is the accounts receivable turnover ratio for 2012?
A. 6.41
B. 4.97
C. 6.72
D. 5.40
E. 5.20
Answer:
What is the reason for pooling costs?
A. To shift costs from low-volume to high-volume products.
B. It is a budgeting technique designed to accurately track fixed costs.
C. Determining a pool rate for all costs incurred by the same activity reduces the
number of cost assignments required.
D. This procedure helps to determine which costs are directly related to production
volume.
E. It simplifies departmental overhead costing procedures.
Answer:
The process of transferring general journal information to the ledger is:
A. Double-entry accounting.
B. Posting.
C. Balancing an account.
D. Journalizing.
E. Not required unless debits do not equal credits.
Answer:
O.K. Company uses a job order cost accounting system and allocates its overhead on
the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the
next period and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is
O.K. Company’s overhead application rate?
A. 25%
B. 5%
C. 160%
D. 1600%
E. 67%
Answer:
Par value of a stock refers to the:
A. Issue price of the stock.
B. Value assigned to a share of stock by the corporate charter.
C. Market value of the stock on the date of the financial statements.
D. Maximum selling price of the stock.
E. Dividend value of the stock.
Answer:
The way of doing business whose goal is to eliminate waste while satisfying the
customer and providing a positive return to the company is:
A. Total quality management.
B. Managerial accounting.
C. Customer orientation.
D. Continuous improvement.
E. Lean business model.
Answer:
A partnership designed to protect innocent partners from malpractice or negligence
claims resulting from acts of another partner is a:
A. Partnership
B. Limited partnership
C. Limited liability partnership
D. General partnership
E. Limited liability corporation
Answer:
Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not
necessary.
Answer:
A company had inventory on November 1 of 5 units at a cost of $20 each. On
November 2, they purchased 10 units at $22 each. On November 6 they purchased 6
units at $25 each. On November 5, 8 units were sold for $55 each. Using the
weighted-average perpetual inventory method, what was the value of the inventory on
November 30?
A. $304.00
B. $404.00
C. $299.33
D. $280.00
E. $276.00
Answer:
What is the basic principle underlying activity-based costing?
Answer:
A company reported assets of $13,362 million at January 1 and $13,369 million as of
December 31 of the current year. The companys net cash flows from operations was
$2,204 million. Calculate the cash flow on total assets ratio.
Answer:
Name and briefly describe three overhead rate methods.
Answer:
A ________ is a document signed by the depositor instructing the bank to pay a
specified amount of money to a designated recipient.
Answer:
A ______________________________ is the value used to record transfers of items
between divisions of the same company.
Answer:
When excess capacity exists, what is the minimum special order price a manager should
accept to increase net income?
Answer:
The statement of cash flows is divided into three sections called the _____________,
_____________ and _______________ sections.
Answer:
Highlight Hotel deposits all cash receipts on the day when they are received and it
makes all cash payments by check. At the close of business on December 31, its Cash
account shows a $18,393, debit balance. Highlight Hotel’s June 30 bank statement
shows $15,921 on deposit in the bank. Prepare a bank reconciliation for Highlight Hotel
using the following information:
Answer:
The following unadjusted and adjusted trial balances were taken from the current year’s
accounting system for High Point, Inc.
In general journal form, present the six adjusting entries that explain the changes in the
account balances from the unadjusted to the adjusted trial balance.
Answer:
A _______________________ is a written promise to pay a specified amount on a
definite future date within one year or the company’s operating cycle, whichever is
longer.
Answer:
How does contribution margin differ from gross margin?
Answer:
Following is the year-end adjusted trial balance for Yakima’s Sporting Goods for the
current year:
Prepare the closing entries at December 31 for the current year.
Answer:
Process manufacturing, also called process operations or process production, is the
___________ production of products in a _____________________ flow of steps.
Answer:
If the _______________ is responsible for paying the freight, ownership of
merchandise inventory passes when goods are loaded on the transport vehicle.
Answer:
Crystal Products allows customers to use bank credit cards to charge purchases. The
bank used by Crystal Products processes all bank credit cards in exchange for a 3%
processing fee. All credit card receipts deposited are credited to the company account
on the day of deposit. Assume that on January 18, Crystal Products sold and deposited
$19,000 worth of bank credit card receipts. Prepare the general journal entry to record
this transaction.
Answer: