1) Purchasing equipment by issuing a six-month note should be shown on the statement
of cash flows under the investing activities section.
2) If the liabilities owed by a business total $300,000 and owners equity is equal to
$300,000, then the assets also total $300,000.
3) Equivalent units are the sum of direct materials used and direct labor incurred.
4) Nonfinancial performance output measures are used to improve the input measures.
5) Under the equity method, a stock purchase is recorded at its original cost and is not
adjusted to fair market value each accounting period.
6) The accounts receivable subsidiary ledger is an example of a special journal.
7) The balanced scorecard is a set of financial and nonfinancial measures that reflect the
performance of the business.
8) The units of production depreciation method provides a good match of expenses
against revenue.
9) The cost of wages paid to employees directly involved in converting materials to
finished product is classified as direct labor cost.
10) The accounts receivables turnover ratio is computed by dividing total gross sales by
the average net receivables during the year.
11) Office Equipment is an example of a current asset account.
12) A report analyzing the dollar savings of purchasing new equipment to speed up the
production process is a managerial accounting report.
13) In most business organizations, the chief accountant is called the controller.
14) A responsibility center in which the authority over and responsibility for costs and
revenues is vested in the department manager is termed a profit center.
15) For a construction contractor, the wages of carpenters would be classified as factory
overhead cost.
16) Foreign currency translation adjustment is an example of an item that would be
included in Other Comprehensive Income.
17) In preparing a bank reconciliation, the amount of a canceled check omitted from the
journal is added to the balance per company’s records.
18) When the seller offers a sales discount, even if borrowing has to be done, it is
generally advantageous for the buyer to pay within the discount period.
19) Managerial accounting provides useful information to managers on product costs.
20) Which of the following is used to analyze the efficiency and effectiveness of
inventory management?
A.inventory turnover only
B.number of days sales in inventory only
C.both inventory turnover and number of days sales in inventory
D.neither inventory turnover or number of days sales in inventory
21) The balances for the accounts listed below appeared in the Adjusted Trial Balance
columns of the work sheet. Indicate whether each balance should be extended to (a) the
Income Statement columns or (b) the Balance Sheet columns.
22) On the basis of the following data, what is the estimated cost of the merchandise
inventory on May 31 using the retail method?
A.$250,000
B.$360,000
C.$172,500
D.$187,500
23) Zeke Company is a manufacturing company that has worked on several production
jobs during the 1st quarter of the year. Below is a list of all the jobs for the quarter:
Job 356, 357, 358 & 359 were completed. Jobs 356 & 357 were sold at a profit of $500
on each job.
What is Sales for Zeke Company as of the end of the 1st quarter?
A.$1,685
B.$2,685
C.$1,000
D.$685
24) The expected average rate of return for a proposed investment of $4,800,000 in a
fixed asset, using straight line depreciation, with a useful life of 20 years, no residual
value, and an expected total net income of $10,560,000 is:
A.24%
B.22%
C.45%
D.10%
25) Period costs include:
A.current assets on the balance sheet
B.current liabilities on the balance sheet
C.operating costs that are shown on the income statement when products are sold
D.operating costs that are shown on the income statement in the period in which they
are incurred
26) The following data relate to direct labor costs for the current period:
What is the direct labor rate variance?
A.$18,000 unfavorable
B.$ 4,500 favorable
C.$17,100 unfavorable
D.$ 3,600 favorable
27) A cash payment is recorded on the cash account as a
A.neither a debit or a credit
B.credit
C.debit
D.either a debit or a credit
28) For which of the following businesses would a process cost system be appropriate?
A.Auto repair service
B.Paint manufacturer
C.Specialty printer
D.Custom furniture manufacturer
29) Parker Company owns 83% of the outstanding stock of Tadeo Company. Parker
Company is referred to as the
A.parent
B.minority interest
C.affiliate
D.subsidiary
30) The cost graphs in the illustration below shows various types of cost behaviors.
For each of the following costs, identify the cost graph that best describes its cost
behavior as the number of units produced and sold increases:
(a) Sales commissions of $6,000 plus $.05 for each item sold.
(b) Rent on warehouse of $12,000 per month.
(c) Insurance costs of $2,500 per month.
(d) Per-unit cost of direct labor.
(e) Total salaries of quality control supervisors. One supervisor must be added for each
additional work shift.
(f) Total employer pension costs of $.35 per direct labor hour.
(g) Per-unit straight-line depreciation costs.
(h) Per-unit cost of direct materials.
(i) Total direct materials cost.
(j) Electricity costs of $5,000 per month plus $.0004 per kilowatt-hour.
(k) Per-unit cost of plant superintendent’s salary.
(l) Salary of the night-time security guard of $3,800 per month.
(m) Repairs and maintenance costs of $3,000 for each 2,000 hours of factory machine
usage.
(n) Total direct labor cost.
(o) Straight-line depreciation on factory equipment.
31) Meredith Company gathered the following reconciling information in preparing its
May bank reconciliation:
A.$4,970
B.$5,120
C.$8,105
D.$3,295
32) State for each account whether it is likely to have (a) debit entries only, (b) credit
entries only, or (c) both debit and credit entries. Also, indicate the normal balance of
each account.
33) The interest expense recorded on an interest payment date is increased
A.only if the market rate of interest is less than the stated rate of interest on that date
B.by the amortization of premium on bonds payable
C.by the amortization of discount on bonds payable
D.only if the bonds were sold at face value
34) A Cash Payments journal would not include a
A.Cash credit column
B.Sales Discounts credit column
C.Accounts Payable debit column
D.Other Accounts debit column
35) Magpie Corporation uses the total cost concept of product pricing. Below is cost
information for the production and sale of 60,000 units of its sole product. Magpie
desires a profit equal to a 25% rate of return on invested assets of $700,000.
The markup percentage on total cost for the company’s product is:
A.21.0%
B.22.7%
C.15.8%
D.24.0%
36) A pension plan which promises employees a fixed annual pension benefit, based on
years of service and compensation, is called a(n)
A.defined contribution plan
B.defined benefit plan
C.unfunded plan
D.compensation plan
37) The debit recorded in the journal to reimburse the petty cash fund is to
A.Petty Cash
B.Accounts Receivable
C.Cash
D.various accounts for which the petty cash was disbursed
38) The Sharpe Company reports the following information for 2015:
Determine product costs for 2015.
A.$24,500
B.$30,300
C.$29,200
D.$35,000
39) The investment turnover is the:
A.ratio of income from operations to sales
B.ratio of income from operations to invested assets
C.ratio of assets to liabilities
D.ratio of sales to invested assets
40) If the contribution margin ratio for France Company is 45%, sales were $425,000.
and fixed costs were $100,000, what was the income from operations?
A.$233,750
B.$91,250
C.$191,250
D.$133,750
41) An owner transfers a personal automobile to the company with a fair market value
of $12,000. The entry will be made in the
A.purchases journal
B.cash payments journal
C.cash receipts journal
D.general journal
42) Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the
year (before adjustment), and an analysis of customers’ accounts indicates uncollectible
receivables of $19,700. Which of the following entries records the proper adjustment
for Bad Debt Expense?
A.debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
B.debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
C.debit Bad Debt Expense $21,800; credit Allowance for Doubtful Accounts, $21,800
D.debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600
43) 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
44) A partner withdraws from a partnership by selling her interest to another person
who currently is not associated with the firm. As a results of this transaction, the capital
account balance of the other partners in the partnership
A.will increase
B.will decrease
C.will remain the same
D.may increase, decrease, or remain the same
45) The following data relate to direct labor costs for February:
What is the direct labor rate variance?
A.$14,000 favorable
B.$14,000 unfavorable
C.$15,400 favorable
D.$15,400 unfavorable
46) The calculation for annual depreciation using the straight-line depreciation method
is
A.initial cost / estimated useful life
B.depreciable cost / estimated useful life
C.depreciable cost * estimated useful life
D.initial cost * estimated useful life
47) An employee receives an hourly rate of $15, with time and a half for all hours
worked in excess of 40 during the week. Payroll data for the current week are as
follows: hours worked, 48; federal income tax withheld, $120; cumulative earnings for
the year prior to this week, $24,500; Social security tax rate, 6% on maximum of
$100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment
compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .
8% on the first $7,000. What is the net amount to be paid to the employee?
A.$568.74
B.$601.50
C.$660.00
D.$574.90
48) Department A had 4,000 units in work in process that were 60% completed as to
labor and overhead at the beginning of the period, 29,000 units of direct materials were
added during the period, 31,000 units were completed during the period, and 2,000
units were 80% completed as to labor and overhead at the end of the period. All
materials are added at the beginning of the process. The first-in, first-out method is used
to cost inventories.
The number of equivalent units of production for material costs for the period was:
A.33,000
B.29,800
C.29,000
D.32,000
49) Given the following cost and activity observations for Smithson Companys utilities,
use the high-low method to calculate Smithsons fixed costs per month. Do not round
your intermediate calculations.
A.$1,533
B.$2,530
C.$22,800
D.$50,600
50) Which of the following applications of the rules of debit and credit is true?
A.decrease Prepaid Insurance with a credit and the normal balance is a credit
B.increase Accounts Payable with a credit and the normal balance is a debit
C.increase Supplies Expense with a debit and the normal balance is a debit
D.decrease Cash with a debit and the normal balance is a credit
51) When a new partner is admitted to a partnership, there should be a(n)
A.revaluation of assets
B.realization of assets
C.allocation of assets
D.return of assets
52) Maxim Technologies projected sales of 35,000 computers for 2012. The estimated
January 1, 2012, inventory is 3,000 units, and the desired December 31, 2012, inventory
is 9,000 units. What is the budgeted production (in units) for 2012?
53) Magnolia, Inc. manufactures bedding sets. The budgeted production is for 55,000
comforters in 2012. Each comforter requires 7 yards of material. The estimated January
1, 2012, beginning inventory is 31,000 yards. The desired ending balance is 30,000
yards of material. If the material costs $4.00 per yard, determine the materials budget
for 2012.
54) What information does the Income Statement give to business users?
55) Prepare a monthly flexible selling expense budget for PineTree Company for sales
volumes of $300,000, $350,000, and $400,000, based on the following data:
56) (1) Discuss factors contributing to the trend to fair value accounting.
(2) What are some of the disadvantages associated with using fair value?
57) The Scharf Company is a retailer located in a state without sales tax. The following
data was given to you to complete the transactions for the days sales to be recorded. All
cash drawers start with $100 in change.
Record the Journal Entries for EACH cash register to determine the cashiers accuracy.
First item for the student to remember is that EACH cash drawer starts with $100. This
must be subtracted from the total cash in drawer to determine the cash over/short
amount.
58) A double-declining balance rate for calculating depreciation expense is determined
by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years,
determine the rate to be used if using the double-declining balance method.