Cycle time includes:
A. Processing time, storage and waiting time, movement time, and inspection time.
B. Processing time, inspection time, and inventory time.
C. Processing time, storage and waiting time, finishing time, and selling time.
D. Processing time, storage and waiting time, movement time, and finishing time.
Refer to the information above. Roman’s labor rate variance for July is:
A. $1,250 favorable.
B. $1,213 favorable.
C. $37 unfavorable.
D. $1,213 unfavorable.
Century Corporation issued 400,000 shares of $4 par value common stock at the time of
its incorporation. The stock was issued for cash at a price of $16 per share. During the
first year of operations, the company sustained a net loss of $100,000. The year-end
balance sheet would show the balance of the Common Stock account to be:
A. $1,600,000.
B. $1,500,000.
C. $6,300,000.
D. $6,400,000.
Doogle Corporation sold a segment of its operations in 2014 and suffered an
extraordinary loss in 2015. Which of the following would be the most useful in
attempting to predict Doogle’s performance for 2016?
A. Doogle’s income from continuing operations in 2014 and 2015.
B. Doogle’s net income in 2014 and 2015.
C. Doogle’s total assets at the end of 2015.
D. Doogle’s retained earnings at the end of 2015.
Which of the following is not a characteristic of most preferred stock?
A. Dividends that vary as income changes.
B. Preference as to dividends.
C. Preference as to assets in the event of liquidation of the company.
D. No voting power.
The computation of equivalent units is generally not necessary when:
A. Beginning work-in-process inventories are significantly larger than ending
work-in-process inventories.
B. Beginning and ending work in process inventories differ only slightly.
C. The number of units in ending work-in-process exceeds the number of units
completed and transferred to finished goods during the period.
D. Per-unit costs become distorted as a result of not computing equivalent units of
production.
The general purpose financial statements prepared annually by a corporation would not
include the:
A. Balance sheet.
B. Income tax return.
C. Income statement.
D. Statement of cash flows.
If actual direct labor cost was $7,560 and standard labor cost was $7,000, the journal
entry to record this would include:
A. A credit to the labor rate variance account of $560 and a credit to Direct Labor of
$7,000.
B. A debit to the labor rate variance account of $560 and a debit to Direct Labor of
$7,000.
C. A credit to the labor rate variance account of $560 and a debit to Direct Labor of
$7,560.
D. A debit to the labor rate variance account of $560 and a credit to Direct Labor of
$7,560.
If beginning inventory in Work in Process is zero and 2,000 units are started during the
period, assuming that 300 units remain in ending inventory, how many equivalent units
were completed and transferred out?
A. 2,000 units.
B. 285 units.
C. 300 units.
D. 1,700 units.
Which of the following is not an addition to total paid-in-capital?
A. Preferred stock.
B. Common stock.
C. Preferred stock and treasury stock.
D. Retained earnings and treasury stock.
Deferred taxes are classified as:
A. Only a liability.
B. Only an asset.
C. Either an asset or liability, depending upon the situation.
D. A non-operating expense.
Stock dividend and treasury stock
At the beginning of the current year, King Cole, Inc. had 300,000 shares of capital stock
outstanding and total stockholders’ equity of $1,200,000. During the year, the company
earned net income of $325,000, declared cash dividends of $150,000, distributed a 5%
stock dividend of 15,000 shares when the market price of the stock was $16 per share,
and purchased 3,000 shares of treasury stock at a cost of $13 per share. Compute the
following at the end of the current year:
(a) Total stockholders’ equity:
(b) Number of shares of stock outstanding:
(c) Book value per share:
Overseeing a company’s affairs to ensure that the company is managed with the best
interest of shareholders in mind is called:
A. Internal control.
B. Financial integrity.
C. Corporate governance.
D. The audit function.
The direct write-off method of recognizing uncollectible accounts expense:
A. Is acceptable only when most of the company’s sales are on credit.
B. Records uncollectible accounts expense when individual accounts receivable are
determined to be worthless.
C. Records uncollectible accounts expense when customers exceed their credit limits.
D. Uses a valuation account to record specific customer accounts deemed uncollectible.
On November 1, Year 1, Noble Co. borrowed $80,000 from South Bank and signed a
12%, six-month note payable, all due at maturity. The interest on this loan is stated
separately.
Refer to the information above. At December 31, Year 1, the adjusting entry with
respect to this note includes a:
A. Credit to Interest Payable for $1,600.
B. Credit to Notes Payable for $1,600.
C. Debit to Interest Expense for $3,200.
D. Credit to Cash for $3,200.
Which of the following costing systems would always use job cost sheets?
A. Job order costing.
B. Process costing.
C. Activity-based costing.
D. All three systems.
Which of the following statements is not true regarding prepaid expenses?
A. Prepaid expenses represent assets.
B. Prepaid expenses are shown in a special section of the income statement.
C. Prepaid expenses become expenses only as goods or services are used up.
D. Prepaid expenses appear in the balance sheet.
The Abrams Corporation incurred the following quality costs for the year ending
December 31, 2015:
Refer to the information above. What are the total internal failure costs for the Abrams
Corporation?
A. $38,300.
B. $34,500.
C. $19,700.
D. $35,250.
Given below are comparative balance sheets and an income statement for Namekagon
Corporation.
Refer to the information above. Namekagon Corporation’s book value per share for
2015 is:
A. $7.32.
B. $10.58.
C. $21.16.
D. $3.14.
Unique Corporation manufactures two products; data are shown below:
If Unique’s monthly fixed costs average $400,000, what is its break-even point
expressed in sales dollars? (Rounded)
A. $1,320,462.
B. $1,250,000.
C. $1,400,000.
D. $1,052,632.
An expense is best defined as:
A. Any payment of cash for the benefit of the company.
B. Past, present, or future payments of cash required to generate revenues.
C. Past payments of cash required to generate revenues.
D. Future payments of cash required to generate revenues.
Widmark Company originally made cell phones at a cost of $60,000 that have since
become obsolete due to new technology. They can sell the phones to a dealer for scrap
for $11,500 or put more work into them to bring them up-to-date. To re-do the phones
would cost $13,000 and they then could be sold for $20,000.
(A.) Should the company scrap them or rework them? (show calculations)
(B.) If the original cost had been $50,000 and the company could now sell the phones
for $25,000 what should Heston do?
At the end of 2015 it is discovered that the accountant for Gower Company failed to
record $60,000 of interest payable which had accrued since the last interest payment
date. The current ratio, quick ratio, and debt ratio, as well as the financial statements,
had already been computed using the erroneous data. Correction of the accounting
records will have which of the following effects?
A. Net income as formerly computed will not be affected by the correction of the error.
B. The interest coverage ratio as formerly computed will not change as a result of the
correction.
C. The debt ratio as formerly computed will decrease as a result of the correction.
D. The quick ratio as formerly computed will decrease as a result of the correction.
Webster Company issues $1,000,000 face value, 6%, 5-year bonds payable on
December 31, 2015. Interest is paid semiannually each June 30 and December 31. The
bonds sell at a price of 97; Webster uses the straight-line method of amortizing bond
discount or premium.
Refer to the information above. The entry made by Webster Company to record
issuance of the bonds payable at December 31, 2015, includes:
A. A debit to Cash of $1,000,000.
B. A debit to Discount on Bonds Payable of $30,000.
C. A credit to Bonds Payable of $970,000.
D. A credit to Bond Interest Payable of $30,000.
Which element of a master budget would normally be prepared first?
A. A production budget.
B. A cash budget.
C. A budget of operating expenses.
D. A sales forecast.
At the end of March, the unadjusted trial balance of Tutor, Inc. included the following
accounts:
Refer to the information above. Tutor uses the income statement approach in estimating
uncollectible accounts expense, and uncollectible accounts expense is estimated to be
3% of credit sales. What is the amount of uncollectible accounts expense recognized in
Tutor’s income statement for March?
A. $13,500.
B. $18,000.
C. $8,600.
D. $7,200.
The set of standards, assumptions, and concepts that form the “ground rules” for
financial reporting in the United States is termed:
A. The conceptual framework.
B. Generally accepted accounting principles.
C. Statements of Financial Accounting Concepts.
D. American standards for certified public accountants.
All of the following are true regarding benchmark studies except:
A. The studies are shared with customers and suppliers.
B. The studies are shared with competitors.
C. The studies are prepared by collecting information from companies in the same
industry.
D. The studies show an organization how its costs and processes compare with other
companies.
Current assets are those assets that can be converted into cash within:
A. One year and never longer.
B. One year or the operating cycle, whichever is longer.
C. One year or the operating cycle, whichever is shorter.
D. Management’s discretion.
The work of accountants practicing in public accounting may best be described as:
A. Providing various types of accounting services to a wide variety of clients.
B. Preparing income tax returns for individuals and small businesses.
C. Developing and interpreting information tailored to the needs of business managers.
D. Helping governmental agencies carry out their various regulatory responsibilities.
Ross Corporation makes all sales on account. The June 30th balance sheet balance in its
accounts receivable is $400,000, of which $240,000 pertain to sales that were made
during June. Budgeted sales for July are $1,250,000. Ross collects 70% of sales in the
month of sale; 20% in the following month; and the final 10% in the second month after
the sale.
Refer to the information above. What are Ross’s budgeted collections for July?
A. $1,275,000.
B. $939,000.
C. $1,195,000.
D. $915,000.
Which of the following results in the inventory being stated at the most current
acquisition costs?
A. Specific identification.
B. LIFO.
C. FIFO.
D. Average cost.
Quality costs do not include:
A. Costs to prevent poor quality from occurring.
B. Costs of appraising and inspecting the product.
C. Costs to correct problems before the customer receives the goods.
D. Advertising costs.
The New York Stock Exchange and the NASDAQ both require all listed companies to
A. Register with the PCAOB (Public Company Accounting Oversight Board).
B. Send their financial statements directly to investors, creditors, and other users of
financial information.
C. Maintain an internal audit function.
D. Use IFRS (International Financial Reporting Standards) for financial statement
reporting purposes.