1) Actual factory overhead incurred in a job costing system is debited to a Factory
Overhead general ledger account and credited to various other accounts.
2) Dividend yield is defined as the annual cash dividends per share divided by the
market price per share of a company’s stock.
3) Managerial accounting information can be forwarded to the managers of a company
quickly since external auditors do not have to review it, and estimates and projections
are acceptable.
4) A volume variance is the difference between overhead at maximum volume of
production and the standard volume of production.
5) If an asset is sold above its book value, the selling company records a loss.
6) An investor presumed to have significant influence owns as least 20% but not more
than 50% of another company’s voting stock.
7) A company owes its employees $5,000 for the year ended December 31. It will pay
employees on January 6 for the previous two weeks’ salaries. The year-end adjusting
entry on December 31 will include a debit to Salaries Expense and a credit to Cash.
8) In a process costing system, the purchase of raw materials is debited to the Raw
Materials Inventory.
9) An activity-based costing system usually involves a fewer number of allocation bases
compared with a traditional cost allocation system.
10) Revenue expenditures are also called balance sheet expenditures.
11) Capital budgeting is the process of analyzing alternative long-term investments and
deciding which assets to acquire or sell.
12) Quick assets include cash and cash equivalents, inventory, and current receivables.
13) Return on investment is a useful measure to evaluate the performance of a cost
center manager.
14) Job cost sheets are used to track all of the costs assigned to a job, including direct
materials, direct labor, overhead, and all selling and administrative costs.
15) The market value (issue price) of a bond is equal to the present value of all future
cash payments provided by the bond.
16) K. Canopy, the proprietor of Canopy Services, withdrew $5,700 from the business
during the current year. The entry to close the withdrawals account at the end of the
year is:
A.Debit K Canopy, Withdrawals $5,700; credit Cash, $5,700
B.Debit K. Canopy, Capital $5,700; credit K. Canopy, Withdrawals $5,700
C.Debit K. Canopy, Withdrawals $5,700; credit K. Canopy, Capital $5,700
D.Debit K. Canopy, Capital $5,700, credit Salary Expense $5,700
E.Debit Income Summary $5,700; credit K Canopy, Capital $5,700
17) Which of the following accurately describes a debenture?
A.A bond with specific assets pledged as collateral.
B.A type of bond issued in the names and addresses of the bondholders.
C.A type of bond which requires the bond issuer to create a sinking fund of assets set
aside at specified amounts and dates to repay the bonds.
D.A type of bond which is not collateralized but backed only by the issuer’s general
credit standing.
E.A type of bond that can be exchanged for a fixed number of shares of the issuing
corporation’s common stock.
18) Which of the following is an example of an extraordinary repair?
A.New tires for a truck.
B.Replacement of all florescent light tubes in an office.
C.Carpet cleaning and repair.
D.Replacing the roof on a manufacturing warehouse.
E. Routine machine maintenance.
19) Jeffreys Company reports depreciation expense of $40,000 for Year 2. Also,
equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following
selected information is available for Jeffreys Company from its comparative balance
sheet. Compute the cash received from the sale of the equipment.
A.$62,000.
B.$38,000.
C.$28,000.
D.$18,000.
E.$58,000.
20) All of the following statements regarding other comprehensive income are true
except:
A.Other comprehensive income includes unrealized gains and losses on
available-for-sale securities.
B.Other comprehensive income is not considered when calculating comprehensive
income.
C.Other comprehensive income includes foreign currency adjustments.
D.Other comprehensive income includes pension adjustments.
E.Accumulated other comprehensive income is defined as the cumulative impact of
other comprehensive income.
21) Identify the account used by businesses to record the transfer of assets from a
business to its owner for personal use:
A.A revenue account.
B.The owner’s withdrawals account.
C.The owner’s capital account.
D.An expense account.
E.A liability account.
22) Which of the following accounts would be closed at the end of the accounting
period with a debit?
A.Sales Discounts.
B.Sales Returns and Allowances.
C.Cost of Goods Sold.
D.Operating Expenses.
E.Sales.
23) If a firm uses activity-based costing to allocate costs, it does all but which of the
following?
A.Combine homogenous costs in appropriate pools.
B.Select appropriate cost drivers.
C.Calculate an appropriate rate for each pool.
D.Allocate costs based on predetermined rates for cost pools.
E.Apply a volume-related measure per unit of product.
24) Use the following information for Meeker Corp. to determine the amount of equity
to report.
A.$390,000.
B.$140,000.
C.$20,000.
D.$530,000.
E.$270,000.
25) The direct method for the preparation of the operating activities section of the
statement of cash flows:
A.Separately lists each major item of operating cash receipts and cash payments.
B.Reports adjustments to reconcile net income to net cash provided or used by
operating activities in the statement.
C.Reports a different amount of cash flows from operations than if the indirect method
is used.
D.Is required if the company is a merchandiser.
E.Is required by the FASB.
26) An opportunity cost:
A.Is an unavoidable cost because it remains the same regardless of the alternative
chosen.
B.Requires a current outlay of cash.
C.Results from past managerial decisions.
D.Is the potential benefit lost by choosing a specific alternative course of action among
two or more.
E. Is irrelevant in decision making because it occurred in the past.
27) The practice of preparing budgets for each of several future periods and revising
those budgets as each period is completed, adding a new budget each period so that the
budgets always cover the same number of future periods, is called:
A.Participatory budgeting.
B.Capital budgeting.
C.Balanced budgeting.
D.Continuous budgeting.
E.Primary budgeting.
28) The dollar change for a comparative financial statement item is calculated by:
A.Subtracting the analysis period amount from the base period amount.
B.Subtracting the base period amount from the analysis period amount.
C.Subtracting the analysis period amount from the base period amount, dividing the
result by the base period amount, then multiplying that amount by 100.
D.Subtracting the base period amount from the analysis period amount, dividing the
result by the base period amount, then multiplying that amount by 100.
E.Subtracting the base period amount from the analysis amount, then dividing the result
by the base amount.
29) A corporation reported cash of $27,000 and total assets of $461,000 on its balance
sheet. Its common-size percent for cash equals:
A.17.1%.
B.58.6%.
C.100%.
D.5.86%.
E.1707%.
30) When a U.S. company makes a credit sale to an international customer and the sale
terms are for payment in a foreign currency, the foreign exchange rate used to record
the sale is the exchange rate:
A.Thirty days from the date of sale.
B.At the end of the seller’s fiscal year.
C.At the end of the buyer’s fiscal year.
D.On the date final payment is made.
E. On the date of the sale.
31) A company paid $37,800 plus a broker’s fee of $525 to acquire 8% bonds with a
$40,000 maturity value as a long-term investment. The company intends to hold the
bonds to maturity. The correct entry to record the purchase of the bond investment is:
A.Debit Long-Term Investments-HTM $37,800; credit Cash $37,800.
B.Debit Long-Term Investments-HTM $38,325; credit Cash $38,325.
C.Debit Cash $40,000; credit Long-Term Investments-HTM $40,000.
D.Debit Long-Term Investments-HTM $37,800; debit Investment Expense $525; credit
Cash $38,325.
E.Debit Long-Term Investments-HTM $37,800; debit Loss on Investment $525; credit
Cash $38,325.
32) Joel Consulting received $3,000 from a customer for services provided. Joel’s
general journal entry to record this transaction will be:
A.Debit Services Revenue, credit Accounts Receivable.
B.Debit Cash, credit Accounts Payable.
C.Debit Cash, credit Accounts Receivable.
D.Debit Cash, credit Services Revenue.
E.Debit Accounts Payable, credit Services Revenue.
33) What is treasury stock? What reasons might a company hold treasury stock?
34) On May 1, Shilling Company sold merchandise in the amount of $5,800 to Anders,
with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Shilling uses the
perpetual inventory system. The journal entry or entries that Shilling will make on May
1 is:
35) What is the main difference between the income statement of a manufacturer and
that of a merchandiser?
36) Explain how to record the receipt (acceptance) of a note receivable.
37) Prepare journal entries to record the following merchandise transactions of
Martinez Excavation Equipment, which applies the perpetual inventory system.
38) Melbourne Resources provides the following data to enable you to calculate
overhead rates: Machining Department Overhead is $15,000, which is to be allocated
on estimated machine hours of 25,000. The rate per Machine Hour would be
___________________. If Machining cost is to be allocated to three jobs which
consumed A = 3,000 hours, B = 4,000 hours, and C = 1,000 hours respectively; then Job
A should be charged _______________; Job B should be charged _______________;
and Job C _______________.
39) ______________ is the area of accounting aimed at serving external users by
providing them with general-purpose financial statements.