Which of the following ratios provides a solvency measure that shows the margin of
safety of bondholders and also gives an indication of the potential ability of the
business to borrow additional funds on a long-term basis?
A.ratio of fixed assets to long-term liabilities
B.ratio of net sales to assets
C.number of days’ sales in receivables
D.rate earned on stockholders’ equity
Answer:
Calculate the Total Direct Materials cost variance using the above information:
A.$9,262.50 Unfavorable
B.$9,262.50 Favorable
C.$3,780.00 Unfavorable
D.$3,562.50 Favorable
Answer:
Zang Co. manufacturers its products in a continuous process involving two
departments, Machining and Assembly. Present entries to record the following selected
transactions related to production during June:
(a) Materials purchased on account, $180,000.
(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials;
Assembly, $4,900 indirect materials.
(c) Direct labor used by Machining, $23,000, Assembly, $47,000.
(d) Depreciation expenses: Machining, $4,500; Assembly, $7,800.
(e) Factory overhead applied: Machining, $9,700; Assembly, $11,300.
(f) Machining Department transferred $98,300 to Assembly Department; Assembly
Department transferred $83,400 to finished goods.
(g) Sold goods on account, $100,000. Cost of goods sold, $68,000.
Answer:
If a gain of $11,000 is realized in selling (for cash) office equipment having a book
value of $55,000, the total amount reported in the cash flows from investing activities
section of the statement of cash flows is
A.$44,000
B.$11,000
C.$55,000
D.$66,000
Answer:
After an accounting system has been set up, what is the next step?
A.Analysis
B.Feedback
C.Implementation
D.Internal controls
Answer:
Which of the following methods is appropriate for a business whose inventory consists
of a relatively small number of unique, high-cost items?
A.FIFO
B.LIFO
C.average
D.specific identification
Answer:
The capital accounts of Harrison and Marti have balances of $160,000 and $110,000,
respectively, on January 1, 2014, the beginning of the current fiscal year. On April 10,
Harrison invested an additional $20,000. During the year, Harrison and Marti withdrew
$96,000 and $78,000, respectively, and net income for the year was $264,000. The
articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2014 would show what
amount in the capital account for Harrison on December 31, 2014?
A.$216,000
B.$164,000
C.$380,000
D.$52,000
Answer:
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.
Answer:
The Zoe Corporation has the following information for the month of March. Prepare a
(a) schedule of cost of goods manufactured, (b) an income statement for the month
ended March 31, and (c) prepare only the inventory section of the balance sheet.
Answer:
The total manufacturing cost variance is
A.the difference between actual costs and standard costs for units produced.
B.the flexible budget variance plus the time variance
C.the difference between planned costs and standard costs for units produced
D.none of the above.
Answer:
The Statement of Owner’s Equity begins with the beginning balance followed by
A.plus Net Income (loss) less withdrawals
B.plus Net Income (loss) plus investments
C.plus investments less withdrawals
D.plus investments plus Net Income (loss) less withdrawals
Answer:
Mocha Company manufactures a single product by a continuous process, involving
three production departments. The records indicate that direct materials, direct labor,
and applied factory overhead for Department 1 were $100,000, $125,000, and
$150,000, respectively. The records further indicate that direct materials, direct labor,
and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000,
respectively. In addition, work in process at the beginning of the period for Department
1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs from Department 1 into Department 2
during the period is:
A.Work in Process–Department 2390,000
Work in Process–Department 1390,000
B.Work in Process–Department 2330,000
Work in Process–Department 1330,000
C.Work in Process–Department 2215,000
Work in Process–Department 1215,000
D.Work in Process–Department 2375,000
Work in Process–Department 1375,000
Answer:
Costs that vary in total in direct proportion to changes in an activity level are called:
A.fixed costs
B.sunk costs
C.variable costs
D.differential costs
Answer:
For the coming year, River Company estimates fixed costs at $109,000, the unit
variable cost at $21, and the unit selling price at $85. Determine (a) the break-even
point in units of sales, (b) the unit sales required to realize operating income of
$150,000 and (c) the probable operating income if sales total $500,000.
Round units to the nearest whole number and percentage to one decimal place.
Answer:
Daniels Company is owned and operated by Thomas Daniels. The following selected
transactions were completed by Daniels Company during May:
Note: Each transaction has two entries.
Answer:
Bob and Sons’ static budget for 10,000 units of production includes $50,000 for direct
materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries
of $25,000. A flexible budget for 12,000 units of production would show:
A.the same cost structure in total
B.direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor
salaries of $30,000
C.total variable costs of $148,000
D.direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and
supervisor salaries of $25,000
Answer:
Standard costs are divided into which of the following components?
A.Variance Standard and Quantity Standard
B.Materials Standard and Labor Standard
C.Quality Standard and Quantity Standard
D.Price Standard and Quantity Standard
Answer:
The manufacturing cost of Prancer Industries for three months of the year are provided
below:
Using the high-low method, the variable cost per unit, and the total fixed costs are:
A.$32.30 per unit and $77,520 respectively.
B.$33 per unit and $21,100 respectively.
C.$32 per unit and $76,800 respectively.
D.$32.30 per unit and $22,780 respectively.
Answer:
The relationship of $325,000 to $125,000, expressed as a ratio, is
A.2.0 to 1
B.2.6 to 1
C.2.5 to 1
D.0.45 to 1
Answer:
Listed below are accounts to use for transactions (a) through (d), each identified by a
number. Following this list are the transactions. You are to indicate for each transaction
the accounts that should be debited and credited by placing the account number(s) in
the appropriate box.
Transactions Account(s) Debited Account(s) Credited
a. Utility bill is received; payment will be made in 10 days.
b. Paid the utility bill previously recorded in transaction (a).
c. Bought a three year insurance policy and paid in full.
d. Received $7,000 from a contract to perform accounting services over the next two
years.
Answer:
The two categories of cost comprising conversion costs are:
A.direct labor and indirect labor
B.direct labor and factory overhead
C.factory overhead and direct materials
D.direct labor and direct materials
Answer:
Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year
(before adjustment), and an analysis of customers’ accounts indicates uncollectible
receivables of $12,900. Which of the following entries records the proper adjustment
for Bad Debt Expense?
A.debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
B.debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000
C.debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800
D.debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800
Answer:
In accounting for uncollectible receivables, the balance in Allowance for Doubtful
Accounts will directly impact the amount of the adjustment when applying which
method?
A.direct write-off method
B.percentage of sales method
C.Analysis of receivables method
D.both (b) and (c)
Answer:
After all of the account balances have been extended to the Income Statement columns
of the work sheet, the totals of the debit and credit columns are $77,500 and $83,900,
respectively. What is the amount of the net income or net loss for the period?
A.$6,400 net income
B.$6,400 net loss
C.$83,900 net income
D.$77,500 net loss
Answer:
The chart of account for the Corning Company includes some of the following
accounts:
On the journal page 3, the following transaction was found:
What is the post reference that will be found on the cash account?
A.11
B.15
C.3
D.None
Answer:
Below is budgeted production and sales information for Flushing Company for the
month of December:
The unit selling price for product XXX is $5 and for product ZZZ is $15.
Budgeted sales for the month are:
A.$3,180,000
B.$5,820,000
C.$1,800,000
D.$8,500,000
Answer:
Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively.
Determine their participation in the year’s net income of $200,000 under each of the
following independent assumptions:
(a) No agreement concerning division of net income;
(b) Divided in the ratio of original capital investment;
(c) Interest at the rate of 15% allowed on original investments and the remainder
divided in the ratio of 2:3;
(d) Salary allowances of $50,000 and $70,000, respectively, and the balance divided
equally;
(e) Allowance of interest at the rate of 15% on original investments, salary allowances
of $50,000 and $70,000, respectively, and the remainder divided equally.
Answer:
A special form on which is recorded pertinent data about a liability and the particulars
of its payment is called a(n)
A.invoice
B.voucher
C.debit memo
D.remittance advice
Answer:
Under the direct write-off method of accounting for uncollectible accounts, Bad Debts
Expense is debited
A.at the end of each accounting period.
B.when a credit sale is past due.
C.whenever a pre-determined amount of credit sales have been made.
D.when an account is determined to be worthless.
Answer:
Which of the following would appear as an extraordinary item on the income
statement?
A.loss resulting from the sale of fixed assets
B.gain resulting from the disposal of a segment of the business
C.loss from land condemned for public use
D.liquidating dividend
Answer:
Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and
100,000 shares of $50 par common stock. The following amounts were distributed as
dividends:
Determine the dividends per share for preferred and common stock for the third year.
A.$4.50 and $0.25
B.$3.25 and $0.25
C.$4.50 and $0.90
D.$2.00 and $0.25
Answer:
A(n) ___________ system is the methods and procedures for collecting, classifying,
summarizing and reporting a business’s financial and operating information.
A.accounting
B.fiduciary
C.operations
D.auditing
Answer: