Acct. 200 ~ Sample Final
1.All of the following represent advantages of corporations over other business entities except:
a.ease of transferring ownership
b.continuity of existence
c.separate legal entity
d.unlimited stockholders' liability
2.The document used by a state to grant permission to form a corporation is called a:
a.proxy
b.charter
c.stock certificate
d.bylaw agreement
3.Which of the following is a disadvantage of the corporate form of business organization?
a.mutual agency
b.limited liability
c.double taxation
d.difficulty in transferring ownership
4.A corporation issues 1,800 shares of $10 par value common stock in exchange for land with a current market value of $20,000. The land account would be:
a.debited for $18,000
b.credited for $18,000
c.credited for $20,000
d.debited for $20,000
5.A corporation issues 2,000 shares of no-par common stock for $40 per share. The journal entry to record the issuance of the stock would include a:
a.debit to cash for $80,000
b.credit to cash for $80,000
c.debit to common stock for $80,000
d.debit to paid-in capital in excess of par-common for $80,000
6.The entry to record the issuance of 6,000 shares of no-par common stock for $12.50 per share includes a:
a.credit to cash for $75,000
b.debit to common stock for $75,000
c.credit to common stock for $75,000
d.credit to retained earnings for $75,000
7.Poindexter Lumber Corporation records the following journal entry on August 1, 20X5:
General Journal
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³ Date ³ Accounts ³ Debit ³Credit ³
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³ Aug. 1 ³Cash ³ 39,375 ³ ³
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³ ³ Common Stock ³ ³ 26,250 ³
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³ ³ Paid-in Capital in Excess ³ ³ 13,125 ³
³ ³ of Par-Common ³ ³ ³
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The stock was issued for $75 per share. What is the par for this stock, and how many shares were issued?
a.$25 par, 525 shares
b.$75 par, 350 shares
c.$50 par, 525 shares
d.none of the above
8.Tuttle Enterprises records the following journal entry on May 1, 20X5:
General Journal
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³ Date ³ Accounts ³ Debit ³Credit ³
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³ May 1 ³Cash ³ 986,000 ³ ³
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³ ³ Common Stock ³ ³ 580,000 ³
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³ ³ Paid-in Capital in Excess ³ ³ 406,000 ³
³ ³ of Par-Common ³ ³ ³
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The stock was issued for $34 per share. What is the par for this stock, and how much did the issuance price exceed the par value?
a.$34 par, $20 excess over par
b.$20 par, $34 excess over par
c.$34 par, $14 excess over par
d.$20 par, $14 excess over par
9.The declaration of a dividend:
a.increases total stockholders' equity
b.reduces total assets
c.increases total assets
d.increases total liabilities
10.The payment of a dividend:
a.reduces total stockholders' equity
b.increases total stockholders' equity
c.reduces total liabilities
d.has no effect on total assets
11.Dividends on cumulative preferred stock of $2,500 are in arrears for 20X2. During 20X3, the total dividends declared amount to $10,000. There are 6,000 shares of $10 par, 10% cumulative preferred stock outstanding and 10,000 shares of $5 par common stock outstanding. The total amount of dividends payable to each class of stock in 20X3 amounts to:
a.$8,500 to preferred, $1,500 to common
b.$6,000 to preferred, $4,000 to common
c.$5,000 to preferred, $5,000 to common
d.$10,000 to preferred, $0 to common
12.Which of the following statements is true?
a.Both a stock split and a stock dividend reduce retained earnings.
b.A stock split increases the par value of the stock.
c.Neither a stock split nor a stock dividend create taxable income for the investor.
d.Both a stock split and a stock dividend increase the balance in the common stock account.
13.Cash equivalents include:
a.liquid short-term investments that can be converted into cash at will
b.money market investments and investments in US Treasury bills
c.securities that can be converted into cash after one year
d.both a and b
14.Cash disbursements for dividends would appear in the:
a.operating activities section
b.investing activities section
c.financing activities section
d.operating activities section or the financing activities section
15.Cash proceeds from the issuance of stock would appear in the:
a.investing activities section
b.financing activities section
c.operating activities section
d.investing activities section or the financing activities section
16.Trevor Industries prepares its statement of cash flows using the direct method. Trevor sold equipment with a book value of $7,500 at a gain of $1,300. The amount to be reported on the statement of cash flows under "proceeds from sale of plant assets" is:
a.$8,800
b.$6,200
c.$7,500
d.cannot be determined from the information given
17.Liberty Industries prepares its statement of cash flows using the direct method. Liberty sold equipment with a book value of $6,400 at a loss of $800. The amount to be reported on the statement of cash flows under operating activities is:
a.$(800)
b.$800
c.$0
d.$5,600
18.Earnheart Company had beginning plant assets, net of depreciation, of $427,500 and an ending net amount of $579,300. The income statement reported depreciation expense of $38,700 for the year. Earnheart Company acquired $275,000 of plant assets during the year and reported proceeds from sale of plant assets of $89,200 for the year. The gain or loss resulting from the sale of plant assets was:
a.$2,390 loss
b.$3,400 loss
c.$4,700 gain
d.$5,050 gain
19.Devers Corporation sold a piece of equipment at a loss of $3,600. The equipment was purchased several years ago at a cost of $70,500 and had been depreciated a total of $52,900. Using the indirect method, what amount is reported under the operating activities on a statement of cash flows?
a.$49,300
b.$(3,600)
c.$3,600
d.none of the above
20.Under the indirect method, a gain resulting from the sale of equipment would:
a.be subtracted from net income in the operating activities section
b.be added to net income in the operating activities section
c.appear in the financing activities section
d.appear in the schedule of noncash investing and financing activities
21.Under the indirect method, depreciation expense would be:
a.added to net income in the operating activities section
b.subtracted from net income in the operating activities section
c.added to net income in the financing activities section
d.added to net income in the investing activities section
22.Which statement is true?
a.Management uses accounting information to report to external parties the company's financial position and results of operations.
b.Management uses accounting information to plan and control business operations.
c.Management uses accounting information to determine the cost of products and services.
d.All of the above statements are true.
23.Management accounting:
a.focuses on the past
b.is restricted by GAAP
c.is used by creditors and investors
d.is concerned with reporting information used by company managers.
24.Inventory accounts for a manufacturer include:
a.work in process, direct labor, and finished goods
b.merchandise, materials, and finished goods
c.materials, work in process, and finished goods
d.work in process, materials, and manufacturing overhead
25.A plant manager's salary may be referred to as:
a.either a direct cost or an indirect cost since management accounting is not restricted by generally accepted accounting principles
b.an indirect cost
c.a direct cost
d.none of the above
26.Inventoriable product costs:
a.include marketing costs and research and development costs
b.include only the costs of direct materials and direct labor used to produce a product
c.include the costs of direct materials, direct labor, and manufacturing overhead used to produce a product
d.both a and b are correct
27.A period cost is:
a.shown on the balance sheet
b.expensed in the period in which it is incurred
c.accumulated in work in process inventory
d.identified with a product and regarded as an asset
28.All of the following are examples of indirect labor except:
a.machine operators
b.janitorial personnel
c.maintenance personnel
d.plant managers
29.All of the following are examples of manufacturing overhead except:
a.wages of assembly line workers
b.utilities incurred in the factory
c.insurance expired on the factory equipment
d.indirect materials
30.Cost of goods sold for a manufacturer equals cost of goods manufactured plus:
a.beginning work in process inventory less ending work in process inventory
b.ending work in process inventory less beginning work in process inventory
c.beginning finished goods inventory less ending finished goods inventory
d.ending finished goods inventory less beginning finished goods inventory
Table 2
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ºWelch Company reports the following data for 20X3, its first º
ºyear of operations: º
º º
ºCost of goods manufactured $420,000 º
ºWork in process inventory, Dec. 31, 20X3 120,000 º
ºDirect materials used 110,000 º
ºManufacturing overhead incurred 150,000 º
ºFinished goods inventory, Dec. 31, 20X3 60,000 º
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31.Refer to Table 2. What is cost of goods sold for Welch Company for 20X3?
a.$240,000
b.$480,000
c.$340,000
d.$360,000
32.A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and $114,000 in manufacturing overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $21,000 respectively, the cost of goods manufactured was:
a.$229,000
b.$250,000
c.$215,000
d.$222,000
33.Given the following information, determine the cost of goods manufactured and the cost of goods sold for Dean's Manufacturing for 20X9.
Direct labor incurred $126,000
Manufacturing overhead incurred 359,000
Direct materials used 271,000
Finished goods inventory, January 1, 20X9 395,000
Finished goods inventory, December 31, 20X9 442,000
Work in process inventory, January 1, 20X9 193,000
Work in process inventory, December 31, 20X9 218,000
a.$756,000 and $709,000
b.$731,000 and $684,000
c.$781,000 and $828,000
d.$411,000 and $837,000
34.Given the following information for 20X5, calculate the direct materials purchased.
Cost of goods sold $610,000
Cost of goods manufactured 589,000
Direct labor 124,000
Manufacturing overhead costs 153,000
Finished goods inventory, January 1, 20X5 217,000
Finished goods inventory, December 31, 20X5 196,000
Work in process inventory, January 1, 20X5 81,000
Work in process inventory, December 31, 20X5 70,000
Materials inventory, January 1, 20X5 35,000
Materials inventory, December 31, 20X5 22,000
a.$288,000
b.$301,000
c.$312,000
d.$333,000
35.Variable costs per unit will:
a.remain the same as production levels change
b.increase as production decreases
c.decrease as production increases
d.decrease as production decreases
36.Total fixed costs will:
a.increase as production decreases
b.decrease as production decreases
c.decrease as production increases
d.remain the same as production levels change
37.Fixed costs per unit will:
a.increase as production decreases
b.decrease as production decreases
c.increase as production increases
d.remain the same as production levels change
38.Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is $10, unit variable costs are $7, and total fixed costs are $3,300. How many dog treats must Canine Company sell to breakeven?
a.1,100
b.330
c.471
d.194
39.Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is $10, unit variable costs are $7, and total fixed costs are $3,300. What are breakeven sales?
a.$4,714
b.$3,300
c.$11,000
d.none of the above
40.Fixed Company produces a single product selling for $30 per unit. Variable costs are $12 per unit and total fixed costs are $4,000. What is the contribution margin ratio?
a.0.40
b.0.60
c.2.50
d.1.67
41.If the sale price per unit is $32, total fixed expenses are $45,000, and the breakeven sales in dollars is $180,000, the variable expense per unit is:
a.$8.00
b.$4.22
c.$24.00
d.$4.00
42.If both fixed expenses and sale price increase while variable costs per unit are unchanged the:
a.breakeven point remains unchanged
b.breakeven point increases
c.breakeven point decreases
d.cannot be determined from the given data
43.Given breakeven sales in units of 45,700 and a unit contribution margin of $6, the total number of units that must be sold to reach a target operating income of $25,200 is:
a.1,813
b.49,900
c.45,700
d.4,200
44.If the contribution margin ratio is 26%, target operating income is $32,000, and target sales in dollars is $200,000, total fixed expenses are:
a.$23,077
b.$52,000
c.$8,320
d.$20,000
45.If target sales in units is 62,300, total fixed expenses are $7,800, and the unit contribution margin is $.15, the target operating income is:
a.$8,175
b.$3,000
c.$1,545
d.$9,345
46.On a CVP graph, the horizontal line intersecting the dollar axis at the level of total cost represents the:
a.total fixed costs
b.total costs
c.total variable costs
- breakeven point
47. A company is considering investing in a project that is
expected to return $350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return?
- $55,606
- $137,681
- $222,425
- $265,764
- $350,000
48. An individual is planning to set-up an education fund for her children. She plans to invest $10,000 annually at the end of each year. She expects to withdraw money from the fund at the end of 10 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 10 years?
- $46,320
- $67,107
- $100,000
- $144,870
- $215,890
49. A company is considering an investment that will return $20,000 semiannually at the end of each semiannual period for 5 years. If the company requires an annual return of 12%, what is the maximum amount it is willing to pay for this investment?
- not more than $62,116
- not more than $75,816
- not more than $147,202
- not more than $151,632
- not more than $621,160
50. A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period. How many years will elapse before the company accumulates the $15,529?
- 0.322 years
- 3.1058 years
- 5 years
- 8 years
- 10 years