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The theoretically correct method of allocating under or over applied overhead is to:
The theoretically correct method of allocating under or over applied overhead is to:
a.
allocate the amount to cost of goods sold
b. allocate the amount to finished
goods
c. allocate the amount to work in
process and finished goods
d. allocate the amount among work in
process, finished goods, and cost of goods sold
The amount of cash reported in the
financial statements is the closing balance of cash reported in the
___________.
a.
check register before Bank Reconciliation
b. Bank Reconciliation
c. bank statement before Bank Reconciliation
d. None of the above
Lindy & Co. use an allowance
method to account for bad debts. They estimate that 5% of the outstanding
accounts receivable will be uncollectible. At the end of the year, they have
outstanding accounts receivable of $750,000, and a debit balance in the
Allowance for Uncollectible Accounts of $9,000. They should record an
uncollectible accounts expense of:
a. $28,500
b.
$37,500
c. $46,500
d. $55,500
Which of the following statements
concerning job cost sheets is incorrect?
a. A job cost sheet would show the
direct materials used on that specific job
b.
A job cost sheet would reveal the selling costs associated with a particular
job
c. The total costs recorded on a job
cost sheet should also be reflected in the Work in Process account in the
general ledger
d. The amount of overhead on a job
cost sheet is the applied factory overhead rather than the actual factory
overhead
If a bank account does not
reconcile, what's the best thing to do?
a. Book the difference as an
adjustment regardless of the magnitude
b. Let it remain unreconciled and
hope it will clear up in the following month
c.
Start from scratch to see if the discrepancy can be found
Refer to the given image:
On
March 1, Zekew & Co. purchased $1,000 worth of merchandise, terms 1%10 net
30 days. They use the net method of recording purchases. Payment of the
accounts payable was made on March 4. Which of the following journal entries
would be appropriate for the March 4 transaction?
a.
1
b. 2
c. 3
d. 4
With the job order cost system, a
credit balance in the Factory Overhead account at the end of an accounting
period would indicate:
a. that an error in the job cost
system has occurred
b. that the company lost money
during the period
c. the presence of under-applied
overhead
d.
the presence of over-applied overhead
Refer to the given image:
The
proper journal entry to record Ransom & Co.'s billing of clients for $500
of services rendered is:
a. 1
b. 2
c.
3
d. 4
The entry to record the payment of
dividends is:
a. debit Cash, credit Dividend
Expense
b.
debit Dividend Expense, credit Cash
c. debit Dividends, credit Dividend
Payable
d. debit Dividend Payable, credit
Cash
A multiple-step income statement is
thought to be more beneficial to financial users because of the revelation of
important relationships. Which of the following is not separately identified in
a multiple-step income statement?
a. Gross profit
b.
Net income
c. Income taxes
d. Total costs and expenses
A check issued by you, but not yet
passed through the banking system, is:
a.
an outstanding check
b. a credit transfer
c. a dishonored check
d. a standing order
'2/10, net 30' is an example of:
a.
Terms
b. Methods
c. Systems
d. None of the above
An increase in a firm's receivable
turnover ratio means that:
a.
it is collecting credit sales more quickly than before
b. cash sales have decreased
c. it has initiated more liberal
credit terms
d. it's inventories have increased
An increase in a firm's receivable
turnover ratio means that:
a. it is collecting credit sales more quickly than before
b. cash sales have decreased
c. it has initiated more liberal
credit terms
d. it's inventories have increased
Which of the following statements is
true?
a. Cash discounts are used to reduce
the invoice price below the stated list price
b. The expression 2/30,n/60.means
that a 2% cash discount is available if the invoice is paid within 30 to 60
days
c.
Cash discounts may not be used in conjunction with trade discounts
d. Cash discounts normally apply to
the invoice price of the merchandise, excluding freight charges
Which of the following inventory
methods will always produce the same results under both a periodic and a
perpetual system?
a.
FIFO
b. LIFO
c. Average
d. All of these
The Factory Overhead account in a
job costing system is credited for the
a. excess of applied overhead over actual overhead
b. actual overhead
c.
applied overhead
d. indirect materials and indirect
labor
Failure to record the receipt of a
utility bill for services already received will result in ___________.
a. an overstatement of assets
b. an overstatement of liabilities
c.
an overstatement of equity
d. an understatement of assets
Of the following manufacturing
operations, which is best suited to the utilization of a job order system?
a. Helicopter manufacturing
b. Soft drink bottling operation
c.
Crude oil refining
d. Plastic molding operation
Lundstrom & Co. began making
sales on credit during 20X1. The Co. used the direct write-off method for
uncollectible accounts. A material amount of uncollectible accounts resulting
from the sales made during 20X1 were written off during 20X2. What was the
effect of this write-off on the net income for 20X1 and 20X2?
20X1
20X2
a. Overstate
Overstate
b. Overstate
Understate
c.
Understate Overstate
d. Understate Understate
Why would a company choose to
invoice customers weekly rather than monthly?
a. It keeps the accounting staff
busy
b.
It increases cash flow
c. Customers expect it
d. It is required by law
If you want to make sure that your
money should remain safe when checks sent are lost in the post, you should:
a.
cross your checks 'Account Payee only, Not Negotiable'
b. not use the postal service in
future
c. always pay by cash
d. always take the money in person
How does a company ensure that their
physical inventory matches what is there in the account books?
a. It assumes it to be correct if it has been received properly in the system
b. It holds the warehouse manager
accountable
c. It counts every item daily
d.
It uses some form of physical inventory count - either annual or
cyclical
Using the following information,
determine the adjusted bank balance: bank statement balance $5,000, bank
service charges $15, NSF check $500, checks outstanding $1,000, deposits in
transit $2,000.
a. $6,000
b. $5,000
c. $5,485
d. None of the above
The basic sequence in the accounting
process can best be described as:
a. Transaction, journal entry, source document, ledger account, trial balance
b. Source document, transaction,
ledger account, journal entry, trial balance
c. Transaction, source document,
journal entry, trial balance, ledger account
d. Transaction, source document,
journal entry, ledger account, trial balance
Which of these items would be
accounted for as an expense?
a. Repayment of a bank loan
b. Dividends to stockholders
c. Purchase of land
d.
Payment of the current period's rent
Refer to the given image:
Hefty
& Co. wants to know the effect of different inventory methods on financial
statements. Given below is the information about the opening inventory and
purchases for the current year.
Sales during the year were 2,700
units at $5.00. If they used the first-in, first-out method, the closing
inventory would be:
a.
$2,780
b. $3,960
c. $9,700
d. $10,880
The correct journal entry to
reconcile an NSF check returned by the bank is:
a. Debit Accounts Receivable, Credit NSF
b. Debit Cash, Credit Accounts
Receivable
c. Debit NSF Expense, Credit Cash
d. Debit Accounts Receivable, Credit
Cash
The sales account and the purchase
account should include:
a. only cash sales and purchases of merchandise
b. only credit sales and credit
purchases of merchandise
c.
both cash and credit sales and credit purchases of merchandise
d. not only merchandise
transactions, but also purchases and other assets used in the business
Refer to the given image:
Hefty
Co. wants to know the effect of different inventory methods on financial
statements. Given below is information about beginning inventory and purchases
for the current year.
Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:
Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:
a. $2,780
b.
$3,960
c. $9,700
d. $10,880
Using the following information,
determine the adjusted book balance: cash account balance on the books $27,000,
bank service charges $200, NSF check $2,000, checks outstanding $3,000, deposits
in transit $1,000.
a. $24,800
b. $25,800
c. $25,000
d. None of the above
Which of the following statements
concerning job costing systems is incorrect?
a. Cost drivers are those items which cause actual overhead to exceed applied overhead
b.
Job costing systems are appropriate to both manufacturing and service
businesses
c. Traditionally, direct labor has
been a very popular overhead application base
d. In a service business, indirect
costs of providing a service are treated as overhead and applied in a manner
similar to that for factory overhead
Home Depot. Inc. had net purchases
of $50,000, closing inventory of $25,000, net sales of $100,000, and gross
profit of $32,000. How much was their opening inventory?
a. $7,000
b.
$43,000
c. $93,000
d. $143,000
In which section of the balance
sheet should inventory accounts be classified?
a. Current assets
b. Investments
c. Property, plant, and equipment
d. Intangible assets
Under normal circumstances, the Work
in Process account used in a job costing system:
a. will include charges for direct labor, direct materials, and applied overhead
b. will include only charges for
direct materials and applied overhead. The labor is charged to
expense as incurred
c. will include charges for direct
labor, direct materials, and actual overhead
d. will include only charges for
direct labor and direct materials
Johnson Manufacturing Ltd. use the
job order cost system. Overhead is applied at the rate of $20 per direct labor
hour. Job #777 includes $2,000 of direct labor cost and 150 direct labor hours.
$1,500 of indirect labor cost was actually incurred. The proper journal entry
to record the wage related cost is:
a. Debit Work in Process, $3,500; credit Wages Payable, $3,500
b. Debit Wage Expense, $3,500;
credit Wages Payable, $3,500
c.
Debit Work in Process, $2,000; debit Factory Overhead, $1,500; credit Wages
Payable, $3,500
d. Debit Work in Process, $3,500;
credit Factory Overhead, $1,500; credit Wage Expense, $2,000
The following statements are true
regarding the Cash short and Over account except
a. "Cash Short and Over also acts as an internal control device."
b.
"There is rarely a difference between actual cash receipts and that day's
record of cash receipts."
c. "A large balance signals the
accountant to investigate."
d. "Honest errors can result in
an entry to this account."
Trade accounts receivable:
a. arise from the sale of a company's products or services
b. are reported in the non-current
asset section of the balance sheet
c. include deposits with utilities
d. generally comprise the minority of
the total receivables balance
Which of the following errors will
be disclosed in the preparation of a trial balance?
a. Recording transactions in the wrong account
b. Duplication of a transaction in
the accounting records
c. Posting only the debit portion of
a particular journal entry
d. Recording wrong amount for a
transaction to both the account debited and the account credited
Which of the following is a
liability?
a. Creditors for Goods
b. Machinery
c. Cash at Bank
d. Motor Vehicles
Refer to the given image:
Lynn
Lippincott invested land valued at $5,000 in her business. This transaction
would be recorded by:
a. 1
b.
2
c. 3
d. 4
Gerald's had opening total
stockholders' equity of $160,000. During the year, total assets increased by
$240,000 and total liabilities increased by $120,000. Their net income was
$180,000. No additional investments were made. However, some amount was paid as
dividend during the year. What was the amount of the dividend paid?
a. $20,000
b. $60,000
c. $140,000
d. $220,000
Documents used to control a bank
account include the following except
a. a bank statement
b. electronic funds transfer (EFT)
c. prenumbered checks
d. a
signature card
If the supplies account (assets),
before adjustment on May 31, indicated a balance of $2,250, and the supplies on
hand on May 31 totaled $950, the adjusting entry would be:
a. Debit supplies, $1,300; credit supplies expense, $1,300
b. Debit supplies, $950; credit
supplies expense, $950
c. Debit supplies expense, $950;
credit supplies, $950
d. Debit supplies expense, $1,300;
credit supplies, $1,300
The trial balance __________.
a. is a formal financial statement
b. is used to prove that there are
no errors in the journal or ledger
c. provides
a listing of every account in the chart of accounts
d. provides a listing of the balance
of each account in active use
Which of the following best
describes the meaning of 'Purchases'?
a. Goods paid for
b. Goods bought for resale
c. Items
bought
d. Goods bought on credit
Wilson & Co. owns land which has
cost it $100,000. If a "quick sale" of the land were necessary to
generate cash, the Co. feels it would receive only $80,000. The Co. continues
to report the asset on the balance sheet at $100,000. Under which of the
following concepts is it justified?
a. The historical-cost principle.
b. The objectivity principle.
c. Neither of the above.
d. Both "a" and
"b"
Sorting the accounts Payable into
current, 1-30 days past due, 31-60 days past due, and so on, is known as:
a. Aging Report
b. Pending Report
c. Payable Report
d. Other Report
What is the primary goal of an
Accounts Payable department?
a. To pay invoices immediately to avoid collection calls
b. To short pay invoices, knowing
that some clients will not notice
c. To maintain an accurate AP record
and pay invoices according to the company policy
d. To tell people who call that
their check is in the mail, when it is not, in order to buy time
By which of the following formulas
should interest on a loan be computed?
a. (principal x rate)/time
b. (principal x rate x time)
c. (principal x time)/rate
d. (principal x time)/time
Of the following account types,
which would be increased by a debit?
a. Liabilities and expenses
b. Assets and equity
c. Assets and expenses
d. Equity and revenues
Which of the following transactions
would have no impact on the stockholders' equity?
a. Purchase of land from the proceeds of a bank loan
b. Dividends to stockholders
c. Net loss
d. Investments of cash by
stockholders
What are the adjustments most common
to bank reconciliation?
a. Interest earned and bank fees
b. Bank errors
c. Unidentified transactions
d. Checks cleared but not in the
accounting system
What is the purpose of applying
overhead costs to work in process?
a. To meet the legal requirements of the IRS
b. To reduce the Expense line on the
profit & loss statement
c. To accurately apply costs to WIP
so that the cost of the finished product reflects all the costs incurred to
produce it
d. To hide costs from the auditors
Russell Merchandising Ltd. uses the
perpetual inventory system. Which of the following statements would
be correct?
a. When they record a sale, it should also debit inventory
b. When
they record a sale, it should also credit inventory
c. When they record a sale, it
should also credit cost of goods sold
d. When they record a sale, it
should also debit cost of goods available for sale
Refer to the given image:
The proper journal entry to record $1,000 of Dividend paid by Myer's Corporation Ltd. is:
a. 1
b. 2
c. 3
d. 4
Account books are typically closed
on a _________ basis.
a. Weekly
b. Monthly
c. Quarterly
d. Yearly
The correct journal entry to
reconcile the interest earned on a bank balance is:
a. Debit Cash, Credit Interest Revenue
b. Debit Cash, Credit Accounts
Payable
c. Debit Cash, Credit Accounts
Receivable
d. Debit Accounts Receivable, Credit
Cash
Which of the following would not be
included in a balance sheet?
a. Accounts receivable
b. Accounts payable
c. Sales
d. Cash
How often can a company change its
inventory valuation methodology and still be compliant with GAAP?
a. Once per month
b. Any number of times; there are no
rules
c. Once per year, but not every year
d. Never;
you decide once and only once
Under normal circumstances, the Work
in Process account used in a job costing system:
a. will include charges for direct labor, direct materials, and applied overhead.
b. will include only charges for
direct materials and applied overhead. The labor is charged to
expense as incurred.
c. will include charges for direct
labor, direct materials, and actual overhead.
d. will include only charges for direct
labor and direct materials
The best inventory method to adopt
for a company that sells a product in large quantities, for example nails,
would be:
a. FIFO
b. LIFO
c. Average Cost
d. Specific
Cost
Purchasers of merchandise may be
dissatisfied with the quality of goods purchased on account, and return the
goods to the seller with an indication that payment will not be forthcoming. In
such a case, the document prepared by the purchaser is called:
a. a debit memorandum
b. a credit memorandum
c. a receiving report
d. an invoice
Remington Inc. has provided the
following information about its balance sheet:
Cash $ 100
Accounts receivable $ 500
Stockholders' equity $ 700
Accounts payable $ 200
Bank loans $ 1,000
Based on the information provided, how much do their liabilities amount to?
Cash $ 100
Accounts receivable $ 500
Stockholders' equity $ 700
Accounts payable $ 200
Bank loans $ 1,000
Based on the information provided, how much do their liabilities amount to?
a. $200
b. $900
c. $1,200
d. $1,700
Retained earnings will change over
time because of several factors. Which of the following factors would explain
an increase in them (Retained Earnings)?
a. Net loss
b. Net income
c. Dividends
d. Investments by stockholders
The purpose of Accrued Expenses is:
a. to accurately reflect expenses in
the periods during which they are incurred
b. to keep account of the vendors
who never send invoices
c. to make the financial statements
more complicated
Which of the following is NOT a
fundamental of accounting?
a. Materiality
b. Timeliness
c. Matching
d. Magnitude
If merchandise purchased on account
is returned, the buyer may inform the seller of the details by issuing:
a. a credit memorandum
b. a bill
c. a debit memorandum
d. an invoice
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