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Accounting Final Exam
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Questions in this quiz (187)
1Management accounting reports:
- AAre primarily used by parties inside the organization
- BMust be prepared on a periodic basis
- CAre generally publicly available
- DAre based upon generally accepted accounting principles
2The unit of measure used in management accounting reports is:
- APrimarily the historical dollar
- BUsually current replacement cost
- CAny measurement unit that is useful in a particular sitaution
- DThe measurement unit used by competing companies
3Which of the following costs is not an inventoriable cost?
- ACost to ship products to customers
- BCost of factory machinery used in production
- CCost to design the product
- DPlant supervisor's salary
4Depreciation expense could be:
- AA period cost
- BA product cost
- CA fixed cost
- DAll of these
5Prime cost is the sum of:
- AThe direct labor costs and indirect labor costs
- BThe direct materials costs, direct labor costs, and overhead costs
- CThe direct labor costs and overhead costs
- DThe direct materials costs and the direct labor costs
6Which of the following is a variable cost?
- ARaw materials
- BRent
- CInsurance
- DSalaries
7Conversion cost consist of:
- ADirect materials and direct labor costs
- BDirect labor costs and overhead costs
- CDirect materials cost and overhead costs
- DDirect labor costs and indirect labor costs
8Materials and supplies that cannot be traced conveniently to specific products are called:
- AIndirect materials
- BRaw materials
- CWaste materials
- DDirect materials
9Costs such as salary of supervisors and other support personnel, which are accounted for as overhead costs, are called:
- APeriod labor costs
- BSales assistance costs
- CIndirect labor costs
- DPrime labor costs
10Woodies Inc., produces wooden desks. Which of the following is NOT an indirect material for Woodies Inc.?
- AWood in a desk
- BNails in a desk
- CScrews in a desk
- DLubricants for production machinery
11Which of the following accounts includes the cost of completed but unsold units of a manufacturing company?
- ACost of goods sold
- BFinished goods inventory
- CWork in process inventory
- DMaterials inventory
12Which of the following should NOT be included in the computations of cost of goods manufactured?
- AFactory power costs
- BIndirect materials cost
- CSelling costs
- DDirect materials costs
13Which of the following account balances is NOT reported on the balance sheet?
- AMaterials inventory
- BManufacturing patents
- CCost of goods sold
- DWork in process inventory
14The following are costs for a selected period:
Direct materials used in production: $75,000
Direct labor cost of converting materials into product: $150,000
Total indirect cost of manufacturing: $45,000
What is the unit cost of manufacturing 30,000 units in the period?- A$7.50
- B$9.00
- C$6.00
- D$4.00
15What cost measurement method calculates product unit cost using estimates for direct materials, direct labor, and overhead?
- AStandard costing
- BActual costing
- CFull costing
- DNormal costing
16If the report is urgently needed, it is sometimes necessary to sacrifice accuracy in the interest of:
- ATimeliness
- BPersonal feelings
- CProfits
- DExpectations
17If a management accountant confides to a relative that his or her company has a confidential plan to merge with another company in the near future, the accountant has:
- ANot violated ethical standards
- BViolated ethical standards on if the relative owns stock in the company
- CViolated ethical standards because the relative could stand to gain personally from that information
- DNot violated ethical standards because the information was relayed to a family member only
18The type of product costing system used by a company is dictated by the:
- ACost flow assumptions made by the company
- BProduction process of the product
- CInventory system used by the company
- DSelling price of the product
19Which of the following represents the product costs on the income statement?
- ACost of goods sold
- BSales revenue
- CSales commission
- DNone of these
20Which of the following firms would most likely use process costing system?
- AFirms producing legal services
- BFirm manufacturing paper
- CFirm providing advertising services
- DFirm printing wedding invitations
21Which of the following products would probably use a job order costing system?
- APens
- BInstant coffee
- CComputer monitors
- DAdvertisements
22Which of the following entities would probably use a process costing system?
- AAn oil refinery
- BA yacht builder
- CA custom furniture company
- DA custom jewelry manufacturer
23Which of the following accurately describes a difference between job order and process costing systems?
- AIn job order costing systems, overhead costs are treated as product costs, whereas in process costing systems, overhead costs are treated as period costs
- BJob order costing systems do not assign costs to production, whereas process costing systems do
- CIn job order costing systems, costs are traced to a specific job order, whereas in process costing systems, costs are traced to work cells and then assigned to products manufactured
- DIn a job order costing system, selling costs are treated as period costs, whereas they are treated as product cost in a process costing system
24Cost assigned to the building of a ship should appear on the income statement when:
- AThe ship is completed
- BThe ship is sold
- CThe purchase order to manufacture the ship is received
- DCash is collected for the sale of the ship
25Under a job order costing system, the dollar amount of the entry to record the transfer of goods from work in process inventory to finished goods inventory is the total of the costs charged to all jobs:
- AStarted during the period
- BCompleted and sold during the period
- CCompleted during the period
- DStarted and completed during the period
26When direct materials are issued from inventory to productions under a job order costing system, an increase is recorded in the:
- AOverhead account
- BWork in process inventory account
- CMaterials inventory account
- DFinished goods inventory account
27The balance in the Work in process inventory account on October 1 was $14,000 and the balance on October 31 was $85,400. Cost incurred during the month were as follows:
Direct materials: $55,820
Direct labor: $58,420
Overhead: $40,000
What amount was transferred to Finished goods inventory account during October?- A$82,840
- B$154,240
- C$239,640
- D$140,240
28The cost of completed jobs in a service organization is transferred to the:
- AWork in process inventory account
- BFinished goods inventory account
- CCost of goods sold account
- DCost of services account
29Deleware Inc. incurred the following costs in October 2014 for producing 5,000 good units of personalized photo frames:
Direct materials: $15,000
Direct labor: $10,000
Overhead applied: $13,500
The company sold 4,500 units. Determine the product unit cost.- A$8.56
- B$7.70
- C$5.00
- D$5.56
30The allocation based used in the process cost allocation is known as:
- ACost processor
- BCost object
- CCost driver
- DCost pooler
31Ad-On International is an advertising company. It estimated the overhead cost for March 2014 to be $950,000 and direct labor hours to be 5,000 hours. In March, it incurred overhead costs of $1,150,000 and 5,100 labor hours.
What is the predetermined overhead rate for March 2014?- A$186 per direct labor hour
- B$190 per direct labor hour
- C$225 per direct labor hour
- D$230 per direct labor hour
32Ad-On International is an advertising company. It estimated the overhead cost for March 2014 to be $950,000 and direct labor hours to be 5,000 hours. In March, it incurred overhead costs of $1,150,000 and 5,100 labor hours.
The amount of overhead cost applied by the company in March 2014 is:- A$969,000
- B$1,150,000
- C$950,000
- D$1,173,000
33Ad-On International is an advertising company. It estimated the overhead cost for March 2014 to be $950,000 and direct labor hours to be 5,000 hours. In March, it incurred overhead costs of $1,150,000 and 5,100 labor hours.
What is the over-applied or under-applied overhead for March 2014?- A$181,000 under-applied
- B$181,000 over-applied
- C$19,000 under-applied
- D$19,000 over-applied
34The higher the interest rate assumed, the:
- AHigher the present value of an ordinary annuity
- BMore one must deposit today to accumulate to a desired sum
- CLower the future value of a sum invested in the bank today
- DLower the present value of a sum due in the future
35Which of the following phrases is not descriptive of an ordinary annuity?
- APayments made at the beginning of equal periods of payment
- BBoth the present and future value can be calculated
- CCompound interest assumed
- DSeries of equal payments
36Which of the following statements is true regarding time value of money?
- ACompound interest will produce equal amounts of interest each period on a final deposit
- BEarning simple interest is more beneficial than earning compound interest
- CWhen making a purchase, it is better to make payment as soon as possible
- DIt is better to receive $1 now than a year from now
37Mortgage payable:
- AAre usually paid in monthly installments
- BHave payments that include both interest and principle
- CAre secured by real property
- DAll of these choices
38Which of the following is an example of "off balance sheet" financing?
- ALeases
- BBonds
- CDividends
- DNotes
39What are liabilities that arise from a contract that requires a company to make payments to its employees after they retire:
- ADeferred income tax
- BCapital leases
- CPensions
- DWelfare
40Post retirement benefits should be expensed:
- AOn the employee's retirement date
- BAs they are received by the employee
- CWhen the employee is hired
- DAs the employee earns them
41All of the following are operating leases EXCEPT:
- AMonthly lease on a building that can be canceled with a 90 day notice
- BTen year lease on a new building
- CTwo year lease on a truck with an option to renew for one more year
- DFive year lease of a computer with an option to buy for a small amount at the end of the lease
42Which of the following is NOT an advantage of issuing long term debt?
- AThe stockholders do not relinquish any control
- BThe interest is tax deductible
- CThe risk of becoming bankrupt is reduced
- DIncreased earnings accrue to the stockholders
43If the market interest rate is higher than the face interest rate at the date of issuance, bond will:
- ANot sell until the face interest rate is adjusted
- BSell at face value
- CSell at a discount
- DSell at a premium
44A bond with a face value of $10,000 has a current price quote of 96.00. The bond is selling for:
- A$960
- B$9,600
- C$10,000
- D$10,960
45If Zeus Corporation issued ten bonds of $10,000 at 98.75 on the interest date. The entry to record this transaction is:
- ADebit: Cash $9,875 Credit: Bonds Payable $9,875
- BDebit: Cash $98,750 Credit: Bonds Payable $98,750
- CDebit: Cash $10,000 Credit: Bonds Payable $10,000
- DDebit: Cash $98,750 Credit: Bonds Payable $100,000
Debit: U/A Discount $1,250
46Bond issue cost:
- AMust be expensed when incurred
- BMust be amortized over the life of the bond
- CAre recorded as an asset account and not amortized
- DAppear on the balance sheet as a liability
47The total interest cost on twenty, 10 year bonds, 7% coupon, $1,000 bonds that are issued at 97 is:
- A$14,000
- B$14,600
- C$13,400
- D$20,000
48Boscoe Corporation issued $200,000 of 20 year, 8% bonds at 103 on one of its semi annual interest dates. The straight line method of amortization is to be used. After seven years, what is the carrying value of the bonds?
- A$206,000
- B$200,000
- C$203,900
- D$208,100
49When the straight line method of amortization is used for a bond discount, the amount of interest expense for the period is calculated by:
- AAdding the amount of discount amortization for the period to the amount of cash paid for interest during the period
- BDeducting the amount of discount amortization for the period from the amount of cash paid for interest during the period
- CMultiplying the carrying value of the bonds by the effective interest rate
- DMultiplying the face value of the bonds by the face interest rate
50When bonds have been issued at a premium, the periodic amortization of the premium will:
- AIncrease the carrying value of the bonds
- BHave no effect on the carrying value of the bonds
- CDecrease the carrying value of the bonds
- DCause the carrying value always to equal the face value of the bonds
51Bonds that contain a provision that allows the holders to exchange the bonds for other securities of the issuing corporation are called:
- ADebenture bonds
- BSecured bonds
- CCallable bonds
- DConvertible bonds
52A disadvantage of the corporate form of business is:
- ALack of mutual agency
- BProfessional management
- CEase of ownership transfer
- DTax treatment
53Which of the following phrases is descriptive of the corporate form of business?
- AStockholders are considered creditors of a corporation
- BThe payment of dividends is required
- CDividends paid are an expense for the issuing company
- DIssuing stock is less financially risky than issuing bonds
54Legal capital is a descriptive phrase for:
- AStockholders' equity
- BResidual equity
- CMarket value
- DPar value
55Treasury shares plus outstanding shares equal:
- AUnissued shares
- BSubscribed shares
- CAuthorized shares
- DIssued shares
56Which of the following is the appropriate entry to record the payment of cash dividends?
- ADebit: Dividends payable
Credit: Cash - BDebit: Paid in capital
Credit: Dividends payable - CDebit: Dividends
Credit: Dividends payable - DDebit: Retained earnings
Credit: Cash
- ADebit: Dividends payable
57The board of directors of Clinton Corporation declared a cash dividend of $3.50 per share on 60,000 shares of common stock on June 15, 2016. The dividend is to be paid on July 15, 2016, to the shareholders of record on July 1, 2016. The proper entry to be recorded on June 14, 2016 will be:
- ADebit: Dividends
Credit: Cash - BDebit: Dividends payable
Credit: Cash - CDebit: Cash
Credit: Dividends - DDebit: Dividends
Credit: Dividends payable
- ADebit: Dividends
58The number of shares of issued stock equals:
- AUnissued shares minus authorized shares
- BOutstanding shares plus treasury stock
- CSubscribed shares plus outstanding shares
- DAuthorized shares minus treasury shares
59A corporation's residual equity is its:
- ACash
- BPreferred stock
- CRetained earnings
- DCommon stock
60Holders of preferred stock normally do NOT have:
- APreference as to dividends
- BPreference as to assets in liquidations
- CFull voting rights
- DOwnership interest in the corporation
61Outstanding shares of stock are:
- AAuthorized shares that have not yet been issued
- BAlso called treasury stock
- CShares of stock owned by unknown individuals
- DIssued shares that are still in circulation
62The additional paid in capital account normally arises in the accounting records when:
- AThe number of shares issued exceeds par value
- BThe stated value of capital stock is greater than the par value
- CThe market value of the stock rises above par value
- DThe capital stock is issued at an amount greater than par value
63The excess of issue price over the stated or par value should be credited to the:
- ACommon stock account
- BRetained earnings account
- CAdditional paid in capital
- DTreasury stock
64When shares of preferred stock may be redeemed by the corporation at a certain price, the shares are said to be:
- ACumulative
- BNonconvertible
- CConvertible
- DCallable
65Start up and organization costs:
- AAre capitalized, but never amortized
- BAre capitalized and amortized, usually over five years
- CAre expensed to the year incurred
- DAppear on the balance sheet as a current asset
66The net effects on the corporation of the declarations and payment of a cash dividend are to:
- AIncrease assets and increase stockholders' equity
- BDecrease liabilities and decrease stockholders' equity
- CDecrease assets and decrease stockholders' equity
- DIncrease stockholders' equity and decrease liabilities
67Book value per share refers to the:
- ANet assets represented by having one share of a company's stock
- BHighest price that investors will pay for a share of stock
- CIssue price of the stock, less any market decline since issuance
- DPar and stated value of a share of stock
68When stock is issued for non-cash assets or services, the dollar amount to be recorded for this exchange is determined by the:
- ATreasurer of the corporation
- BPar value of the stock
- CMarket value of the stock or the market value of the consideration received, whichever is greater
- DMarket value of the stock or the market value of consideration received when the market value of the stock cannot be determined
69Which of the following transactions affects total retained earnings?
- APurchase of treasury stock
- BPayment of previously declared cash dividend
- CDeclaration of stock dividend
- DDeclaration of a stock split
70Which of the following phrases is not descriptive of the corporate form of business?
- AProfessional management
- BContinuous existence
- CDouble taxation
- DUnlimited liability
71How will the declaration and distribution of a 10% stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity, respectively?
- ADecrease and no effect
- BNo effect and no effect
- CDecrease and decrease
- DNo effect and decrease
72Non cash investing and financing transactions:
- AAppear as separate schedule on the statement of cash flows
- BAppear in either the investing or financing activities section, but not both
- CAre excluded from the statement of cash flows
- DAppear in both the investing and financing activities section
73Cash equivalents do NOT include:
- AU.S. Treasury bills
- BMoney market accounts
- CMarketable securities
- DCommercial paper
74Investors and creditors would find the statement of cash flows least useful in assessing:
- AFinancial position at a point in time
- BNeed for additional financing
- CAbility to pay dividends and liabilities
- DAbility to generate positive future cash flows
75Collected accounts receivables:
- ADoes not represent a cash flow
- BOperating activities section
- CFinancing activities section
- DInvesting activities section
76Retired long term debt with cash:
- AOperating activities section
- BDoes not represent cash flow
- CInvesting activities section
- DFinancing activities section
77If net cash flows from operating activities were $187,000, net income were $50,000, and net sales were $600,000, the cash flow yield would equal:
- A$137,000
- B$237,000
- C3.7 times
- D$413,000
78If the index recut method is used to prepare a statement of cash flows, which of the following would be deducted from net income to arrive at net cash flows from operating activities:
- AIncrease in accrued liabilities
- BIncrease in income taxes payable
- CIncrease in accounts receivable
- DDecrease in prepaid expenses
79Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statement-"increase in accounts receivable" indicate the effect on net income in arriving at net cash flow from operating activities by choosing one of the following:
- AAdd to net income to arrive at net cash flows from operating activities
- BSubtract from net income to arrive at net cash flows from operating activities
- CNot used to adjust net income too calculate net cash flows from operating activities
80Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statements-"Decrease in prepaid expenses" indicate the effect on net income in arriving at net cash flow from operating activities by choosing one of the following:
- AAdd to net income to arrive at net cash flows from operating activities
- BSubtract from net income to arrive at net cash flows from operating activities
- CNot used to adjust net income to calculate net cash flows from operating activities
81If the indirect method is used, each of the following is a proper adjustment to net income to arrive at net cash flows from operating activities, except:
- ADeducting a decrease in prepaid expenses
- BAdding an increase in salaries payable
- CDeducting an increase in accounts receivable
- DAdding a decrease in inventory
82In preparing a statement of cash flows using the indirect method, an increase in unearned revenue account should:
- ABe shown as a financing activity
- BBe shows as a deduction from net income in computing net cash flows from operating activities
- CNot to be shown on the statement of cash flows
- DBe shown as an addition to net income in computing net cash flows from operating activities
83Non cash investing and financing transactions:
- AAppear as a separate schedule on the statement of cash flows
- BAppear in either the investing or financing activities section, but not both
- CAre excluded from the statement of cash flows
- DAppear in both the investing and financing activities section
84Cash equivalents do NOT include:
- AU.S treasury bills
- BMoney market accounts
- CMarketable securities
- DCommercial paper
85Investors and creditors would find the statement of cash flows least useful in assessing:
- AFinancial position at a point in time
- BNeed for additional financing
- CAbility to pay dividends and liabilitites
- DAbility to generate positive future cash flow
86Collected accounts receivables:
- ADoes not represent a cash flow
- BOperating activities section
- CFinancing activities section
- DInvesting activities section
87Retired long term debt with cash:
- AOperating activities section
- BDoes not represent a cash flow
- CInvesting activities section
- DFinancing activities section
88If net cash flows from operating activities were $187,000, net income were $50,000, and net sales were $600,000, the cash flow yield would equal:
- A$137,000
- B$237,000
- C3.7 times
- D$413,000
89If the indirect method is used to prepare a statement of cash flows, which of the following would be deducted from net income to arrive at net cash flows from operating activities:
- AIncrease in accrued liabilities
- BIncrease in income taxes payable
- CIncrease in accounts receivable
- DDecrease in prepaid expenses
90The ability to pay bills when due and to meet unexpected needs for cash most closely describes:
- ACash flow adequacy
- BLong term adequacy
- CLiquidity
- DProditability
91The existence of diversified companies make which of the following difficult?
- AComparisons with industry norms
- BThe preparation of interim financial statements
- CUse of more than one depreciation or inventory method
- DThe compilation of segment information
92The ratio of net income of $100,000 to sales of $1,000,000 can be stated as:
- ANet income is 1/10 , 10% of sales
- BFor every dollar of sales, the company has an average net income of 10 cents
- CThe ratio of sales to net income is 10 to 1 (10:1), or the sales are 10 times net income
- DAll of these choices
93One reason that a common size statement is a useful tool in financial performance evaluation is that it enables the user to:
- AMake better comparisons to two companies of different sizes in the same industry
- BDetermine which companies in a single industry are of the same size
- CJudge the relative potential of two companies of similar size in different industries
- DDetermine which companies in a single industry are of the same value
94In common size income statement for a retail store, 100% amount is for:
- ANet revenues
- BCost of goods sold
- CTotal assets
- DTotal current assets
95If Year #1 equals $2,800, Year #2 equals $3,108, and Year #3 equals $3,668, the index number to be assigned for Year #3 in trend analysis, assuming that Year #1 is the base year is:
- A100
- B141
- C131
- D136
96In a common size financial statement, which of the following is given a designation of 100 percent?
- ACost of goods sold
- BTotal assets
- CTotal liabilities
- DNet income
97A common measure of long term solvency is the:
- AReceivable turnover
- BAsset turnover
- CDebt to equity ratio
- DCurrent ratio
98Liquidity ratios are an indication of a company's:
- AAbility to effectively employ its resources
- BOverall debt to equity position
- COverall debt position
- DAbility to pay bills when they are due and to meet unexpected needs for cash
99Days' inventory on hand is used to analyze:
- ACash flow adequacy
- BOperating asset management
- CProfitability
- DLong term solvency
100Which of the following describes the return on asset ratio?
- AAverage total assets divided by sales
- BNet sales divided by net income
- CNet income divided by average total assets
- DAverage total assets divided by net income
101Which of the following describes the profit margin ratio?
- AAverage total assets divided by net income
- BNet income income tax expense divided by average total assets
- CAverage total assets divided by net revenue
- DNet income divided by net revenue
102A quick ratio that is about to equal to the current ratio indicated that:
- AInventories represent a large portion of the current assets
- BThe company has a low inventory turnover
- CInventories represent a small portion of current assets
- DThe company has a high inventory turnover
103During the year, Dempsey Corporation's current ratio increased while it quick ration decreased. Which of the following could help explain this situation?
- AA decrease in accounts receivable during the year
- BAn increase in accounts payable during the year
- CThe sale of short term investments during the year
- DAn increase in inventory levels during the year
104Which of the following statements most accurately explains the behavior of costs?
- ACost can be fixed, variable or a combination of both
- BIncrease
- CThe majority of costs are variable per unit of production
- DThe majority of costs are fixed per unit of production
- EMixed costs are treated as variable costs
105Which of the following decreases with increase in number of units sold?
- ATotal variable costs
- BTotal fixed costs
- CUnit variable cost
- DUnit fixed cost
- EIndirect materials cost
106In terms of cost behavior, supervisory salaries and direct labor are classified as:
- AFixed and variable, repectfully
- BVariable
- CFixed
- DMixed and fixed, respectfully
107Clark International produces designer watches. Each watch requires material worth $14.50, and three direct labor hours. The company pays its production supervisor a salary of $500 per week. Hourly wage rate at Clark is $5. If 25 watches are produced in a week, what is the fixed cost per watch?
- A$14.50
- B$5.00
- C$20.00
- D$34.50
108Using the high low method and the information below, compute the monthly fixed costs for Coral Corporation:
Month Telephone Hours Used Telephone Expense
Oct 110 $4,400
Nov 120 $4,700
Dec 160 $5,300- A$8,000
- B$2,420
- C$5,500
- D$5,580
109Product X sells for $20 per unit and has variable costs of $10 per unit. If the fixed costs amount to $45,000, the break even point will be:
- A4,500 units
- B1,500 units
- C2,250 units
- D6,225 units
110The break even point is the point at which:
- AFixed costs equal variable costs
- BTotal revenue equal total cost
- CSales equal variable costs
- DFixed costs equal sales
111How many units must BAC sell to break even if the selling price per unit is $8.50, variable costs are $4.00 per unit, and the fixed costs are $9,000?
- A1,000 units
- B1,059 units
- C2,000 units
- D2,250 units
112Which of the following equations represents break even?
- ASales price+variable cost-fixed cost=0
- BVariable cost-fixed cost=sales price
- CSales price+fixed cost=variable cost
- DSales price-variable cost=fixed cost
113Using the combination margin approach, find the contribution margin ratio for Consumer Products if the selling price per unit is $15, the variable cost per unit is $7.50, and the fixed costs are $8,000
- A25%
- B75%
- C50%
- D100%
114A disadvantage of the corporate form of business is:
- AProfessional management
- BEase of ownership transfer
- CTax treatment
- DUnlimitied liability
115The number of shares of issued stocks equals:
- AUnissued shares minus authorized shares
- BOutstanding shares plus treasury shares
- CSubscribed shares plus outstanding shares
- DAuthorized shares minus treasury shares
116Which of the following is the appropriate entry to record the declaration of a dividend?
- ADebit: Dividends payable
Credit: Cash - BDebit: Additional paid in capital
Credit: Dividends payable - CDebit: Dividends
Credit: Dividends payable - DDebit: Retained earnings
Credit: Cash
- ADebit: Dividends payable
117A corporations residual equity is its:
- APreferred stock
- BRetained earnings
- CCommon stock
- DCash
118When shares of preferred stock may be redeemed by the corporation at a certain price, the shares are said to be:
- ACumulative
- BNonconvertible
- CConvertible
- DCallable
119DePaul Corporation has 5,000 shares of $100 par value, 6% cumulative preferred stock, and 10,000 of $10 par common stock outstanding during the first five years of operations. DePaul Corporation paid cash dividends as follows:
2011 $36,500
2012 $10,000
2013 $65,000
2014 $40,000
2015 $55,000
The amount of dividends received by the preferred stockholders during 2013 was:- A$65,000
- B$85,000
- C$30,000
- D$50,000
120The following accounts appear in the ledger of Zeus Corporation on December 31, 2015
Preferred Stock $100,000
Common Stock $125,000
Additional Paid in Capital, Preferred $50,000
Additional Paid in Capital, Common $44,000
Retained Earnings $80,000
A balance sheet prepared on December 31, 2015, would report total contributed capital of:- A$94,000
- B$225,000
- C$319,000
- D$399,000
121If Rahm Corporation has 1,000,000 shares of common stock authorized, 400,000 shares of common stock issued, and holds 40,000 of common stock as treasury stock, the total number of outstanding shares of Rahm Corporation amounts to:
- A960,000
- B360,000
- C440,000
122The additional paid in capital account normally arises in the accounting records when:
- AThe book value per share is greater than market value
- BThe stated value of capital stock is greater than the par value
- CThe market value of the stock rises above par value
- DCapital stock is issued at an amount greater than par value
123How will the declaration and distribution of a 10% stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity respectively?
- ADecrease and no effect
- BNo effect and no effect
- CDecrease and decrease
- DNo effect and decrease
124The company issues 10,000 shares of stock in exchange for land that had a fair market value between $600,000-$1,000,000 depending upon whether a new casino is to be built nearby. The par value of the stock is $25 per share. The market value of the stock is $50 per share.
The entry to record:- ALand $250,000
Common Stock $250,000 - BLand $600,000
Common Stock $600,000 - CLand $500,000
Common Stock $250,000
Additional Paid in Capital $250,000 - DLand $1,000,000
Common Stock $250,000
Additional Paid in Capital $750,000
- ALand $250,000
125On July 1, 2015, Ladd Corporation has 500,000 shares of $20 par value common stock outstanding with a market value of $60 per share. On July 2, 2015 Ladd announced a 2 for 1 stock split. After the split, the par value of the stock:
- ARemained the same as before the split
- BWas reduced to $10.00 per share
- CWas reduced to $5.00 per share
- DWill be the same as the market value $60
126How should dividends in arrears be shown on the corporation's balance sheet?
- AAs an increase in liabilities
- BIn a note or in the body of the financial statement
- CAs a decrease in assets
- DAs an increase in stockholders' equity
127Fergus is considering the purchase of a machine that will save the company $4,000 per year in operating costs for a period of seven years. The most it should pay for the machine is equal to:
- A$4,000 times the present value of ordinary annuity for 7 periods
- B$28,000
- C$4,000 divided by the future value of a single sum at the end of 7 periods
- D$4,000 times the future value of an ordinary annuity for 7 periods
128Dunce Corporation purchased equipment on January 1 by signing a $700,000 long term note payable, plus a $300,000 down payment and a monthly payment of $15,000. The note carries an interest rate of 6%. The entry to record the note payable with include
- ACredit to note payable for $1,000,000
- BCredit to note payable for $700,000
- CDebit to equipment account $700,000
- DDebit to note payable $100,000
129Which of the following is true of issuing long term debt?
- AThe bond holders get paid after the stockholders
- BThe interest expense like dividends are not deductible
- CThe risk of becoming bankrupt is increased
- DCorporate earnings will be higher compared with equity
130If the market interest rate is higher than the face interest rate at the date of issuance, bonds will:
- ANot sell until the face interest rate is adjusted
- BSell at face value
- CSell at a discount
- DSell at a premium
131A bond with a face value of $60,000 has a current price of 93.75. The proceeds in dollars and cents is:
- A$93,750
- B$56,250
- C$60,000
- D$62,700
132Any unamortized bond premium should be reported on the balance sheet of the issuing corporation as a(n):
- AAsset
- BDirect reduction from retained earnings in the stockholders' equity
- CAddition to the face amount of the bonds in the liability section
- DDirect reduction from the face amount of the bonds in the liability section
133When bonds are issued at a premium, the total interest cost of the bonds over the life of the bond is equal to the amount of:
- AInterest payments made over the life of the bonds plus the issuance premium
- BIssuance premium
- CInterest payments made over the life of the bonds minus the amount of issuance premium
- DInterest payments made over the life of the bond
134Rauner Corporation issued $400,000 of 10 year 8% bonds at 103 on one of its semi annual interest dates, The straight line method of amortization is to be used. What is the total interest cost of the bonds?
- A$308,000
- B$332,000
- C$412,000
- D$329,600
135Bonds that contain a provision that allows the investor to redeem the bonds (prior to the maturity date) for stock are called:
- ASecured bonds
- BCallable bonds
- CConvertible bonds
- DDebenture bonds
136Which of the following is NOT needed in calculation the price or value of the bond?
- AFace interest rate
- BMarket interest rate
- CFuture value of periodic interest payments
- DPresent value of face (maturity) payments
137Buck Corporation issued $2,000,000 of 20 year, 6% bonds at 98 on one of its semiannual interest dates. The straight line method of amortization is to be used. After three years, what is the carrying value of the bonds?
- A$2,000,000
- B$1,960,000
- C$1,966,000
- D$1,954,000
138Investors and creditors would find the statement of cash flows LEAST useful is assessing:
- AAbility to pay dividends and liabilities
- BNeed for additional financing
- CFinancial position at any point
- DAbility to generate future cash flows
139Analysis of the investing activities section of the statement of cash flows will disclose:
- APurchase and sale of treasury stock
- BProceeds on the sale of investments in another company
- CThe amount of dividends received on investments
- DNet income for the period
140Which of the following is reported as a non cash investing and financing transaction on the statement of cash flows?
- APayments of long term debt
- BProceeds on the sale of treasury stock
- CRedemption of bonds issued
- DPurchase of land by issuing a mortgage
141Purchased prepaid insurance with cash:
- AFinancing activities section
- BInvesting activities section
- CDoes not represent a cash flow
- DOperating activities section
142Sold land it was holding for speculation or investment purposes:
- ASchedule for non-cash investing and financing transactions
- BFinancing activities section
- CInvesting activities section
- DOperating activities section
143Declared and paid dividends on preferred stocks:
- AFinancing activities section
- BInvesting activities section
- CDoes not represent a cash flow
- DOperating activities section
144Gain on the sale of Amazon stock :
- AOperating activities section
- BDoes not represent a cash flow
- CInvesting activities section
- DFinancing activities section
145Durbin Inc. settled a long term note payable it owed to Kirk Company by transferring title to a large piece of equipment. Durbin would report this:
- AOnly as a cash outflow from financing activity for the payment of the debt
- BOnly as a cash inflow from financing activity for the issuance of common stock
- CIn the schedule of non-cash investing and cash flow from financing activity
- DAs both a cash flow from investing activity and a cash flow from financing activity
146In preparing a statement of cash flows using the indirect method, a decrease in unearned revenues should:
- ABe shown a financing activity
- BBe shown as a deduction from net income in computing net cash flows from operating activities
- CNot be shown on the statement of cash flows
- DBe shown as an addition to net income to arrive at net cash flows from operating activities
147If the indirect method is used, which of the following is a proper adjustment to net income to arrive at cash flow from operating activities?
- ADeducting a decrease in prepaid expense
- BDeducting an increase in salaries payable
- CAdding an increase in accounts receivable
- DAdding a decrease in inventory
148If the indirect method is used to prepare a statement of cash flows, which of the following would be added to net income to arrive at net cash flows from operating activities?
- AAll of the items below
- BDepreciation/Amortization expense
- CLoss on the sale of equipment
- DDecrease in accounts receivable
149Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statements-Interest Expense-indicate the effect on net income at arriving at net cash flows from operating activities by choosing one of the following:
- ANot used to adjust net income to calculate net cash flows from operating activities
- BSubtract from net income to arrive at net cash flows from operating activities
- CAdd to net income to arrive at net cash flows from operating activities
150If the indirect method is used to prepare a statement of cash flows, which of the following would be added to net income to arrive at net cash flows from operating activities?
- ADecrease in accounts receivable
- BIncrease in prepaid insurance
- CDecrease in income taxes payable
151The ability to pay bills when due and to meet unexpected needs for cash most closely describes:
- ACash flow adequacy
- BLong term solvency
- CLiquidity
- DProfitability
152A general rule in choosing among alternative investments is the greater risk taken, the:
- AGreater the return required
- BLower the potential expected
- CGreater the price of the investment
- DLower the profits expected
153Which of the following is the most useful in evaluating a relationship as either favorable or unfavorable?
- APast and current performances of the company
- BIndustry averages
- CPast performance of the company
- DRule of thumb measure
154One reason that a common size statement is a useful tool in performance evaluation is that it enables the user to:
- AMake better comparisons of two companies of different sizes in the same industry
- BDetermine which companies in a single industry are of the same size
- CJudge the relative potential of two companies of similar size in different industries
- DDetermine which companies in a single industry are of the same value
155In trend analysis, each item is expressed as a percentage of the:
- ANet income amount
- BTotal assets amount
- CBase year income
- DRetained earnings amount
156In a common size financial statement, which of the following is given a designation of 100%?
- ACost of goods sold
- BNet sales
- CTotal liabilities
- DNet income
157A common measure of long term solvency is the:
- AReceivable turnover
- BAsset turnover
- CDebt to equity ratio
- DCurrent ratio
158Day's inventory on hand is used to analyze:
- ACash flow adequacy
- BOperating asset management
- CProfitability
- DLong term solvency
159Which of the following describes the return on equity ratio?
- AAverage total equity divided by sales
- BNet sales divided by net income
- CNet income divided by average equity
- DAverage total equity divided by net income
160A quick ratio that is about equal to the current ratio indicates that:
- AInventories represent a large portion of current assets
- BThe company has a low inventory turnover
- CInventories represent a small portion of current assets
- DThe company has a high inventory turnover
161During the year, Dempsey Corporation's current ratio increased while its quick ratio decreased. Which of the following could help explain the situation?
- AA decrease in accounts receivable during the year
- BAn increase in accounts payable during the year
- CThe sale of short term investments during the year
- DAn increase in inventory levels during the year
162The inventory turnover amount is needed to calculate the:
- ADays outstanding uncollected
- BDays inventory on hand
- CReceivable turnover
- DInterest coverage ratio
163Which of the following describes the profit margin ratio?
- AAverage total assets divided by net income
- BNet income plus income tax expense divided by average total assets
- CAverage total assets divided by net revenue
- DNet income divided by net revenue
164Managerial accounting information is primarily used by:
- ASupply chain partners
- BLenders
- CEmployees
- DGovernmental agencies
165Which of the following is true of financial and managerial accounting?
- ABoth use historical costs as their primary unit of measurement
- BBoth depend on double entry system of accounting
- CBoth require adherence to generally accepted accounting principles
- DBoth assist managers in decision making
166Which of the following is a product cost?
- AIncome taces
- BComissions
- CAdvertising expenses
- DManufacturing overhead
167Period cost is also called:
- AVariable cost
- BProduct cost
- CValue adding cost
- DNon-inventoriable cost
168Tesler Ltd. is a sports car manufacturer. Which of the following is a value adding cost for Tesler?
- AWages of hourly workers in assembly
- BCosts of super bowl commercial
- CCost of office supplies
- DSalary of plant supervisor
169The three elements of product costs are:
- ADirect materials, work in process, and overhead
- BDirect materials, work in process, and finished goods
- CDirect materials, direct labor, and general administrative
- DDirect materials, direct labor, and overhead
170Which of the following labor costs would be included in direct labor?
- AMaintenance worker
- BMachine operators
- CManagers and supervisors
- DMaterials storeroom customers
171All manufacturing costs that are assigned to complete (but unsold) products should be classified as:
- AWork in process inventory
- BCost of goods sold
- CFinished goods inventory
- DRaw materials inventory
172The income statement for a manufacturing company usually contains a detailed computation of the:
- ATotal manufacturing cost
- BTotal overhead
- CTotal cost of materials used
- DCost of goods sold
173The following are cost for a selected period:
Direct materials used in production: $75,000
Direct labor cost of converting materials: $100,000
Total indirect cost of manufacturing $45,000
What is the unit cost of manufacturing 22,000 units during the period?- A$10.00
- B$8.00
- C$6.00
- D$4.00
174Which of the following is one of the integrity standards of management accounting?
- ARefraining from accepting hospitality gifts from coworkers
- BRefraining from activities that the company does not actively endorse
- CAvoiding actual or apparent conflicts of interest
- DAvoiding only conflicts of interest that occur between coworkers
175Which of the following represents the product costs on the income statement?
- ACost of goods sold
- BSales revenue
- CSales commissions
- DNone of these
176Process costing is applicable to production operations that:
- AUtilize several processes, departments, or work cells
- BDo not assign overhead costs of operations
- CProduce products that are made to order
- DProduce unique products
177Which of the following products would probably be produced by a company using a job costing system?
- AOlive oil
- BWedding gowns
- CCereal
- DHostess cupcakes
178Speed Zone Inc., dealers in automobiles, pays its employees a commission of 5% on each car sale. What is the proper classification of the cost of the sales commission?
- AScattered cost
- BVariable cost
- CMixed cost
- DFixed cost
179Which of the following will decrease with the increase in number of units produced?
- ATotal variable costs
- BTotal fixed costs
- CUnit variable costs
- DUnit fixed costs
180In terms of cost behavior, executive salaries and materials are classified as:
- AFixed and variable, respectively
- BVariable
- CFixed
- DMixed and fixed, respectively
181A new product XLC7, is being planned, with the following cost estimates: variable cost per unit $12, and total fixed costs, $68,000. The projected sales price is $20 each.
If we use the contribution margin approach, compute the number of units that must be sold to break even.- A3,400
- B5,667
- C2,125
- D8,500
182A new product XLC7, is being planned, with the following cost estimates: variable cost per unit $12, and total fixed costs, $68,000. The projected sales price is $20 each.
If we use the same approach and assuming that fixed costs can be reduced by $8,000, how many units must be sold to produce a $75,000 profit?- A6,750
- B11,250
- C16,875
- D3,750
183A new product XLC7, is being planned, with the following cost estimates: variable cost per unit $12, and total fixed costs, $68,000. The projected sales price is $20 each.
Given the provided information and the projection that 25,000 units can be sold, compute the selling price that the producer must use to obtain a profit of $150,000.- A$20.00
- B$28.00
- C$28.72
- D$20.72
184When the production levels are below the break even point:
- AVariable costs are zero
- BProfit is postiive
- CContribution margin is negative
- DFixed costs are not recovered
185Lopez Inc. sells 400 watches at $59 per watch and has variable costs of $26 per watch and fixed costs of $4,000, what is the projected profit?
- A$4,000
- B$9,200
- C$7,248
- D$23,600
186As production increases, what should you expect to happen to the fixed cost per unit?
- AIncrease
- BEither increase or decrease, depending upon the variable cost
- CDecrease
- DRemains the same
187For every unit that a company produces and sells above the break even point, its profitability is improved by the unit's:
- AGross margin
- BSelling price minus fixed costs
- CContribution margin
- DVariable cost
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- Accounting Quiz on Accounting Final Exam, created by Steve Wojtowicz on 07/11/2017.
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- Steve Wojtowicz
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