A03 Principles of Accounting II
Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English, spelling and grammar. Sources must be cited in APA format. Your response should be four (4) double-spaced pages; refer to the "Assignment Format" page located on the Course Home page for specific format requirements.
Part A (15 points each for a possible total of 30 points)
1. After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances.
Cash 18,000
Inventory 73,000
Other assets 157,000
Accounts Payable 61,000
Abel, Capital 50,000
Barney, Capital 50,000
Cole, Capital 87,000
Non-cash assets are sold for $275,000. Profits and losses are shared equally.
After all liabilities are paid, divide the remaining cash amongst the partners.
2. The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:
Cash $10,000
Other Assets 8,000
Liabilities 4,000
Brandon, Capital 7,000
Ryan, Capital 7,000
a. If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?
b. If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets?
Part B (20 points each for a possible total of 40 points)
1. Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries.
a. Initial deposit
b. The first year's interest
c. The redemption of the bonds
2. On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries.
a. Issued the bonds
b. Paid first semiannual interest payment
c. Retired the bonds at maturity
Part C (15 points each for a possible total of 30 points)
1. Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 2012, from the following:
Retained Earnings, January 1, 2012 $2,000
Dividends paid during the year 800
Net income for the year 3,000
Correction of prior year error. Purchase
of land recorded as rent expense 1,000
2. Curtis Corporation's balance sheet included the following:
Common Stock, $5 par value, 5,000 shares issued
and outstanding $25,000
Retained Earnings 20,000
Total Stockholders' Equity $45,000
Prepare journal entries for the following transactions.
May 3 Issued 500 shares at $6 per share.
9 Reacquired 100 shares at $4 per share.
15 Reissued 50 of the Treasury shares at $7 per share.
17 Reissued 10 of the Treasury shares at $3 per share.
A03 Principles of Accounting II
Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English, spelling and grammar. Sources must be cited in APA format. Your response should be four (4) double-spaced pages; refer to the "Assignment Format" page located on the Course Home page for specific format requirements.
Part A (5 points each for a possible total of 15 points)
The following information is given for Tripp Company, which uses the indirect method.
Net income $20,000
Depreciation expense 3,000
Increase in accounts receivable 2,000
Payment of dividends 2,000
Proceeds from sale of equipment 6,000
Increase in accounts payable 4,000
Decrease in inventory 3,000
From the information provided, answer the following questions:
(1) The cash flow from operating activities is ________.
(2) The cash flow from investing activities is ________.
(3) The cash flow from financing activities is ________.
Part B (5 points each for a possible total of 25 points)
Selected data for Stick's Design are given as of December 31, Year 1 and Year 2 (rounded to the nearest hundredth).
Year 2 Year 1
Net Credit Sales $25,000 $30,000
Cost of Goods Sold 16,000 18,000
Net Income 2,000 2,800
Cash 5,000 900
Accounts Receivable 3,000 2,000
Inventory 2,000 3,600
Current Liabilities 6,000 5,000
Compute the following:
(1) Current ratio for Year 2.
(2) Acid-test ratio for Year 2.
(3) Accounts receivable turnover for Year 2.
(4) Average collection period for Year 2.
(5) Inventory turnover for Year 2.
Part C (30 points)
Prepare an income statement showing departmental contribution margin based on the following:
Dept. X Dept. Y Rent Expense
Space (square feet) 17,500 35,000
Net Sales $60,000 $40,000
Cost of Goods Sold 18,000 16,000
Rent Expense (allocated based on square feet) $2,700
Part D (5 points each for a possible total of 30 points)
From the following transactions, prepare the appropriate general journal entries for the month of April.
(1) Raw materials costing $60,000 were issued from the storeroom.
(2) Direct labor of $53,000 was charged to production.
(3) Indirect labor costs of $17,000 were incurred.
(4) Overhead was applied at the rate of 40% of direct labor dollars.
(5) Completed products costing $42,000 were transferred to finished goods.
(6) Products costing $32,000 were sold.
A03 Online Exam 3_03 Score 85% (Incorrect answers marked)
Question-1
When treasury stock is reissued for more than cost __________.
A. debit Cash; credit Treasury Stock and Paid-in Capital
from Treasury Stock
B. debit Cash; credit Common Stock and Paid-in Capital from
Common Stock
C. debit Cash; credit Treasury Stock
D. debit Cash; credit Treasury Stock and Retained Earnings
Question-2
To record the purchase of treasury stock, __________.
A. debit Treasury Stock-Common (par value.; credit Cash
(same.
B. debit Treasury Stock-Common (purchase price.; credit Cash
(same.
C. debit Treasury Stock-Common (par value.; debit any
difference to Paid-in Capital; credit Cash (purchase price.
D. none of the above
Question-3
Treasury stock was sold above cost and the excess was credited to Gain on Sale.
This error would cause __________.
A. the period's end assets to be overstated
B. the period's end liabilities to be overstated
C. the total period's end stockholders' equity to be
overstated
D. the period's net income to be overstated
Question-4
When O'Rourke Corporation sells treasury stock for more than the original cost,
__________.
A. stockholders' equity increases
B. paid-in capital increases
C. retained earnings may increase
D. retained earnings may decrease
Question-5
A retained earnings appropriation is a restriction of retained earnings by
__________.
A. accountants
B. senior management
C. stockholders
D. the board of directors
Question-6
ABC Corporation offered a four-for-one stock split. The number of outstanding
shares before the split was 15,000 and the par value was $20 per share. After
the split, what was the par value and number of shares?
A. 3,750 shares at $80 per share
B. 60,000 shares at $80 per share
C. 60,000 shares at $5 per share
D. 3,750 shares at $5 per share
Question-7
Which of the following would not be shown on the statement of retained
earnings?
A. purchase of treasury stock
B. appropriations for plant expansion
C. declaration of a stock dividend
D. declaration of a cash dividend
Question-8
Typically, the only credit to the retained earnings account for a corporation
is __________.
A. the initial investment of stockholders
B. net income of the period
C. net loss of the period
D. any withdrawals by the owners
Question-9
The journal entry to record the issuance of a stock dividend is to __________.
A. debit Common Stock Dividend Distributable (number of
shares × par value common stock.; credit Common Stock (same.
B. debit Common Stock Dividends Distributable (number of
shares × market value common stock.; credit Common Stock (same.
C. debit Retained Earnings (market value × number of
shares.; credit Common Stock Dividends Distributable (number of shares × par
value.; credit Paid-in Capital in Excess of Par-Stock Dividend
D. debit Common Stock Dividend Distributable (number of
shares × par value.; credit Cash
(Answer of question-9 is incorrect)
Question-10
At the end of the accounting cycle, net income will be closed into __________.
A. Treasury Stock
B. Paid-in Capital
C. Cash
D. Retained Earnings
Question-11
In the dividend process, the liability Dividend Payable is recognized on the
__________.
A. date of declaration
B. date of record
C. date of payment
D. date of stock issue
Question-12
A stock-split journal entry would include a __________.
A. debit to Retained Earnings and a credit to Common Stock
B. debit to Common Stock and a credit to Cash
C. debit to Common Stock Dividend Distributable and a credit
Common Stock
D. memorandum notation only
Question-13
A distribution to stockholders in the form of cash is called a __________.
A. stock dividend
B. stock split
C. stock conversion
D. cash dividend
Question-14
The entry to record the declaration of a stock dividend would include
__________.
A. a credit to Retained Earnings
B. a credit to Cash
C. a credit to Common Stock (This is incorrect)
D. none of the above
Question-15
Barkley's Resort had 2,000 shares of $20 par value common stock outstanding. On
June 1, Barkley's purchased 200 shares of treasury stock at $21 per share and
later reissued them for $22 per share. What amount of profit from the
re-issuance will be reported on the income statement?
A. $400
B. $200
C. $100
D. $0
Question-16
Appropriations to retained earnings are __________.
A. recorded as an contra-asset
B. disclosed in the notes to the financial statements
C. recorded as a contra-liability
D. a contra-stockholders' equity
Question-17
Farm and Supply reissued 100 shares of treasury stock at $20 that had been
reacquired for $15 per share. What is the entry?
A. debit Cash $2,000; credit Treasury Stock-Common $1,500,
credit Paid-In Capital from Treasury Stock $500
B. debit Cash $2,000; credit Treasury Stock-Common $2,000
C. debit Cash $1,500; Paid-In Capital from Treasury Stock
$500, credit Treasury Stock-Common $2,000
D. none of the above
Question-18
The date of record for cash dividends is __________.
A. the date the board of directors pays a dividend
B. the date established by the board of directors that
determines who will receive dividends
C. the date that creates a liability for the company
D. none of the above
Question-19
Before a three-for-one stock split, the shares outstanding were 5,000 shares at
$12 par. After the split, what was the par and number of shares?
A. 15,000 shares at $12 per share
B. 20,000 shares at $6 per share
C. 15,000 shares at $4 per share
D. 5,000 shares at $48 per share
Question-20
The entry to record the distribution of the stock dividend would include
__________.
A. a credit to Common Stock
B. a debit to Common Stock Distributable (This
is incorrect)
C. both A and B
D. none of the above
Incorrect answers are
marked so that you get a chance to correct them.
A03 Online Exam 5_05 Score 80%
Question-1
Bonds payable issued with collateral are called __________.
A. debenture bonds
B. serial bonds
C. callable bonds
D. secured bonds
Question-2
On October 1, Indiana Company issued $10,000, 8%, 5-year bonds at 102. What is the adjusting entry on December 31 using the straight-line method?
·
A.
|
Bond Interest Expense |
800 |
|
Bond Interest Payable |
800 |
·
B.
|
Bond Interest Expense |
200 |
|
Bond Interest Payable |
200 |
·
C.
|
Bond Interest Expense |
190 |
|
Premium on Bonds Payable |
10 |
|
Bond Interest Payable |
200 |
·
D.
|
Bond Interest Expense |
210 |
|
Premium on Bonds Payable |
10 |
|
Bond Interest Payable |
200 |
Question-3
The sale and issuance of $400,000, 8% bonds with a market rate of 8% would involving debiting Cash for __________.
A. $432,000
B. $400,000
C. $368,000
D. $ 32,000
Question-4
Casey issued bonds for $20,000 at 8% on June 1. What is the adjusting on December 31?
·
A.
|
Bond Interest Expense |
800 |
|
Bond Interest Payable |
800 |
·
B.
|
Bond Interest Expense |
933 |
|
Bond Interest Payable |
933 |
·
C.
|
Bond Interest Expense |
667 |
|
Bond Interest Expense |
667 |
·
· D.
|
Bond interest payable |
600 |
|
Bond Interest Expense |
600 |
Question-5
The payment of quarterly interest on 12%, $60,000 bonds would be to __________.
A. debit Cash $3,600; credit Bond Interest Expense $3,600
B. debit Bond Interest Expense $7,200; credit Cash $7,200
C. debit Cash $1,800; credit Bond Interest Expense $1,800
D. debit Bond Interest Expense $1,800; credit Cash $1,800
Question-6
A $1,000 bond quoted at 104 would sell for __________.
A. $1,104
B. $1,000
C. $104
D. $1,040
Question-7
On April 1, Braintree Corporation issued 10%, ten-year, $300,000 bonds at face value. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is __________.
A. $0
B. $15,000
C. $30,000
D. $31,000
Question-8
If a bond is issued at a premium, the effective interest rate is most likely __________ the contract interest rate.
A. higher than
B. lower than
C. the same as
D. Answer cannot be determined based on information given.
Question-9
Martin Corporation sells $200,000, 12%, ten-year bonds at face value on January 1. Interest is paid on January 1 and July 1. The entry to record the issuance of the bonds on January 1 is __________.
·
A.
|
Cash |
200,000 |
|
Bonds Payable |
200,000 |
·
B.
|
Cash |
200,000 |
|
Interest Payable |
24,000 |
|
Bonds Payable |
176,000 |
·
C.
|
Cash |
176,000 |
|
Interest Expense |
24,000 |
|
Bonds Payable |
200,000 |
·
D.
|
Cash |
188,000 |
|
Interest Expense |
12,000 |
|
Bonds Payable |
200,000 |
Question-10
When interest payments are made on a bond issued at face value, the journal entry is __________.
A. debit Bond Interest Expense; credit Cash
B. debit Bonds Payable; credit Cash
C. debit Cash; credit Bonds Payable
D. debit Cash; credit Bond Interest Expense
Question-11
The entry to record the semiannual payment and amortization of the discount using the straight-line method on a 10%, $100,000, five-year bond issued at 97 would be to __________.
A. debit Bond Interest Expense $5,000; credit Cash $5,000
B. debit Bond Interest Expense $5,300; credit Cash $5,000; credit Discount on Bonds Payable $300
C. debit Bond Interest Expense $10,000; credit Cash $10,000
D. debit Bond Interest Expense $13,000; credit Cash $10,000; credit Discount on Bonds Payable $3,000
Question-12
On April 1, Braintree Corporation issued 10%, ten-year, $300,000 bonds at 106. The effective interest rate for these bonds is __________.
A. 10%
B. 9.43%
C. 4.7%
D. 5%
Question-13
A bond is issued for less than its face value. Which of the following statements most likely would explain why?
A. The bond's contract rate is lower than the market rate at the time of the issue.
B. The bond's contract rate is the same as the market rate at the time of the issue.
C. The bond's contract rate is higher than the market rate at the time of the issue.
D. The bond is not secured by specific assets of the corporation.
Question-14
Plaza Corporation issued $350,000 of 8%, ten-year bonds for 98. The entry to record the issuance of the bonds includes a __________.
A. debit to Discount on Bonds Payable for $7,000
B. credit to Bonds Payable for $343,000
C. debit to Bonds Payable for $350,000
D. credit to Cash for $343,000
Question-15
Bonds that are backed solely by the general credit of the corporation issuing them are called __________.
A. callable bonds
B. debenture bonds
C. indenture bonds
D. convertible bonds
Question-16
For a corporation, a premium on bonds results when __________.
A. the contract rate is greater than the market rate
B. the contract rate is less than the market rate
C. the face value is greater than the effective rate
D. none of the above
Question-17
A fund set up so that a bond can be retired at maturity is called a __________.
A. sinking fund
B. bond payable fund
C. stock fund
D. retirement fund
Question-18
A $1,000 bond quoted at 96.5 would sell for __________.
A. $1,000
B. $965
C. $96.50
D. none of the above
Question-19
If bonds are sold between interest payment dates, the amount of cash the issuer receives is __________.
A. more than the market value of the bonds
B. less than the market value of the bonds
C. equal to the market value of the bonds
D. equal to the face value of the bonds
Question-20
On October 1, Indiana Company issued $10,000, 8%, five-year bonds at 98. What is the adjusting entry on December 31 using straight-line method?
A.
Bond Interest Expense
800
Bond Interest Payable
800
B.
Bond Interest Expense
200
Bond Interest Payable
200
C.
Bond Interest Expense
190
Discount on Bonds Payable
10
Bond Interest Payable
200
D.
Bond Interest Expense
210
Discount on Bonds Payable
10
Bond Interest Payable
200
Question-21
Fidelity Furniture's net income was $25,000. Accounts Receivable decreased by $18,000, Merchandise Inventory increased by $7,000, Accounts Payable increased by $4,000, and Salaries Payable decreased by $3,000. The net cash flow from operating activities using the indirect method is __________.
A. $57,000
B. $43,000
C. $37,000
D. $15,000
Question-22
When preparing the statement of cash flows by the indirect method, if current liabilities increase the difference is __________.
A. added to net income
B. added to investments
C. deducted from net income
D. subtracted from investments
Question-23
When using the indirect method, which of the following would be included in the net cash flows from operating activities section of a cash flow statement?
A. sales of plant, property and equipment
B. making loans and paying out interest
C. payment of interest and expenses
D. issuing bonds and notes
Question-24
The statement of cash flows provides information about all of the following except __________.
A. organizing activities
B. investing activities
C. operating activities
D. financing activities
Question-25
Management has authorized the purchase of a large quantity of inventory for early December. The purchase will have credit terms of 2/10, n/30, and they will authorize payment by the discount date. How will this decision affect the period's cash flows from operations—indirect method?
A. It will increase this period's cash flows from operations.
B. It will decrease this period's cash flows from operations.
C. It will not affect this period's cash flows from operations.
D. This does not affect cash flows from operations.
Question-26
A statement of cash flows __________.
A. has three main sections: net cash flow from operating, investing, and financing activities
B. may be computed directly or indirectly
C. is a statement used to better understand the financing and investing activities
D. all of the above
Question-27
Big Toy Corporation's records show a profit of $30,000, depreciation expenses of $10,000, and cash dividends declared and paid of $5,000. The amount of cash used in operating activities using the indirect method is __________.
A. $40,000
B. $30,000
C. $20,000
D. $10,000
Question-28
Using the indirect method for cash flows, depreciation expense is added to net income to determine the __________.
A. cash flow from investing activities
B. cash flow from financing activities
C. cash flow from operating activities
D. cash flow from fixed asset activities
Question-29
Trundle Corporation reported a net income of $40,000, depreciation expenses of $1,000, sales of additional common shares of $25,000, and a decrease in Accounts Payable of $8,000. Net cash flow from operating activities using the indirect method is __________.
A. $41,000
B. $32,000
C. $33,000
D. $58,000
Question-30
When preparing the statement of cash flows by the indirect method, if accumulated depreciation increases the difference is __________.
A. added to net income
B. added to investments
C. deducted from net income
D. not considered in the statement of cash flows using the indirect method
Question-31
Rick Corporation's Accounts Receivable decreased by $25,000 during the year. What is the adjustment to the cash flow statement when it is prepared by the indirect method?
A. Subtract the decrease from the net income in operating activities.
B. Add the decrease to the net income in operating activities.
C. Add the decrease in the investing activities section.
D. Subtract the decrease in the financing activities.
Question-32
An inflow of cash from investing activities would be __________.
A. the issuance of stock
B. the sale of investment in equity securities
C. interest received on loans
D. the purchase of fixed assets
Question-33
Transactions involving the purchase and sale of fixed assets would be considered __________.
A. buying and selling activities
B. financing activities
C. operating activities
D. investing activities
Question-34
The activity that is probably the most important indicator of financial health is the net cash flow from __________.
A. buying and selling activities
B. financing activities
C. operating activities
D. investing activities
Question-35
When using the direct method to determine the net cash flows from operating activities, major categories would not include __________.
A. cash received from customers
B. cash paid for salaries
C. cash paid for dividends
D. cash paid for inventory
Question-36
Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in __________.
A. the operating activities section
B. the financing activities section
C. the investing activities section
D. none of the above
Question-37
Operating expenses other than depreciation for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be __________.
A. $335,000
B. $342,000
C. $328,000
D. $7,000
Question-38
Operating expenses other than depreciation for the year were $400,000. Accrued expenses payable increased by $35,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be __________.
A. $400,000
B. $435,000
C. $365,000
D. $35,000
Question-39
A statement of cash flows is helpful in __________.
A. evaluating cash flows
B. comparing cash flows
C. predicting future cash flows
D. all of the above
Question-40
A cash outflow from a financing activity would be __________.
A. paying cash dividends
B. buying debt and equity securities
C. paying interest on notes payable
D. making payments for additional inventory
A03 Online Exam 7_06 Score 97.5%
Question-1
Profitability ratios measure __________.
A. a company's ability to earn profits
B. a company's ability to meet short-term obligations
C. how well a company is using debt versus equity
D. how effectively a company is using its assets
Question-2
The current ratio determines the ability of a company to __________.
A. pay off all payables
B. pay off current payables
C. manage its ability to earn profit
D. use its equity
Question-3
Noble Company's accounts receivable turnover was 18.2 in Year 1 and 24.6 in Year 2. This change in accounts receivable turnover indicates __________.
A. the company is not selling its inventory as fast
B. the company is selling its inventory faster
C. the company's customers are paying faster
D. the company's customers are paying slower
Question-4
If management wishes to evaluate the amount of assets that were financed by creditors, they could use the __________.
A. debt to total assets
B. rate of return on common stockholders' equity
C. debt to total liabilities
D. times interest earned
Question-5
What was the percentage of decrease in the Accounts Receivable account if the receivables were $80,000 in Year 1 and $60,000 in Year 2?
A. (25%.
B. 33.33%
C. (33.33%.
D. 25%
Question-6
The current ratio for a company with current assets of $70,000, current liabilities of $50,000, total assets of $150,000, and net sales of $80,000, would be __________.
A. 1.4
B. 0.714
C. 3.0
D. 0.875
Question-7
The ratio that indicates how many days it takes to turn accounts receivable into cash is the __________.
A. accounts receivable turnover ratio
B. average turnover ratio
C. average collection period
D. quick assets turnover ratio
Question-8
If Rick's sales decreased from $90,000 (Year 1. to $45,000 (Year 2. and its cost of goods sold decreased from $30,000 (Year 1. to $20,000 (Year 2., then vertical analysis based on sales would show the following decreases for cost of goods sold for the two periods __________.
A. 33.33% and 44.44%.
B. 44.44% and 33.33%.
C. 300% and 225%.
D. None of the above.
Question-9
Debt management ratios measure __________.
A. how effectively a company is using its cash
B. how well a company is using debt versus equity position
C. a company's ability to earn profit
D. a company's ability to meet payable obligations
Question-10
If current assets were $100,000 in 20x7 and $88,000 in 20x8, what was the amount of increase or decrease?
A. The percentage increase is 13.64%.
B. The percentage decrease is 12%.
C. The percentage decrease is 13.64%.
D. The percentage increase is 12%.
Question-11
If Cash is $2,345 in 20X2 and $3,671 in 20X1, what is the percent of increase or (decrease. from 20X1 to 20X2?
A. 56.55%
B. (56.55%.
C. 36.12%
D. (36.12%.
Question-12
The sales for Mary's Services for Years 1, 2, and 3 are $25,000, $45,000, $60,000, respectively. The trend percentage for Year 3 is __________.
A. 42%
B. 240%
C. 140%
D. 58%
Question-13
If beginning and ending inventories are $100,000 and 150,000, respectively, and the cost of goods sold is $450,000, what is the inventory turnover ratio?
A. 4.50
B. 3.00
C. 3.60
D. 0.28
Question-14
The lower the times interest earned ratio, the more likely __________.
A. a default in payment will occur
B. a business needs to borrow money
C. a business will suffer a loss
D. interest payments can be made
Question-15
If Rick Company's sales increased from $40,000 to $80,000 and its cost of goods sold increased from $30,000 to $50,000, then vertical analysis based on sales would show the cost of goods sold for the two periods as __________.
A. 75% and 62.5%
B. 62.5% and 75%
C. 133.33% and 160%
D. 160% and 133.33%
Question-16
Compute the gross profit rate when net sales are $350,000 and gross profits are $178,500.
A. 51:10
B. 54%
C. 51%
D. 54:10
Question-17
Which statement below best describes the quick (acid test. ratio?
A. The acid test ratio considers only the most liquid assets: cash, accounts receivable, and temporary investments.
B. The current ratio includes only the assets most easily converted into cash.
C. The acid test adds merchandise inventory and prepaid expenses in the computation of current assets.
D. none of the above
Question-18
The inventory turnover ratio calculates __________.
A. how many times the inventory turns over in one period
B. number of times inventory is purchased in one period
C. the dollar amount of change in inventory in one period
D. none of the above
Question-19
If management wishes to evaluate the ability of a business to provide funding to cover operating expenses, they could use the __________.
A. rate of return on total assets
B. rate of return on common stockholders' equity
C. gross profit rate
D. times interest earned
Question-20
In a comparative balance sheet, the ending Cash was $315,000 in 2011 and $270,000 in 2012. The net increase or decrease from 2011 to 2012 is __________.
A. 86.0%
B. 14.3%
C. 26.4%
D. 16.7%
Question-21
Gross profit by department appears on the __________.
A. balance sheet
B. statement of retained earnings
C. statement of cash flows
D. income statement
Question-22
The women's shoe department shows gross sales of $245,000 with the cost of the shoes $147,000. The men's shoe department shows gross sales of $184,000 with the cost of the shoes $110,000. What is the gross profit for each department?
A. $392,000 and $294,000
B. $245,000 and $184,000
C. $98,000 and $74,000
D. $429,000 and $257,000
Question-23
When preparing an income statement showing departmental contribution margin, __________.
A. indirect expenses are combined with direct expenses
B. indirect departmental expenses are added to contribution margin
C. direct expenses are subtracted from contribution margin on sales (Incorrect)
D. none of the above
Question-24
The cosmetic department experienced the following revenue and expenses during December:
Sales
$86,000
Cost of Goods Sold
$29,000
Direct Operating Expenses
$7,000
Indirect Operating Expenses
$3,000
The cosmetic department's contribution margin is __________.
A. $57,000
B. $50,000
C. $53,000
D. $47,000
Question-25
Supporters of the contribution margin approach believe that __________.
A. indirect expenses should be departmentalized
B. indirect expenses should not be used for evaluating departmental performance
C. indirect expenses are proportionally charged to each department
D. direct expenses should not be used in evaluating departmental performance
Question-26
If the gross sales for the computer department are $3,700 and the book department's gross sales are $6,300, what is the allocation for advertising expense of $750 to these departments, based on gross sales?
A. computer department $425; book department $325
B. computer department $375; book department $375
C. computer department $277.50; book department $472.50
D. computer department $462.50; book department $287.50
Question-27
Normally the report prepared for a department is a(n. __________.
A. cash flow statement
B. statement of equity
C. income statement
D. balance sheet
Question-28
What is the total gross profit of a company that has three departments (A, B, and C. with net sales of $200,000, $164,000, and $286,000, and cost of goods sold is $86,000, $92,000, and $82,000?
A. $390,000
B. $650,000
C. $400,000
D. $260,000
Question-29
Calculate a department's gross profit on sales given the following:
Sales
$1,600
Operating expenses
$350
Cost of goods sold
$900
A. $350
B. $700
C. $1,050
D. $1,250
Question-29
To determine how each profit center is performing, management would analyze the __________.
A. income tax rate
B. indirect expenses
C. gross profit for each profit center
D. other expenses
Question-30
Windermere Corporation has 25,000 square feet in Department A, 20,000 square feet in Department B, and 55,000 square feet in Department C. Janitorial services as based on the square footages of each department. How will the $35,000 of janitorial services be allocated?
A. $19,250 to C, $7,000 to B, and $8,750 to A
B. $19,250 to A, $7,000 to B, and $8,750 to C
C. split evenly ($11,666.67. to each department
D. It cannot be determined by given information.
Question-31
Direct expenses are expenses that __________.
A. can be identified with a specific department
B. cannot be identified with a specific department
C. can be identified with more than one department
D. none of the above
Question-32
Calculate the costume jewelry department net income given the following:
Sales
$1,300
Direct Operating Expenses
300
Indirect Operating Expenses
250
Cost of Goods Sold
1,000
A. $1,300
B. $1,000
C. $300
D. -$250
Question-34
The photography department in a department store experienced the following revenue and expenses during October:
Sales
$11,000
Cost of Goods Sold
$5,000
Direct Operating Expenses
$800
Indirect Operating Expenses
$2,100
The photography department's gross profit on sales is __________.
A. $3,100
B. $5,200
C. $6,000
D. $8,100
Question-35
When a company tracks gross profit by department, the sales journal will __________.
A. not differ from a company that does not track gross profit by department
B. have a separate column for accounts receivable for each department
C. have a separate column for sales for each department
D. have a column for purchases for each department
Question-36
What is the purpose of determining the contribution margin?
A. to show the contribution by a department toward covering indirect costs
B. to help determine whether to eliminate a department
C. to show the effect on net income of each department
D. all of the above
Question-37
Compute the contribution margin for the video department when gross profits are $880,000, direct expenses are $370,000, and indirect expenses are $190,000.
A. $320,000
B. $690,000
C. $510,000
D. $700,000
Question-38
The candy department experienced the following revenue and expenses during October:
Sales
$13,500
Cost of Goods Sold
$8,200
Direct Operating Expenses
$1,100
Indirect Operating Expenses
$700
The candy department's net income is __________.
A. $6,400
B. $3,500
C. $4,200
D. $5,300
Question-39
A unit or department that incurs costs and generates revenues is a(n. __________.
A. expense center
B. direct center
C. cost center
D. profit center
Question-40
A maintenance department would be an example of a __________.
A. cost center
B. direct expense
C. profit center
D. none of the above
A03 Online Exam 8_07 Score 85% (Incorrect answers are marked)
Question-1
Calculate the cost of goods sold when beginning finished goods inventory equals
$70,000, ending finished goods inventory is $85,000, and cost of goods
manufactured is $600,000.
A. $615,000
B. $445,000
C. $685,000
D. $585,000
Question-2
Which of the following is an approach to sensitivity analysis?
A. contribution
B. distribution
C. margin
D. profit
Question-3
The formula for cost of goods manufactured is __________.
A. raw materials plus direct labor minus overhead plus beginning
work-in-process inventory plus ending work-in-process inventory
B. raw materials minus direct labor plus overhead plus beginning
work-in-process inventory plus ending work-in-process inventory
C. beginning work-in-process plus total manufacturing cost minus
ending work-in-process
D. raw materials plus direct labor less overhead plus beginning
work-in-process inventory less ending work-in-process inventory
Question-4
If direct labor for the month is $40,000, overhead is applied based on direct
labor, annual overhead is $600,000, and annual direct labor is $1,000,000, what
is the entry to charge direct labor to production?
A. debit Work-in-Process Inventory $40,000; credit Payroll $40,000
B. debit Overhead-Applied $40,000; credit Work-in-Process
Inventory $40,000
C. debit Work-in-Process Inventory $24,000; credit
Overhead-Applied $24,000
D. debit Work-in-Process Inventory $66,000; credit
Overhead-Applied $66,000
Question-5
If direct labor for the month is $80,000 and overhead is applied based on 75%
of direct labor dollars, what is the entry to apply overhead?
A. debit Work-in-Process Inventory $80,000; credit Payroll $80,000
B. debit Overhead-Applied $60,000; credit Work-in-Process
Inventory $60,000
C. debit Work-in-Process Inventory $60,000; credit
Overhead-Applied $60,000
D. debit Work-in-Process Inventory $80,000; credit Overhead-Applied
$80,000
Question-6
An element of sensitivity analysis includes __________.
A. unidimensional changes (Incorrect)
B. a sole focus on profit
C. simultaneous changes
D. a financial accounting approach
Question-7
Which of the following is part of a firm's master budget?
A. pro forma budget (Incorrect)
B. inventory purchases budget
C. operating budget
D. schedule of cash receipts budget
Question-8
During the week ending on November 30, total factory payroll incurred was
$6,000. Of this total, 80% was for direct labor. The entry to record the
payroll distribution would include __________.
A. debit Work-in-Process Inventory $4,800 and Overhead-Control
$1,200
B. debit Work-in-Process Inventory $6,000
C. debit Work-in-Process Inventory $4,800 and Overhead-Applied
$1,200
D. debit Work-in-Process Inventory $4,800 and Indirect Labor
Expense $1,200
Question-9
Candyland completed the manufacturing process. The entry to transfer the
product to finished goods is __________.
A.
Raw Materials Inventory
Finished Goods Inventory
B.
Finished Goods Inventory
Cost of Goods Sold
C.
Finished Goods Inventory
Work-in-Process Inventory
D.
Finished Goods Inventory
Raw Materials Inventory
Question-10
Sensitivity analysis is part of __________.
A. income statement analysis
B. gross profit analysis
C. cost analysis
D. cost-volume-profit analysis
Question-11
The entry to record rent expense $9,000, supervision expense $19,000, and
depreciation expense $7,000 to overhead is __________.
A. debit Overhead-Applied $35,000; credit Rent Expense $9,000;
credit Supervision $19,000; credit Depreciation Expense $7,000
B. debit Overhead-Control $35,000; credit Rent Expense $9,000;
credit Supervision $19,000; credit Depreciation Expense $7,000
C. debit Overhead-Applied $35,000; credit Overhead-Control $35,000
D. none of the above (Incorrect)
Question-12
What is the journal entry to record issuing supplies from the storeroom?
A. debit Overhead-Applied; credit Raw Materials Inventory
B. debit Overhead-Control; credit Supplies Inventory
C. debit Supplies Inventory; credit Overhead-Applied
D. debit Overhead-Applied; credit Supplies Inventory
Question-13
A budget enables managers to __________.
A. focus solely on production
B. adopt lax standards
C. abrogate responsibility for financial goals
D. achieve company objectives
Question-14
ABC Restaurant's revenue budget reflects the following information for
February:
Food sales
$260,000
Beverage and liquor sales
$140,000
Total sales
$300,000
ABC expects revenue to increase by 5% during both March and April. What is the
budgeted amount of beverage and liquor sales revenue for March?
A. $145,000
B. $154,350
C. $147,000
D. $150,000
Question-15
Manufacturing overhead includes all manufacturing costs __________.
A. including raw materials
B. including overhead
C. excluding raw materials and direct labor
D. none of the above
Question-16
Factory Supplies Expense, Depreciation Expense-Factory, and Heat, Light, and
Power-Factory appear on which section of the worksheet?
A. statement of cost of goods manufactured
B. balance sheet
C. income statement
D. statement of cost of goods sold
Question-17
Omega.com sold 25 jet skis for $7,000 which cost $5,000. The entry to record
the sale would include __________.
A. credit to Finished Goods Inventory for $5,000
B. credit to Sales for $7,000
C. debit to Cost of Goods Sold for $5,000
D. all of the above
Question-18
ABC Restaurant's revenue budget reflects the following information for
February:
Food sales
$260,000
Beverage and liquor sales
$140,000
Total sales
$300,000
ABC expects revenue to increase by 5% during both March and April. What is the
budgeted amount of food sales revenue for April?
A. $286,650
B. $272,650
C. $288,250
D. $292,350
Question-19
Journal entries crediting Payroll and debiting Work-in-Process Inventory are
made for __________.
A. administrative salaries
B. hourly manufacturing labor
C. foremen's salaries
D. raw materials
Question-20
The entry to record the requisition of supplies from the storeroom would
include __________.
A. debit to Raw Materials; credit to Work-in-Process
B. debit to Overhead-Applied; credit to Overhead-Control
C. debit to Work-in-Process; credit to Overhead-Control
D. debit to Overhead-Control; credit to Supplies Inventory
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