Professional Documents
Culture Documents
PART A.1: WSU STUDENTS 50 MCQS (GP & ISB STUDENTS MOVE TO
PART A.2 PLEASE)
Question 3: Financial accounting provides economic and financial information for all of
the following except
a. creditors.
b. investors.
c. managers.
Question 4: Net income for the period is determined by subtracting total expenses and
drawings from total revenues.
a. True
b. False
Question 5: Sam Ryo is the proprietor (owner) of Sam's, a retailer of golf apparel.
When recording the financial transactions of Sam's, Sam does not record an entry for a
car he purchased for personal use. Sam took out a personal loan to pay for the car.
What accounting concept guides Sam's behavior in this situation?
a. True
b. False
Question 7: Which one of the following represents the expanded basic accounting
equation?
Question 8: A debit is not the normal balance for which account listed below?
a. Drawings
b. Cash
c. Accounts Receivable
d. Service Revenue
Question 10: On June 1, 2014, Portugal Inc. reported a cash balance of $12,000.
During June, Portugal made deposits of $5,000 and made disbursements totalling
$14,000. What is the cash balance at the end of June?
Question 11: The cash basis of accounting is not in accordance with generally
accepted accounting principles.
a. True
b. False
Question 12: Quirk Company purchased office supplies costing $6,000 and debited
Office Supplies for the full amount. At the end of the accounting period, a physical count
of office supplies revealed $2,400 still on hand. The appropriate adjusting journal entry
to be made at the end of the period would be
Question 14: If a business has received cash in advance of services performed and
credits a liability account, the adjusting entry needed after the services are performed
will be
a. True
b. False
b. so that all assets, liabilities, and owner’s capital accounts will have zero balances
c. in order to transfer net income (or loss) and owner’s drawings to the owner’s capital
account.
Question 18: The income statement for the month of June, 2016 of Snap Shot, Inc.
contains the following information:
Revenues $7,300
Expenses:
Question 19: The income statement for the month of June, 2016 of Snap Shot, Inc.
contains the following information:
Revenues $7,300
Expenses:
a. closing entries.
b. financial statements.
d. adjusting entries.
Question 21: The steps in the accounting cycle are different for a merchandising
company than for a service company.
a. True
b. False
Question 24: Flynn Company purchased merchandise inventory with an invoice price
of $5,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Flynn
Company pays within the 10 days?
a. $5,000
b. $4,900
c. $4,500
d. $4,600
Question 25: The collection of a $600 account within the 2 percent discount period will
result in a
Question 26: The first-in, first-out (FIFO) inventory method results in an ending
inventory valued at the most recent cost.
a. True
b. False
Question 27: The LIFO inventory method assumes that the cost of the latest units
purchased are
Question 28: Two companies report the same cost of goods available for sale but each
employs a different inventory costing method. If the price of goods has increased
during the period, then the company using
a. LIFO will have the highest ending inventory.
Assuming that a perpetual inventory system is used, what is the ending inventory on a
FIFO basis?
a. $2,748
b. $2,754
c. $2,778
d. $5,796
Question 30: Under the direct write-off method, no attempt is made to match bad debts
expense to sales revenues in the same accounting period.
a. True
b. False
Question 31: The existing balance in Allowance for Doubtful Accounts is considered in
computing bad debts expense in the
a. direct write-off method.
Question 32: An aging of a company's accounts receivable indicates that $9,000 are
estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit
balance, the adjustment to record bad debts for the period will require a
Question 33: An aging of a company's accounts receivable indicates that $3,000 are
estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 debit
balance, the adjustment to record bad debts for the period will require a
Question 34: Using the units-of-activity method of depreciating factory equipment will
generally result in more depreciation expense being recorded over the life of the asset
than if the straight-line method had been used.
a. True
b. False
Question 35: Pine Company acquires land for $86,000 cash. Additional costs are as
follows:
a. $86,000.
b. $87,690.
c. $89,610.
d. $89,370.
Question 36: Equipment was purchased for $75,000. Freight charges amounted to
$3,500 and there was a cost of $10,000 for building a foundation and installing the
equipment. It is estimated that the equipment will have a $15,000 salvage value at the
end of its 5-year useful life. Depreciation expense each year using the straight-line
method will be
a. $17,700.
b. $14,700.
c. $12,300.
d. $12,000.
Question 37: A company purchased office equipment for $40,000 and estimated a
salvage value of $8,000 at the end of its 5-year useful life. The constant percentage to
be applied against book value each year if the double-declining-balance method is used
is
a. 20%.
b. 25%.
c. 40%.
d. 4%.
Question 38: Ending finished goods inventory appears on both the balance sheet and
the income statement of a manufacturing company.
a. True
b. False
a. general-purpose.
b. macro-reports.
c. special-purpose.
ending WIP.
ending WIP.
ending WIP.
beginning WIP.
Question 42: For CVP analysis, both variable and fixed costs are assumed to have a
linear relationship within the relevant range of activity.
a. True
b. False
Question 43: A cost which remains constant per unit at various levels of activity is a
a. variable cost.
b. fixed cost.
c. mixed cost.
d. manufacturing cost.
Question 44: Two costs at Watson, Inc. appear below for specific months of operation.
Question 45: Which of the following is not a plausible explanation of why variable costs
often behave in a curvilinear fashion?
a. Labor specialization
b. Overtime wages
Question 46: The manufacturing overhead budget generally has separate sections for
variable, mixed, and fixed costs.
a. True
b. False
Question 47: Which is the last step in developing the master budget?
a. Preparing the budgeted balance sheet
b. Cash budget
Question 49: In a production budget, total required units are the budgeted sales units
plus
c. desired ending finished goods units plus beginning finished goods units.
d. desired ending finished goods units minus beginning finished goods units.
Question 50: Which of the following does not appear as a separate section on the cash
budget?
a. Cash receipts
b. Cash disbursements
c. Capital expenditures
d. Financing
PART A.2: GP & ISB STUDENTS 40 MCQS (WSU STUDENTS MOVE TO
PART A.1 PLEASE)
Question 3: Financial accounting provides economic and financial information for all of
the following except
a. creditors.
b. investors.
c. managers.
Question 4: Net income for the period is determined by subtracting total expenses and
drawings from total revenues.
a. True
b. False
Question 5: Sam Ryo is the proprietor (owner) of Sam's, a retailer of golf apparel.
When recording the financial transactions of Sam's, Sam does not record an entry for a
car he purchased for personal use. Sam took out a personal loan to pay for the car.
What accounting concept guides Sam's behavior in this situation?
a. True
b. False
Question 7: Which one of the following represents the expanded basic accounting
equation?
Question 8: A debit is not the normal balance for which account listed below?
a. Drawings
b. Cash
c. Accounts Receivable
d. Service Revenue
Question 9: On January 14, Edamame Industries purchased supplies of $700 on
account. The entry to record the purchase will include
Question 10: On June 1, 2014, Portugal Inc. reported a cash balance of $12,000.
During June, Portugal made deposits of $5,000 and made disbursements totalling
$14,000. What is the cash balance at the end of June?
Question 11: The cash basis of accounting is not in accordance with generally
accepted accounting principles.
a. True
b. False
Question 12: Quirk Company purchased office supplies costing $6,000 and debited
Office Supplies for the full amount. At the end of the accounting period, a physical count
of office supplies revealed $2,400 still on hand. The appropriate adjusting journal entry
to be made at the end of the period would be
Question 14: If a business has received cash in advance of services performed and
credits a liability account, the adjusting entry needed after the services are performed
will be
a. True
b. False
b. so that all assets, liabilities, and owner’s capital accounts will have zero balances
c. in order to transfer net income (or loss) and owner’s drawings to the owner’s capital
account.
Question 18: The income statement for the month of June, 2016 of Snap Shot, Inc.
contains the following information:
Revenues $7,300
Expenses:
Question 19: The income statement for the month of June, 2016 of Snap Shot, Inc.
contains the following information:
Revenues $7,300
Expenses:
a. closing entries.
b. financial statements.
d. adjusting entries.
Question 21: The steps in the accounting cycle are different for a merchandising
company than for a service company.
a. True
b. False
Question 24: Flynn Company purchased merchandise inventory with an invoice price
of $5,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Flynn
Company pays within the 10 days?
a. $5,000
b. $4,900
c. $4,500
d. $4,600
Question 25: The collection of a $600 account within the 2 percent discount period will
result in a
Question 26: The first-in, first-out (FIFO) inventory method results in an ending
inventory valued at the most recent cost.
a. True
b. False
Question 27: The LIFO inventory method assumes that the cost of the latest units
purchased are
Question 28: Two companies report the same cost of goods available for sale but each
employs a different inventory costing method. If the price of goods has increased
during the period, then the company using
a. LIFO will have the highest ending inventory.
Assuming that a perpetual inventory system is used, what is the ending inventory on a
FIFO basis?
a. $2,748
b. $2,754
c. $2,778
d. $5,796
Question 30: Under the direct write-off method, no attempt is made to match bad debts
expense to sales revenues in the same accounting period.
a. True
b. False
Question 31: The existing balance in Allowance for Doubtful Accounts is considered in
computing bad debts expense in the
a. direct write-off method.
Question 32: An aging of a company's accounts receivable indicates that $9,000 are
estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit
balance, the adjustment to record bad debts for the period will require a
Question 33: An aging of a company's accounts receivable indicates that $3,000 are
estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 debit
balance, the adjustment to record bad debts for the period will require a
Question 34: Using the units-of-activity method of depreciating factory equipment will
generally result in more depreciation expense being recorded over the life of the asset
than if the straight-line method had been used.
a. True
b. False
Question 35: Pine Company acquires land for $86,000 cash. Additional costs are as
follows:
a. $86,000.
b. $87,690.
c. $89,610.
d. $89,370.
Question 36: Equipment was purchased for $75,000. Freight charges amounted to
$3,500 and there was a cost of $10,000 for building a foundation and installing the
equipment. It is estimated that the equipment will have a $15,000 salvage value at the
end of its 5-year useful life. Depreciation expense each year using the straight-line
method will be
a. $17,700.
b. $14,700.
c. $12,300.
d. $12,000.
b. a cash transaction and would be reported in the body of a statement of cash flows.
d. only reported if the statement of cash flows is prepared using the direct method.
Question 38: Joy Elle’s Vegetable Market had the following transactions during 2008:
a. $13,000
b. $25,000
c. $14,000
d. $9,000
Question 39: The formula for horizontal analysis of changes since the base period is
the current year amount
b. minus the base year amount divided by the base year amount.
c. minus the base year amount divided by the current year amount.
d. plus the base year amount divided by the base year amount.
Question 40: Walker Clothing Store had a balance in the Accounts Receivable account
of $780,000 at the beginning of the year and a balance of $820,000 at the end of the
year. Net credit sales during the year amounted to $8,000,000. The average collection
period of the receivables in terms of days was
a. 30 days.
b. 365 days.
c. 10 days.
d. 37 days.
Question 51: In short essay (100-150 words) identify the differences between perpetual
and periodic inventory system.
Question 52: In short essay (100-150 words) explain the distinguishing features of
managerial accounting and compare it with financial accounting.
Question 53: In short essay (100-150 words) distinguish between variable and fixed
costs and mixed costs.
Question 54: Jill Hayes operates a bed and breakfast hotel in a resort area in the
Smoky Mountains. Depreciation on the hotel is $60,000 per year. Jill employs a
maintenance person at an annual salary of $32,000 and a cleaning person at an annual
salary of $24,000. Real estate taxes are $10,000 per year. The rooms rent at an
average price of $60 per person per night including breakfast. Other costs are laundry
and cleaning service at a cost of $8.00 per person per night and the cost of food which
is $4.00 per person per night.
a) Determine the number of rentals and the sales revenue Jill needs to break even
using the contribution margin technique.
b) If the current level of rentals is 3,000, by what percentage can rentals decrease
before Jill has to worry about having a net loss?
c) Jill is considering upgrading the breakfast service to attract more business and
increase prices. This will cost an additional $3.00 for food costs per person per night. Jill
feels she can increase the room rate to $65 per person per night. Determine the number
of rentals and the sales revenue Jill needs to break even if the changes are made.
Question 55: Tanner Company purchased equipment on January 1, 2007 for $70,000.
It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-
year useful life. It is also estimated that the equipment will produce 100,000 units over
its 5-year life.
a) Compute the amount of depreciation expense for the year ended December 31,
2007, using the straight-line method of depreciation.
b) If 16,000 units of product are produced in 2007 and 24,000 units are produced in
2008, what is the book value of the equipment at December 31, 2008? The company
uses the units-of-activity depreciation method.
Question 41: Journalize the following transactions under perpetual inventory system
On October 1, Nguyen Mai Bicycle Store had an inventory of 20 ten speed bicycles at a
cost of $200 each. During the month of October, the following transactions occurred.
Oct. 4 Purchased 30 bicycles at a cost of $200 each from Son Tra Bicycle Company,
Oct. 6 Sold 18 bicycles to Dieu Nhi for $300 each, terms 2/10, n/30.
Oct. 7 Received credit from Son Tra Bicycle Company for the return of 2 defective
bicycles.
Oct. 13 Issued a credit memo to Dieu Nhi for the return of a defective bicycle.
Oct. 14 Paid Son Tra Bicycle Company in full for the payment.
Question 42: Alice Company sells many products. Whamo is one of its popular items.
Below is an analysis of the inventory purchases and sales of Whamo for the month of
March. Alice Company uses the perpetual inventory system.
a) Using the FIFO assumption, calculate the amount charged to cost of goods sold for
March. (Show computations)
b) Using the LIFO assumption, calculate the amount assigned to the inventory on hand
on March 31. (Show computations)
Question 43: Kiley Company had a $700 credit balance in Allowance for Doubtful
Accounts at December 31, 2008, before the current year's provision for uncollectible
accounts. An aging of the accounts receivable revealed the following:
a) Prepare the adjusting entry on December 31, 2008, to recognize bad debts expense.
b) Assume the same facts as above except that the Allowance for Doubtful Accounts
account had a $500 debit balance before the current year's provision for uncollectible
accounts. Prepare the adjusting entry for the current year's provision for uncollectible
accounts.
c) Assume that the company has a policy of providing for bad debts at the rate of 1% of
sales, that sales for 2008 were $550,000, and that Allowance for Doubtful Accounts had
a $650 credit balance before adjustment. Prepare the adjusting entry for the current
year's provision for bad debts.
Question 44:
a) Watts Company purchased equipment in 2001 for $90,000 and estimated a $6,000
salvage value at the end of the equipment's 10-year useful life. At December 31, 2007,
there was $58,800 in the Accumulated Depreciation account for this equipment using
the straight-line method of depreciation. On March 31, 2008, the equipment was sold for
$24,000.
Prepare the appropriate journal entries to remove the equipment from the books of
Watts Company on March 31, 2008.
b) Reynolds Company purchased a new machine for $300,000. It is estimated that the
machine will have a $30,000 salvage value at the end of its 5-year useful service life.
Prepare a depreciation schedule which shows the annual depreciation expense on the
machine for its 5-year life, using: double-declining balance method.
Question 45: