A small neighborhood barber shop that is operated by its owner would likely be organized as a

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Joint venture

Partnership

Corporation

Sole proprietorship

Starsky and Hutch start a partnership. Starsky contributes a building that he purchased 10 years ago for $100,000. Because the accumulated depreciation on the building on the date of formation of the partnership is $25,000, the book value is $75,000. The fair market value is $110,000. For what amount will Starsky’s capital account be credited on the books of the partnership?

$25,000

$100,000

$75,000

$110,000

The individual assets invested by a partner in a partnership

Are jointly owned by all partners.

Revert back to that partner if the partnership liquidates.

Determine that partner’s share of net income or loss for the year.

Determine the scope of authority of that partner.

Which of the following is NOT a characteristic of a partnership?

Double taxation

Unlimited liability

Mutual agency

Ease of formation

On January 1, 2006, Victor and Nikki have capital account balances of $80,000 and $100,000. Their partnership agreement provides for interest allowances of $8,000 and $10,000 respectively; salaries of $30,000 to Victor and $24,000; and the remainder divided 6:4 respectively. Victor’s share of the $82,000 partnership net income would be:

$43,000

$49,200

$44,000

$41,000

Which of the following statements is correct?

The balance sheet of a sole proprietorship will show three or more capital accounts.

The balance sheet of a corporation will show fifty or more capital accounts.

The balance sheet of a partnership will show two or more capital accounts.

All of these statements are correct.

A corporation has the following account balances. Common stock, $1 par value, $60,000, Paid-in-Capital in Excess of Par, $1,300,000. Based on this information, the

Number of shares issued are 60,000.

Legal capital is $1,360,000.

Average price per share issued is $22.50.

Number of shares outstanding are 1,360,000.

If Vickers Company issues 4,000 shares of $5 par value common stock for $140,000,

Paid-in Capital in Excess of Par will be credited for $20,000.

Common Stock will be credited for $140,000.

Cash will be debited for $120,000.

Paid-in Capital in Excess of Par will be credited for $120,000.

Karl Corporation was organized on January 2, 2010. During 2013, Karl issued 20,000 shares at $24 per share, purchased 3,000 shares of treasury stock at $26 per share, and had net income of $300,000. What is the total amount of stockholders’ equity at December 31, 2013?

$708,000

$702,000

$720,000

$640,000

Jarret Company issued 600 shares of no-par common stock for $8,800. Which of the following journal entries would be made if the stock has no stated value?

Cash 8,800 Common Stock 8,800

Cash 8,800 Common Stock 600 Paid-in Capital in Excess of Par 8,200

Common Stock 8,800 Cash 8,800

Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $90 per share. The entry to record the transaction will consist of a debit to Cash for $900,000 and a credit or credits to

Paid-in Capital from Preferred Stock for $900,000.

Preferred Stock for $900,000.

Preferred Stock for $400,000 and Paid-in Capital from Preferred Stock for $500,000.

Preferred Stock for $500,000 and Paid-in Capital in Excess of Par – Preferred Stock for $400,000.

The following selected amounts are available for Clark Company Retained earnings (beginning) $800 Net loss 150 Cash dividends declared 100 Stock dividends declared 100 What is its ending retained earnings balance?

$700

$450

$650

$600

The trial balance of Houston Inc. Includes the following balances: Common Stock, $28,000; Paid-in Capital in Excess of Par, $64,000; Treasury Stock, $6,000; Preferred Stock, $30,000. Capital stock totals

$128,000.

$96,000.

$58,000.

$122,000.

The statement of cash flows

Is another name for the income statement.

Must be prepared on a daily basis.

Summarizes the operating, financing, and investing, activities of an entity.

Is a special section fo the income statement.

The acquisition of land by issuing common stock is

A noncash transaction which is not reported in the body of a statement of cash flows.

Only reported if the statement of cash flows is prepared using the direct method.

A cash transaction and would be reported in the body of a statement of cash flows.

A noncash transaction and would be reported in the body of a statement of cash flows.

Indicate where the event common stock issued for cash would appear, if at all, on the indirect statement of cash flows.

Investing activities section

Operating activities section

Does not represent a cash flow

Financing activities section

When equipment is sold for cash, the amount received is reflected as a cash

Inflow in the operating section.

Outflow in the operating section.

Inflow in the financing section.

Inflow in the investing section.

Which of the following changes will be rported in the financing activities section of the statement of cash flows? 1. Declaration and payment of a cash dividend during the period. 2. Net income for the period.

Neither 1 nor 2.

Both 1 and 2.

Prior period adjustments are reported in the:

Income statement.

Balance sheet.

Statement of retained earnings.

Statement of financial statements.

Manufacturing costs include

Direct materials and direct labor only.

Direct materials, direct labor, and manufacturing overhead.

Direct materials and manufacturing overhead only.

Direct labor and manufacturing overhead only.

Which one of the following represents a period cost?

The VP of Sales’ salary and benefits

Fringe benefits associated with factory workers

Overhead allocated to the manufacturing operations

Labor costs associated with quality control

The product cost that is most difficult to associate with a product is

Advertising.

Manufacturing overhead.

Direct labor.

Direct materials.

The inventory accounts that show the cost of completed goods on hand and the goods applicable to production that is only partially completed are, respectively

Raw Materials Inventory and Work in Process Inventory.

Work in Process Inventory and Raw Materials Inventory.

Finished Goods Inventory and Work in Process Inventory.

Finished Goods Inventory and Raw Materials Inventory.

Given the following data for Harder Company, compute cost of goods manufactured: Direct materials used $120,000 Beginning work in process $20,000 Direct labor 200,000 Ending work in process 10,000 Manufacturing overhead 150,000 Beginning finished goods 25,000 Operating expenses 175,000 Ending finished goods 15,000

$480,000

$490,000

$460,000

$470,000

Worth Company reported the following year-end information: beginning work in process inventory, $180,000; cost of goods manufactured, $816,000; beginning finished goods inventory, $252,000; ending work in process inventory, $220,000; and ending finished goods inventory, $264,000. Worth Company’s cost of goods sold for the year is

$828,000

$804,000

$552,000

$776,000

The two basic types of cost accounting systems are

Process cost and batch systems.

Job order and process cost systems.

Job order and batch systems.

Job order and job accumulation systems.

Which one of the following best describes a job cost sheet?

It is used by management to understand how direct costs affect profitability.

It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.

It is used to track manufacturing overhead costs to specific jobs.

It is a daily form that management uses for tracking worker productivity on which employee raises are based.

Madison Inc. Uses job order costing for its brand new line of sewing machines. The costs incurred for production during 2013 totaled $18,000 of materials, $9,000 of direct labor and $6,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of the year. Beginning work in process totaled $15,000 and the ending balance is $9,000. During the year, the company completed 20 machines. How much is the cost per machine?

$1,350

$1,950

$1,650

$2,400

If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is:

A loss on the income statement under “Other Expenses and Losses.”

Overapplied.

Considered a miscellaneous expense.

Underapplied.

The existence of under or overapplied overhead at the end of the year:

Is written off as a bad estimate expense.

Indicates that an error has been made.

Requires an adjustment to Cost of Goods Sold.

Requires a retroactive adjustment to the cost of all jobs completed.

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable Cost Unit Fixed Cost

Remains constant, Decreases

Increases, Decreases

Decreases, Remains constant

Remains constant, Remains constant

A mixed cost contains

Both retailing and manufacturing costs.

Both operating and nonoperating costs.

A variable element and a fixed element.

Both selling and administrative costs.

Contribution margin

Is always the same as gross profit margin.

Is calculated by subtracting total manufacturing costs per unit from sales revenue per unit

Equals sales revenue minus variable costs.

Excludes variable selling costs from its calculation.

Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000 and fixed costs $270,000. What is Boswell's break-even-point in units?

38,334.

24,546

30,000.

42,188.

The amount by which actual or expected sales exceeds break-even sales is referred to as

Unanticipated profit.

Target net income.

Margin of safety.

Contribution margin.

Incremental analysis would be appropriate for

Acceptance of an order at a special price.

A retain or replace equipment decision.

A sell or process further decision.

All of these.

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then

The order will likely be rejected.

Only variable costs are relevant.

The order will likely be accepted.

Fixed costs are no relevant.

Which statement is true concerning the decision rule on whether to make or buy?

The company should buy assuming no additional fixed costs are incurred.

The company should buy if the cost of buying is less than the cost of producing.

The company should buy as long as total revenue exceeds present revenues.

The company should buy if the incremental revenue exceeds the incremental costs.

Which of the following is the starting point of the master budget?

The budgeted income statement

The cash budget

The sales budget

The budgeted balance sheet

An opportunity cost

Should be initially recorded as an asset.

Is the cost of a new product proposal.

Is the potential benefit that may be obtained by following an alternative course of action.

Is classified as manufacturing overhead.

The decision rule on whether to sell or process further

Varies from situation to situation.

Is process further as long as total revenue exceeds present revenues.

Is process further if incremental revenue from such processing exceeds incremental costs.

Is process further if incremental revenue from such processing exceeds the incremental processing costs.

Why are budgets useful in the planning process?

They enable the budget committee to earn their paycheck.

They provide management with information about the company’s past performance.

They guarantee the company will be profitable if it meets its objectives.

They help communicate goals and provide a basis for evaluation.

The most common budget period is

One month.

Six months.

One year.

Three months.

Long-range planning

Generally encompasses a longer period of time than an annual budget.

Is prepared on a quarterly basis if the budget is prepared on a quarterly basis.

Is usually more accurate than an annual budget.

Generally presents more detailed information than an annual budget.

The financial budgets include the

Cash budget and the selling and administrative expense budget.

Budgeted balance sheet and the budgeted income statement.

Cash budget and the production budget.

Cash budget and the budgeted balance sheet.

On January 1, Witt Company has a beginning cash balance of $126,000. During the year, the company expects cash disbursements of $1,020,000 and cash receipts of $870,000. If Witt requires an ending cash balance of $120,000, Witt Company must borrow

$96,000

$120,000

$144,000

$276,000

The cash budget reflects

Expected cash receipts and cash disbursements from all sources.

All the items that appear on a budgeted income statement.

All revenues and all expenses for period.

All the items that appear on a budgeted balance sheet.

What is the primary difference between a static budget and a flexible budget?

The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.

The static budget is constructed using input from only level upper management, while a flexible budget obtains input from all levels of management.

The static budget contains only fixed costs, while the flexible budget contains only variable costs.

The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

Which one of the following would be the same total amount on a flexible budget and a standard budget if the activity level is different for the two types of budgets?

Direct materials cost

Variable manufacturing overhead

Fixed manufacturing overhead

Direct labor cost

The difference between a budget and a standard is that

Standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system.

A budget expresses a total amount, while a standard expresses a unit amount.

A budget expresses management plans, while a standard reflects what actually happened.

A budget expresses what costs were, while a standard expresses what costs should be.

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