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accounting exam

1. Managerial accounting is different from financial accounting in that 
A. Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.
B. Managerial accounting never includes nonmonetary information.
C. Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
D. Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.
E. Managerial accounting is mainly used to set stock prices.

2. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include: 
A. A debit to Cost of Goods Sold for $600.
B. A credit to Factory Overhead for $600.
C. A credit to Finished Goods Inventory for $600.
D. A debit to Goods in Process Inventory for $600.
E. A credit to Cost of Goods Sold for $600.

3. Refer to the following selected financial information from Fennie’s, LLC. Compute the company’s acid-test ratio for Year 2.    
A. 2.26.
B. 1.98.
C. 2.95.
D. 3.05.
E. 1.88.

4. Selected current year company information follows:
  
The return on total assets is: 
A. 2.24%
B. 2.81%
C. 3.64%
D. 4.67%
E. 6.28%

5. Austin Company uses a job order cost accounting system. The company’s executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate? 
A. $6.00 per direct labor hour.
B. $7.50 per direct labor hour.
C. $6.67 per direct labor hour.
D. $8.33 per direct labor hour.
E. $7.08 per direct labor hour.

6. The R&R Company’s production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company’s factory overhead incurred for August is: 
A. $2,000.
B. $6,500.
C. $8,500.
D. $21,500.
E. $36,500.

7. Using the information below, calculate gross profit for the period.
   
A. $714,000.
B. $482,000.
C. $1,022,000.
D. $187,000.
E. Cannot be determined from the information provided.

8. A company’s income statement showed the following: net income, $124,000; depreciation expense, $30,000; and gain on sale of plant assets, $14,000. An examination of the company’s current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities. 
A. $139,000.
B. $141,000.
C. $145,800.
D. $155,000.
E. $167,000.

9. A fixed cost: 
A. Requires the future outlay of cash and is relevant for future decision making.
B. Does not change with changes in the volume of activity within the relevant range.
C. Is directly traceable to a cost object.
D. Changes with changes in the volume of activity within the relevant range.
E. Has already been incurred and cannot be avoided so it is irrelevant for decision making.

10. When preparing a statement of cash flows on the indirect method, which of the following is correct? 
A. Proceeds from the sale of equipment should be added to net income in the operating activities section.
B. A loss on the sale of land should be added to net income in the operating activities section.
C. The declaration of a cash dividend should be a use of cash in the financing activities section.
D. The issuance of a stock dividend should be a use of cash in the financing activities section.
E. The purchase of land and a building by issuing a long-term note payable should be a source of cash in the financing activities section.

11. Using the information below, calculate the cost of goods manufactured for the period.
   
A. $553,000.
B. $536,000.
C. $549,000.
D. $527,000.
E. $525,000.

12. A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is: 
A. $(3,000).
B. $(60,000).
C. $(57,000).
D. Zero. This is an operating activity.
E. Zero. This is an investing activity.

13. The following information relates to the manufacturing operations of the IMH Publishing Corporation for the year:
  
The raw materials used in manufacturing during the year totaled $118,000. Raw materials purchased during the year amount to: 
A. $107,000.
B. $115,000.
C. $118,000.
D. $121,000.
E. $126,000.

14. In preparing a company’s statement of cash flows for the most recent year, the following information is available:
  
Net cash flows from investing activities for the year were: 
A. $134,000 of net cash used by investing activities.
B. $134,000 of net cash provided by investing activities.
C. $120,000 of net cash used by investing activities.
D. $252,000 of net cash used by investing activities.
E. $221,000 of net cash provided by investing activities.

15. Refer to the following selected financial information from Hansen’s, LLC. Compute the company’s debt-to-equity ratio for Year 2.    
A. 1.75.
B. 2.34.
C. 0.75.
D. 1.34.
E. 2.63.

16. BVD Company uses a job order cost accounting system and last period incurred $80,000 of overhead and $100,000 of direct labor. BVD estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor. If BVD bases applied overhead on direct labor cost, their overhead application rate for the next period should be: 
A. 75%.
B. 80%.
C. 107%.
D. 125%.
E. 133%.

17. Deltan Corp. allocates overhead to production on the basis of direct labor costs. Deltan’s total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory. 
A. $8,000.
B. $20,000.
C. $70,000.
D. $50,000.
E. $90,000.

18. If a company applies overhead to production with a predetermined rate, a credit balance in the Factory Overhead account at the end of the period means that: 
A. The bookkeeper has made an error because the debits don’t equal the credits.
B. The balance will be carried forward to the next period as an overhead cost.
C. Actual overhead incurred was less than the overhead amount charged to production.
D. The overhead was underapplied for the period.
E. Actual overhead was greater than the overhead amount charged to production.

19. O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company’s overhead application rate? 
A. 6.25%.
B. 62.5%.
C. 160%.
D. 1600%.
E. 67%.

20. Alton Company has an overhead application rate of 160% and allocates overhead based on direct materials. During the current period, direct labor is $50,000 and direct materials used are $80,000. Determine the amount of overhead Alton Company should record in the current period. 
A. $31,250.
B. $50,000.
C. $80,000.
D. $128,000.
E. $208,000.

21. Calculate the cost of goods sold using the following information:
   
A. $680,500.
B. $701,900.
C. $687,100.
D. $674,600.
E. $772,600.

22. Refer to the following selected financial information from Fennie’s, LLC. Compute the company’s accounts receivable turnover for Year 2.
   
A. 8.32.
B. 8.62.
C. 8.94.
D. 5.78.
E. 7.90.

23. Weston is preparing the company’s statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:
   
A. $(168,000).
B. $200,000.
C. $168,000.
D. $(191,700).
E. $191,700.

24. Weston is preparing the company’s statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method:
   
A. $332,200.
B. $236,800.
C. $261,400.
D. $186,800.
E. $189,400.

25. At the current year-end, Hardly Company found that its overhead was underapplied by $2,500, and this amount was not deemed to be a material amount. Based on this information, Hardly should 
A. Close the $2,500 to Cost of Goods Sold.
B. Close the $2,500 to Finished Goods Inventory.
C. Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year.
D. Carry the $2,500 to the income statement as “Other Expense”.
E. Carry the $2,500 to the next period.

 

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