Midterm Exam 1 (Form 2) Flashcards
Past midterm question and answers for the Final
Marco Nelson opened a frame shop and completed these transactions:
1. sold custom frames and immediately collected $41,600 cash for the sale
2. purchased 4230 of office supplies on credit
3. paid $2,800 cash for the receptionist’s salary
4. sold a custom frame and collected $6,100 cash on the sale
5. completed framing services and billed the client $360
What was the balance of the cash account after these transactions were posted?
a) 45,260
b) 10,830
c) 45,030
d) 44,900
e) 10,470
= 41,600 + 2,800 + 6,100
= $44,900 (D)
If the assets of a business increased $109,000 during a period of time and its liabilities increased $77,000 during the same period, equity in the business must have:
a) decreased $186,000
b) decreased $32,000
c) increased $32,000
d) increased $186,000
e) increased $109,000
+109,000 = +77,000 + Equity
Equity = +32,000 (C)
Use the following information as of December 31 to determine equity
Cash = 59,000
Buildings = 177,000
Equipment = 208,000
Liabilities = 143,000
a)444,000
b)587,000
c)301,000
d)59,000
e)143,000
A = L + E
Cash + Build + Equip = L + E
59,000 + 208,000 + 177,000 = 143,000 + E
444,000 = 143,000 + E
E = 301,000 (C)
Flitter reported net income of $23,000 for the past year. At the beginning of the year the company had $211,000 in assets and $61,000 in liabilities. By year end, assets had increased to $311,000 and liabilities were $86,000. Calculate its return on assets:
a) 7.4%
b)10,9%
c)25.8%
d)8.8%
e)35.6%
ROA = Net Income / Ave Total Assets
= 23,000 / [(211,000 + 311,000) / 2]
= 23,000 / 261,000
= 0.088
= 8.8% (D)
Which of the following is NOT a source document?
a) bills from suppliers
b) sales reciepts
c) ledgers
d) bank statements
e) purchase orders
Ledgers (C)
On April 1, Garcia Publishing Company received $29,880 from Otisci, Incorporated for 36-month subscriptions to several different magazines. the company credited Unearned Revenue for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year end, what is the adjusting entry that should be recorded by Garcia Publishing Company on Dec 31 of the first year?
a) debit Unearned Revenue $2490; credit Subscription Revenue $2490
b) debit Unearned Revenue $22410; credit Subscription Revenue $22410
c) debit Unearned Revenue $7470; credit Subscription Revenue $7470
d) debit Unearned Revenue $9960; credit Subscription Revenue $9960
e) debit Unearned Revenue $29880; credit Subscription Revenue $29880
29880 * (9 / 36) = 7470 (C)
A manufacturing company has a beginning finished goods inventory of $16,600, raw material purchases of $20,000, cost of goods manufactured of $36,500, and an ending finished goods inventory of $19,800. The COGS for this company is:
a) $33,300
b) $36,500
c) $31,600
d) $53,100
e) $23,200
COGS = B Finished Goods + COG Manufactured - E Finished Goods
= 16,600 + 36,500 - 19,800
= 33,300 (A)
If the cost of the beginning WIP is $60,800, cost of goods manufactured is $930,000, direct materials cost is $338,000, direct labor cost is $218,000, and overhead cost is $323,000, calculate the ending WIP
a) 374,000
b) 51,000
c) 328,200
d) 9,800
e) 111,800
E WIP = B Wip + DM + DL + OH - COG Manufactured
= 60,800 + 338,000 + 218,000 + 323,000 - 930,000
= $9,800 (D)
Which of the following statements is TRUE regarding product and period costs?
a) factory rent is a product cost and advertising expense is a period cost
b) office rent is a product cost and supervisors’ salaries expense is a period cost
c) office salaries expense is a product cost and factory maintenance are both product costs
d) delivery expense is a product cost and indirect materials is a period cost
e) sales commissions and indirect labor are both period costs
Factory rent is a product cost and advertising expense is a period cost (A)
Which of the following statements regarding manufacturing costs is FALSE?
a) FOH costs cannot be cost-effectively traced to finished goods
b) indirect materials are materials used in manufacturing that cannot be cost-effectively traced to finished goods
c) FOH includes all manufacturing costs that are not DM or DL
d) DM costs can be cost-effectively traced to finished goods
e) indirect labor related to labor costs that can be cost-effectively traced to finished goods
Indirect labor related to labor costs that can be cost-effectively traced to finished goods (E)
Jennings Company has total assets of $461 million. Its total liabilities are $128.5 million. Its equity is $332.5 million. Calculate the debt ratio (round your answer to 1 decimal place.)
a) 34.9%
b) 14.5%
c) 27.9%
e) 16.2%
d) 38.6%
Debt ratio = Total L / Total A
= 128.5 mil / 461 mil
= 0.279
= 27.9% (C)
A management concept whose goal is to eliminate waste while “satisfying the customer” and “providing a positive return” to the company is called:
a) continuous operations
b) just-in-time
c) customer orientation
d) theory of constraints
e) lean business model
Lean business model (E)
Craigmont Company’s DM costs are $3,500,000, its DL costs total $7,450,000, and its FOH costs total $5,450,000. Its conversion costs total:
a) 5,500,000
b) 10,950,000
c) 8,950,000
d) 16,400,000
e) 12,900,000
Conversion Costs = DL + FOH
= 7450000 + 5450000
= $12,900,000 (E)
Identify the statement below that is INCORRECT.
a) the normal balance of an expense account is a credit
b) the normal balance of Unearned Revenue is a credit
c) the normal balance of AR is a debit
d) the normal balance of the Cash account is a debit
e) the normal balance of Services Revenue is a credit
The normal balance of an expense account is a credit (A)
Managerial Accounting Information:
a) is used mainly by external users
b) can be used for control purposes but not for planning purposes
c) is generally the only accounting information available to managers
d) has little to do with controlling costs
e) involves gathering information about costs for planning and control decisions
Involves gathering information about costs for planning and control decisions (E)
