MGT 6753

MGT 6753Spring 2010Accounting Questions

FINANCIAL ACCOUNTING

3. Rolling Stones Supplies has the following stock outstanding reported on its balance sheet:

5% Cumulative preferred stock, par $20$100,000Common stock, par $5$200,000

In 2006, Rolling Stones Supplies paid $28,000 in dividends. No dividends were paid in 2004 or 2005. The amount of dividends paid to common stockholders in 2006 should be: $ ____________________

4. Which of the following pairs of accounts are usually current liabilities?a) accounts payable, accounts receivable.b) prepaid expenses, wages payable.c) income taxes payable, unearned revenue.d) additional paid in capital, deferred tax liability.e) notes receivable, bonds payable.

5. The following information pertains to The Association Co. for 2008:

Purchases$260,000Inventory, 1/1/0840,000Purchase returns7,640Purchase discounts880Freight-in12,400Cash4,000Inventory, 12/31/0848,000

Cost of goods sold for 2008 = $ _____________________

6. The Cars, Inc. had the following purchases of inventory during the month of December. There were 1,400 units sold during the month.

DateTransactionUnitsUnit Cost12/1Beginning inventory500$ 412/5Purchase No. 1600$ 612/18Purchase No. 2500$ 812/24Purchase No. 3 400$10

Assume that the company uses the LIFO inventory method. What is the dollar value of the ending inventory on December 31? $________________

7. The following information pertains to Coldplay Corp.:

Accounts payable = $44,000Accounts receivable = $13,000Advertising expense = $50,000Cash = $19,000Supplies expense = $33,000Rent expense = $22,000Common stock = $89,000Utilities expense = $17,000Salaries expense = $45,000Land = $400,000Consulting revenues = $176,000Interest revenues = $28,000

Net income = $ _________________

8. Accrual accounting recognizes revenue:a) when the order is signed and is accompanied by cash.b) when the order for goods or services is signed.c) when the goods have been transferred or services have been rendered.d) when the cash is received.e) according to the matching principle.

10. Which of the following are intangible assets?a) accounts receivable and notes receivable.b) equipment and tools.c) office supplies and accounts receivable.d) patents and goodwill.e) land and equipment.

11. The allowance for bad debts accounts is:a) the amount of the period's cash sales expected to be uncollectible.b) an account that adds to sales revenue.c) a contra account that reduces accounts receivable to the amount estimated to be collectible.d) All of the above are correct.e) Only (a) and (c) are correct.

MANAGERIAL ACCOUNTING

14. Styx Co. uses activity based costing and has provided the following data:

Amount of CenterActivity CenterCost DriverActivityCostsMaterials handlingPounds handled55,000 lbs.$220,000PaintingUnits painted40,000 units$320,000AssemblyLabor hours6,000 hours$240,000

Job #45 contains 700 units. It weighs 1,900 pounds and uses 950 hours of labor. Compute the total overhead cost that should be assigned to Job #45: $ ________________Answer: (220,000/55,000)(1900) + (320,000/40,000)(700) + (240,000/6,000)(950) = 51,200

15. Phox Co. has a capacity of 100,000 units. They are currently producing and selling 90,000 units at $50 per unit. The cost of a unit at the present production level is as follows:

per unitDirect materials$19Direct labor 11Variable overhead 6Fixed overhead 9 $45

An order for 10,000 units has just been received from a foreign company at a price of $42 per unit. Freight costs of $2 per unit would be required.

The incremental profit (loss) on the order is: $______________

16. Product costs:a.include only the direct costs of manufacturing a product.b.include only the indirect costs of manufacturing a product.c.are expensed when products become part of finished goods inventory.d.are regarded as assets before the products are sold.e.exclude fixed factory overhead.

17. Classifying a cost as either direct or indirect depends on:a.the behavior of the cost in response to volume changes.b.whether the cost is expensed in the period in which it is incurred.c.the cost object to which the cost is being related.d.whether an expenditure is unavoidable because it cannot be changed.e.the timing of the cash outlay for the cost.

18. Practical capacity:a. is the same as ideal capacity.b. allows for normal interruptions and inefficiencies.c. is an average of expected and normal volume.d. is the level of operation budgeted for the current period.e. is the average level of plant utilization for more than one year.

21. A standard price is the same as a(n):a. budgeted priceb. actual pricec. budgeted quantityd. favorable pricee. actual rate