Business - Accounting And Taxation Pace 4 Quiz

Which of the following statements about a multistep income statement is correct?

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

3

A business purchases equipment with $8,000 cash. Which of the following accounts is credited?

4

On January 2, 2016, Rushmore, Inc. issued 8,000 bonds at $1,080 each. Each bond contains 40 stock warrants, each of which gives the owner the right to purchase one share of Rushmore $10 par value common stock at $50. The current selling price of common stock is $40 per share. Rushmore bonds without stock warrants are currently selling for $1,025

5

The amount a business expects to collect from its accounts receivable is

6

The principal purpose of a statement of cash flows is to measure the profitability of a business that maintains its accounting records on the cash basis

7

Transfers between categories

8

To address heightened risks of fraud, the auditor can do all of the following except

9

Analytical procedures used in planning an audit should focus on:

10

The Tulip Company uses the percent of receivables method of accounting for uncollectible accounts receivable, and a perpetual inventory system. As of January 1, its net accounts receivable totaled $485,000 (Accounts Receivable $500,000 less a $15,000 Allowance for Doubtful Accounts). During the current year, the following transactions occurred. 1)Merchandise costing $2,400,000 was sold on account for $4,000,000. 2)The company collected $3,880,000 from customers on account.3)$20,000 of accounts receivable were deemed uncollectible and written off.4)$3,000 of accounts receivable previously written off as uncollectible were recovered.5)At year-end, Lily Company estimates that 3% of its accounts receivable are uncollectible.Prepare journal entries to record these transactions.

11

When calculating the direct labor budget, the starting point should be:

12

Kent, an unmarried individual, invited his widowed father, Martin, to move into his home in January of this year. Martin's only income item was a $14,000 taxable pension from his former employer. Kent provides about 75% of his father's financial support. What is Kent's filing status for the year?

13

Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October. Fixed Element per MonthVariable Element per Customer ServedActual Total for OctoberRevenue $4,100$182,900Employee salaries and wages$42,300 $1,300$98,800Travel expenses $700$30,500Other expenses$31,500 $31,900 When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October. The spending variance for total expenses for October would have been closest to:

14

Answer the following statements true (T) or false (F)

15

The following selected account balances appeared on the financial statements of the Washington Company: Accounts Receivable, Jan. 1 $13,000 Accounts Receivable, Dec. 31 9,000 Accounts Payable, Jan 1 4,000 Accounts payable Dec. 31 7,000 Merchandise Inventory, Jan 1 10,000 Merchandise Inventory, Dec 31 15,000 Sales 56,000 Cost of Goods Sold 31,000 The Washington Company uses the direct method to

16

A wage plan based solely on an employee's quantity of production is known as a(n):

17

Benitez Company makes wicker and wooden slat picnic baskets. It requires approximately one hour of labor to make one basket of either type. Wicker baskets are produced in batches of 100 units and require 0.5 machine hours per basket. Wooden slat baskets are produced in batches of 50 units and require 0.75 machine hours per basket. Setup is required for each batch. During the most recent accounting period, the company made 8,000 wicker baskets and 2,000 wooden slat baskets. Setup costs amounted to $24,000 for the baskets produced during the period. If activity-based costing is used to allocate overhead costs to the two products, the amount of setup cost assigned to the wicker baskets will be:

18

Ending inventory is made up of the oldest purchases when a company uses

19

Mayberry Company paid $30,000 cash to purchase land. What happened as a result of this business event?

20

A data editing routine that compares numeric data input within a range is a(n)

21

Which of the following would not be a factor in the consideration of whether or not a special order is accepted or not?

22

Certosimo Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.Sales (7,000 units)$350,000Variable expenses245,000Contribution margin105,000Fixed expenses 97,500Net operating income $7,500Required:a. If sales increase to 7,040 units, what would be the estimated increase in net operating income?b. If sales decline to 6,900 units, what would be the estimated net operating income?

23

At December 31, Year 1, Musslewhite Corporation reported a net loss of $2.5 million related to its pension plan, because the actuarial assumptions related to future salary levels changed. Musslewhite's entry to record the results of this change will include ________

24

Which of the following is a procedure which analyzes plausible relationships among financial and nonfinancial data?

25

The voucher system strengthens internal control because:

26

A detailed vendor comparison would normally include all of the following except:

27

Brighton, Inc. issued 25,000 shares of $10 par value common stock for $500,000, purchased 10,000 shares of treasury stock with a par value of $10 for $150,000, and paid $20,000 in cash dividends. Net cash flows from financing activities totaled

28

Deidra has owned and occupied her principal residence for 10 years. Two and one-half years ago, she married Doug who moved into her house. Doug has never owned a home. When Deidra is transferred to another city, she sells the house and has a realized gain of $425,000. Deidra can exclude the realized gain of $425,000 from her gross income under § 121 if she and Doug file a joint return.

29

A C corporation is required to annualize certain tax factors:

30

Even though assets must always equal the sum of liabilities and owners' equity, the net cash flow from operations does not have to equal the sum of the net cash flow from investing activities and the net cash flow from financing activities

31

Creditors analyze the statement of cash flows to determine:

32

A cost incurred in the past that is not relevant to any current decision is classified as a(n):

33

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand. The costs of inventory financing, storage, supervision, and obsolescence could most likely be reduced by which of the following practices?

34

The ending balance of Accounts Receivable in the ledger is calculated by adding the _________________________________________.

35

In general, revenue is recognized when

36

When a partner withdraws from the partnership, the partnership dissolves

37

The client should have methods in place to identify and account for intangible-asset impairments

38

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports

39

The purchase of equipment, involving a cash down payment and a promise to pay the balance in the future, includes:

40

Gain recognized on the sale or exchange of property between related parties is capital if the property is subject to depreciation in the hands of the transferee.

41

Identify which of the following statements is true.

42

The practice of off-balance-sheet financing is illegal

43

Which of the following is a reason why top managers want lower-level managers to participate in the budgeting process?

44

Which of the following serial bonds has the first scheduled installment delayed for a period of more than 1 year after the date of the issue?

∙	Either spouse meets the at-least-two-years ownership requirement.
∙	Both spouses meet the at-least-two-years use requirement.
∙	A joint return is filed.
∙	Neither spouse is ineligible for the § 121 exclusion on the sale of the current principal residence because of the sale of another principal residence within the prior two years.

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Business - Accounting And Taxation Pace 4 Quiz

Recent Packs

	Selling price per unit ($350,000 ÷ 7,000 units)	$50
	Variable cost per unit ($245,000 ÷ 7,000 units)	35
	Unit contribution margin	$15

	Unit contribution margin (a)	$15	per unit
	Increased unit sales (b)	40	units

Unit contribution margin (a)	$15	per unit
Unit sales (b)	6,900	units
Contribution margin (a) × (b)	$103,500
Fixed expenses	97,500
Net operating income	$6000