MGT 6753

Spring 2010
Accounting Questions

FINANCIALACCOUNTING
3. Rolling Stones Supplies has the following stock outstanding reported on its balance sheet:
5% Cumulative preferred stock, par $20
Common stock, par $5

$100,000
$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.Whichofthefollowingpairsofaccountsareusuallycurrentliabilities?
a)accountspayable,accountsreceivable.
b)prepaidexpenses,wagespayable.
c)incometaxespayable,unearnedrevenue.
d)additionalpaidincapital,deferredtaxliability.
e)notesreceivable,bondspayable.

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

Purchases
Inventory, 1/1/08
Purchase returns
Purchase discounts
Freight-in
Cash
Inventory, 12/31/08

$260,000
40,000
7,640
880
12,400
4,000
48,000

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.

Date
12/1
12/5
12/18
12/24

Transaction
Beginning inventory
Purchase No. 1
Purchase No. 2
Purchase No. 3

Units
500
600
500
400

Unit Cost
$4
$6
$8
$10

Assume that the company uses the LIFO inventory method. What is the dollar
value of the ending inventory on December 31? $________________
7.ThefollowinginformationpertainstoColdplayCorp.:
Accounts payable = $44,000
Accounts receivable = $13,000
Advertising expense = $50,000
Cash = $19,000
Supplies expense = $33,000
Rent expense = $22,000
Common stock = $89,000
Utilities expense = $17,000
Salaries expense = $45,000
Land = $400,000
Consulting revenues = $176,000
Interest revenues = $28,000
Net income = $ _________________
8.Accrualaccountingrecognizesrevenue:
a)whentheorderissignedandisaccompaniedbycash.
b)whentheorderforgoodsorservicesissigned.
c)whenthegoodshavebeentransferredorserviceshavebeenrendered.
d)whenthecashisreceived.
e)accordingtothematchingprinciple.
10.Whichofthefollowingareintangibleassets?
a)accountsreceivableandnotesreceivable.
b)equipmentandtools.
c)officesuppliesandaccountsreceivable.
d)patentsandgoodwill.
e)landandequipment.

11.Theallowanceforbaddebtsaccountsis:
a)theamountoftheperiod'scashsalesexpectedtobeuncollectible.
b)anaccountthataddstosalesrevenue.
c)acontraaccountthatreducesaccountsreceivabletotheamountestimatedtobe
collectible.
d)Alloftheabovearecorrect.
e)Only(a)and(c)arecorrect.

MANAGERIALACCOUNTING
14.Styx Co. uses activity based costing and has provided the following data:
Activity Center
Materials handling
Painting
Assembly

Amount of
Activity
55,000 lbs.
40,000 units
6,000 hours

Cost Driver
Pounds handled
Units painted
Labor hours

Center
Costs
$220,000
$320,000
$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:
Direct materials
Direct labor
Variable overhead
Fixed overhead

per unit
$19
11
6
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.Practicalcapacity:
a.isthesameasidealcapacity.
b.allowsfornormalinterruptionsandinefficiencies.
c.isanaverageofexpectedandnormalvolume.
d.isthelevelofoperationbudgetedforthecurrentperiod.
e.istheaveragelevelofplantutilizationformorethanoneyear.
21.A standard price is the same as a(n):
a. budgeted price
b. actual price
c. budgeted quantity
d. favorable price
e. actual rate