Distinction Delivered: Excelling in Accounting Modules
37. Fredonia Repair Inc. was started on May 1. A summary of May transactions is presented below. 1...
Fredonia Repair Inc. was started on May 1. A summary of May transactions is presented below.
1. | Stockholders invested $11,000 cash in the business in exchange for common stock. | |
2. | Purchased equipment for $4,500 cash. | |
3. | Paid $400 cash for May office rent. | |
4. | Paid $500 cash for supplies. | |
5. | Incurred $200 of advertising costs in the Beacon News on account. | |
6. | Received $4,300 in cash from customers for repair service. | |
7. | Declared and paid a $1,000 cash dividend. | |
8. | Paid part-time employee salaries $1,000. | |
9. | Paid utility bills $160. | |
10. | Performed repair services worth $930 on account. | |
11. | Collected cash of $140 for services billed in transaction (10). |
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38. 10. A custom-home builder would likely utilize: A. job-order costing B. process costing. C, mass ...
10. A custom-home builder would likely utilize: A. job-order costing B. process costing. C, mass customization.
61) When a sales job is being filled by an untrained individual, the job specifications list will most likely include ________ as a way to predict which candidate will perform the job well.
A) age and gender
B) past job performance
C) relevant certification
D) personality traits
62) According to research, each of the following work behaviors is considered important in all jobs EXCEPT ________.
A) attendance
B) experience
C) schedule flexibility
D) industriousness
63) Job ________ means assigning workers additional same-level activities.
A) enrichment
B) assignment
C) enlargement
D) rotation
64) Which of the following terms refers to systematically moving workers from one job to another?
A) Job rotation
B) Job enrichment
C) Job enlargement
D) Job adjustment
65) Which of the following terms refers to redesigning jobs in a way that increases the opportunities for the worker to experience feelings of responsibility, achievement, growth, and recognition?
A) Job rotation
B) Job enrichment
C) Job reengineering
D) Job enlargement
66) Who argued that the best way to motivate workers is to build opportunities for challenge and achievement into their jobs via job enrichment?
A) Adam Smith
B) Frederick Taylor
C) Frederick Herzberg
D) Abraham Maslow
67) Jack is an employee at a Best Western Hotel. Some weeks he works with the catering group, and other weeks he assists the reservations clerk or the parking attendant. This is an example of ________.
A) job enlargement
B) job rotation
C) job enrichment
D) job specialization
68) The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in performance is called ________.
A) job redesign
B) reengineering
C) process engineering
D) job enlargement
69) Which of the following describes a job in terms of measurable and observable behaviors that an employee doing the job must exhibit to do the job well?
A) competency-based job analysis
B) Department of Labor procedure
C) functional job analysis
D) high-performance work matrix
70) Which of the following questions will most likely be addressed by a manager who is writing a job description based on a competency-based job analysis?
A) What are the typical duties associated with this job?
B) What are the working conditions and safety issues related to this job?
C) What opportunities for advancement are available to an employee in this job?
D) What should the employee be able to do in order to competently perform this job?
E) What machines or equipment is the job holder responsible for operating on a daily basis?
71) Which of the following best supports the argument that jobs should be described in terms of competencies rather than duties?
A) New employees in high-performance work systems receive extensive job skills training for their specific positions.
B) Managers in global firms are empowered to implement job rotation, job enlargement, and job enrichment in order to maximize productivity.
C) In high-performance work systems, employees serve as team members rotating among various jobs.
D) Globalization and telecommuting require workers to be able to self-manage and perform duties without close supervision.
40. The ending raw materials inventory was
Clyde Company has provided the following data for the month of November:
Inventories | November 1 | November 30 | |
Raw materials | $17,000 | ? | |
Work in process | $14,000 | $12,000 | |
Finished goods | ? | $9,000 | |
Additional Data: |
| ||
Sales revenue | $102,000 | ||
Direct labor costs | $10,000 | ||
Manufacturing overhead | $12,000 | ||
Selling expenses | $14,000 | ||
Administrative expenses | $16,000 | ||
Cost of goods manufactured | $40,000 | ||
Raw materials purchases | $10,000 | ||
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The ending raw materials inventory was:
A) $11,000
B) $23,000
C) $10,000
D) $12,000
41. The amount of accrued but unpaid expenses at the end of the fiscal period is both an expense and...
The amount of accrued but unpaid expenses at the end of the fiscal period is both an expense and a(n):
a. liability
b. asset
c. deferral
d. revenue
Reconstructing Adjusting Entries
For each situation, reconstruct the adjusting entry that was made to arrive at the ending balance. Assume statements and adjusting entries are prepared only once each year.
1. | Prepaid Insurance: |
|
| Balance beginning of year | $5,600 |
| Balance end of year | 6,400 |
During the year, an additional business insurance policy was purchased. A 2–year premium of $2,500 was paid and charged to Prepaid Insurance.
2. | Accumulated Depreciation: |
|
| Balance beginning of year | $85,200 |
| Balance end of year | 88,700 |
During the year, a depreciable asset that cost $7,500 and had a carrying value of $1,600 was sold for $2,400.The disposal of the asset was recorded correctly.
3. | Unearned Rent: |
|
| Balance beginning of year | $11,000 |
| Balance end of year | 15,000 |
Warehouse quarterly rent received in advance is $18,000. During the year, equipment was rented to another company at an annual rent of $9,000. The quarterly rent payments were credited to Rent Revenue; the annual equipment rental was credited to Unearned Rent.
4. | Salaries Payable: |
|
| Balance beginning of year | $42,860 |
| Balance end of year | 34,760 |
Salaries are paid biweekly. All salary payments during the year were debited to Salaries Expense.
A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and a. is acceptable as a means to pay current liabilities. b. has a current market value that is greater than its original cost c. bears an interest rate that is at least equal to the prime rate of interest at the date of liquidation. d. is so near its maturity that it presents insignificant risk of changes in interest rates. When a company has cash available in another account in the same bank at which an overdraft has occurred, the company will a. offset the overdraft against cash account. b. report the same in the notes to financial statement. c report the bank overdraft amount as account payable. d. classify the bank overdraft as compensating balance. What is the normal journal entry for recording bad debt expense under the allowance method? a. Debit Allowance for Doubtful Accounts, credit Accounts Receivable. b. Debit Allowance for Doubtful Accounts, credit Bad Debt Expense. c. Debit Bad Debt Expense, credit Allowance for Doubtful Accounts. d. Debit Accounts Receivable, credit Allowance for Doubtful Accounts. If the estimate of uncollectible is made by taking 2% of net sales, the amount of the adjustment a. $6, 700. c. $8, 500. b. $8, 220. d. $9, 740. If the estimate of uncollectible is made by taking 10% of gross account receivables, the amount the adjustment is a. $3, 540. c. $4, 224. b. $4, 300. d. $5, 060.
44. 21) Which is the correct order for items to appear on the income statement? A) Sales revenue,...
21) Which is the correct order for items to appear on the income statement?
A) Sales revenue, operating expenses, gross profit, net income
B) Sales revenue, gross profit, net income, operating expenses
C) Sales revenue, gross profit, cost of goods sold, operating expenses
D) Sales revenue, cost of goods sold, gross profit, net income
22) A small ________ would most likely use a perpetual inventory system.
A) automobile dealership
B) fabric store
C) restaurant
D) flower shop
23) A periodic inventory system:
A) is used for inexpensive goods.
B) is not expensive to maintain.
C) does not keep a running record of inventory on hand.
D) is all of the above.
24) The inventory system that uses computer software to keep a running record of inventory on hand is the:
A) cost of goods sold inventory system.
B) periodic inventory system.
C) perpetual inventory system.
D) hybrid inventory system.
25) ABC Company purchases inventory from XYZ Company with the shipping terms FOB shipping point. This means that:
A) XYZ Company owns the goods while they are in transit.
B) legal title passes to ABC Company when they receive the inventory.
C) XYZ Company will pay the freight on this transaction.
D) ABC Company will include the goods in their inventory as soon as they leave the shipping dock.
26) Under a perpetual inventory system:
A) there must be a physical count to determine the amount of the ending inventory.
B) there must be a physical count to determine the cost of goods sold.
C) the inventory records must be updated manually.
D) it can be readily determined if there is a sufficient supply of inventory on hand.
27) Under a perpetual inventory system, when a sale is made, the company:
A) makes a journal entry to record the sale only.
B) makes a journal entry to record only the cost of goods sold.
C) makes a journal entry to record the sale and the cost of goods sold.
D) does not need to make a journal entry.
28) How do purchase returns and allowances and purchase discounts affect gross purchases?
A) Both are added to purchases.
B) Both are subtracted from purchases.
C) Purchase returns and allowances are added to purchases; purchase discounts are subtracted from purchases.
D) Purchase returns and allowances are subtracted from purchases; purchase discounts are added to purchases.
29) A purchase:
A) allowance increases the cost of the inventory.
B) discount increases the cost of the inventory.
C) allowance has no effect on the cost of the inventory.
D) return decreases the cost of the inventory.
30) Which of the following is NOT used to determine net purchases?
A) Freight-out
B) Freight-in
C) Purchase returns
D) Purchase discounts
45. The formula to compute direct materials price variance is to calculate the difference between
The formula to compute direct materials price variance is to calculate the difference between
a. actual costs - (actual quantity * standard price)
b. actual cost + standard costs
c. actual cost - standard costs
d. (actual quantity * standard price) -standard costs
46. 8) Documents that are sent to customers or suppliers and then sent back to the company in the course
8)
Documents that are sent to customers or suppliers and then sent back to the
company in the course of a business transaction are known as
A)
turnaround documents.
B)
source documents.
C)
input documents.
D)
transaction documents.
9)
Which of the following is an example of source data automation?
A)
a utility bill
B)
POS (point-of-sale) scanners in retail stores
C)
a bill of lading
D)
a subsidiary ledger
10)
Pre-numbering of source documents helps to verify that
A)
documents have been used in order.
B)
company policies were followed.
C)
all transactions have been recorded.
D)
source data automation was used to capture data.
11)
Source documents generally help to improve accuracy in transaction processing
because
A)
they specify which information to collect.
B)
logically related data can be grouped in the same area of the document.
C)
they provide directions and steps for completing the form.
D)
All of the above are correct.
12)
In transaction processing, generally which activity comes first?
A)
recording data in a journal
B)
posting items to special journals
C)
capturing data on source documents
D)
recording data in a general ledger
13)
Which of the following statements is true?
A)
Batch processing ensures that stored information is always current.
B)
Batch input is more accurate than on-line data entry.
C)
On-line batch processing is a combination of real-time and batch processing.
D)
Batch processing is not frequently used.
14)
The data processing method used by FedEx to track packages is an example of
A)
real-time processing.
B)
batch processing.
C)
online batch processing.
D)
real-time batch processing.
15) Street
Smarts (SS) is a retailer located in Naperville, Illinois. During the peak
tourist season, it has average daily cash and credit card sales in excess of
$7,000. What is the best way for SS to ensure that sales data entry is
efficient and accurate?
A) well-designed
paper forms
B) source data
automation
C) turnaround
documents
D) sequentially
numbered sales invoices
16) In Petaluma,
California, electric power is provided to consumers by Pacific Power. Each
month Pacific Power mails bills to 86,000 households and then processes
payments as they are received. What is the best way for this business to
ensure that payment data entry is efficient and accurate?
A) well-designed
paper forms
B) source data
automation
C) turnaround
documents
D) sequentially
numbered bills
17) Data
processing includes all of the following except
A) verifying
subsidiary ledger balances.
B) changing
customer addresses.
C) removing
inventory items no longer offered.
D) adding the
name of a new vendor.
Show transcribed image text Craig Ferguson Company has the following balances in selected accounts on December 31, selected data. 2014. All the accounts have normal balances. The information below has been gathered at December 31, 2014. 1. Craig Ferguson Company borrowed $20,000 by signing a 12%, one-year note on August 1, 2014. 2. A count of supplies on December 31, 2014, indicates that supplies of $900 are on hand. 3. Depreciation on the equipment for 2014 is $2,000. 4. Craig Ferguson Company paid $2,700 for 12 months of insurance coverage on May 1, 2014. 5. On November 1, 2014, Craig Ferguson collected $50,000 for consulting services to be performed from November 1, 2014, through March 31, 2015. 6. Craig Ferguson performed consulting services for a client in December 2014. The client will be billed $6,300. 7. Craig Ferguson Company pays its employees total salaries of $13,000 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2014. Instructions: A. Prepare adjusting entries for the seven items described above. B. Prepare the 2015 entry for items 6 and 7.
48. Ralph Henwood was paid a salary of $64,600 during 2013 by Odesto Company.
Ralph Henwood was paid a salary of $64,600 during 2013 by Odesto Company. In addition, during the year Henwood started his own business as a public accountant and reported a net business income of $48,000 on his income tax return for 2013. Compute the following:
a. The amount of FICA taxes that was withheld from his earnings during 2013 by Odesto Company. OASDI $ HI $
b. Henwood’s self-employment taxes on the income derived from the public accounting business for 2013. OASDI $ HI $
49. 11-48 Special Order Green Grow Inc. (GGI) manufactures lawn fertilizer and because of its very...
11-48 Special Order Green Grow Inc. (GGI) manufactures lawn fertilizer and because of its very high quality often receives special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have the precise mix of components advertised for that type of fertilizer. GGI’s operating capacity is 22,000 one-hundred-pound bags per month, and it currently is selling 20,000 bags manufactured in 20 batches of 1,000 bags each. The firm just received a request for a special order of 5,000 one-hundred-pound bags of fertilizer for $125,000 from APAC, a research organization. The production costs would be the same, although delivery and other pack- aging and distribution services would cause a one-time $2,000 cost for GGI. The special order would be processed in two batches of 2,500 bags each. The following information is provided about GGI’s current operations:
Sales and production cost data for 20,000 bags, per bag
Sales price | $38 |
Variable manufacturing costs | 15 |
Variable marketing costs | 2 |
Fixed manufacturing costs | 12 |
Fixed marketing costs | 2 |
No marketing costs would be associated with the special order. Since the order would be used in research and consistency is critical, APAC requires that GGI fill the entire order of 5,000 bags.
Required
1. Should GGI accept the special order? Explain why or why not.
2. What would be the change in operating income if the special order is accepted?
3. Suppose that after GGI accepts the special order, it finds that unexpected production delays will not allow it to supply all 5,000 units from its own plants and meet the promised delivery date. It can provide the same materials by purchasing them in bulk from a competing firm. The materials would then be packaged in GGI bags to complete the order. GGI knows the competitor’s materials are very good qual- ity, but it cannot be sure that the quality meets its own exacting standards. There is not enough time to carefully test the competitor’s product to determine its quality. What should GGI do?
50. Par Corporation acquired a 70 percent interest in Sol Corporatio
Par Corporation acquired a 70 percent interest in Sol Corporation’s outstanding voting common stock on January 1, 2011, for $490,000 cash. The stockholders’ equity of Sol on this date consisted of $500,000 capital stock and $100,000 retained earnings. The difference between the fair value of Sol and the underlying equity acquired in Sol was assigned $5,000 to Sol’s undervalued inventory, $14,000 to undervalued buildings, $21,000 to undervalued equipment, and $60,000 to goodwill. The undervalued inventory items were sold during 2011, and the undervalued buildings and equipment had remaining useful lives of seven years and three years, respectively. Depreciation is straight line. At December 31, 2011, Sol’s accounts payable include $10,000 owed to Par. This $10,000 account payable is due on January 15, 2012. Par sold equipment with a book value of $15,000 for $25,000 on June 1, 2011. This is not an intercompany sale transaction. Separate financial statements for Par and Sol for 2011 are summarized as follows (in thousands):
REQUIRED: Prepare consolidation workpapers for Par Corporation and Sol for the year ended December 31, 2011. Use an unamortized excessaccount.