ACC202 Exam 1 Review

On May 1, a two-year insurance policy was purchased for $33,600 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Answer: $11,200 33,600 / 24 = 1,400 1400 x 8 = 11,200

Craigmont Company's direct materials costs are $3,500,000, its direct labor costs total $7,450,000, and its factory overhead costs total $5,450,000. Its conversion costs total:

Answer: $12,900,000 7,450,000 + 5,450,000 Direct Labor + Factory Overhead

Use the following information to determine equity: Cash $59,000 Building $177,000 Equipment $208,000 Liabilities $143,000

Answer: $301,000 A = L + E 59,000 + 177,000 + 208,000 = 143,000 + x

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 cost of goods sold for this company is:

Answer: $33,300 36,500 + 16,600 - 19,800

Zinc has beginning equity of $295,000, total revenues of $95,000, and total expenses of $59,000. The company has no other transactions impacting equity. Its ending equity is:

Answer: $331,000 295,000 + 95,000 - 59,000 = 331,000

Marco Nelson opened a frame shop and completed these transactions: 1. Sold custom frames and immediately collected $41,600 cash. 2. Purchased $230 of office supplies on credit. 3. Paid $2,800 cash for the receptionist's salary. 4. Sold a custom frame service and collected $6,100 cash 5. Completed framing services and billed the client $360. What was the balance of the cash account after these transactions were posted?

Answer: $44,900 $41,600 - $2,800 + $6,100 = $44,900

Using the information below, calculate the cost of goods manufactured for the period:

Answer: $529,000 544,000 - 86,000 + 71,000 = 529,000 COGS - Beg Fin Goods + End Fin Goods

If the cost of the beginning work in process inventory 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 work in process inventory.

Answer: $9,800 60,800 + 338,000 + 218,000 + 323,000 = 939,800 939,800 - 930,000 = 9,800

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.

Answer: 27.9% 128.5 / 461 liabilities / assets

Using the information below, compute the days' sales in raw materials inventory: Raw materials used $155,600 Beg Raw Mater inv $19,700 End Raw Mater inv $21,900

Answer: 51.37 21,900 / 155,600 = 0.14074 0.14074 x 365 = 51.37

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:

Answer: 8.8% 23,000 / ((211,000 + 311,000) / 2) 23,000 / 261,000 Net Income / Average Assets

Which of the following statements is true regarding product and period costs?

Answer: Factory rent is a product cost and advertising expense is a period cost

If the assets of a building increased $109,000 during a period of time and its liabilities increased $77,000 during the same period, equity in the business must have:

Answer: Increased $32,000 A = L + E 109,000 = 77,000 + x

Which of the following statements regarding manufacturing costs is false?

Answer: Indirect labor relates to labor costs that can be cost-effectively traced to finished goods.

Managerial accounting information:

Answer: Involves gathering information about costs for planning and control decisions

A management concept whose goal is to eliminate waste while "satisfying the customer" and "providing a positive return" to the company is called:

Answer: Lean business model

Which of the following is not a source document? 1. Bills from suppliers 2. Sales receipts 3. Ledgers 4. Bank statements 5. Purchase orders

Answer: Ledgers

Which of the following accounts is not classified as a current liability?

Answer: Notes payable (due in 5 years)

Identify the statement below that is incorrect.

Answer: The normal balance of an expense account is a credit

On April 1, Garcia Publishing Company received $29,880 from Otisco, 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 December 31 of the first year?

Answer: debit Unearned Revenue, $7,470; credit Subscription Revenue, $7,470 29880 / 36 = 830 x 9 = 7,470