Accounting Test 2

Assume the following sales data for a company: Current year$836,680 Preceding year504,828 What is the percentage increase in sales from the preceding year to the current year (rounded to one decimal place)?

65.7%

The recording of the application of factory overhead costs to jobs would include a credit to

Factory Overhead

Recording jobs completed would include a debit to

Finished Goods

Which of the following is not a characteristic of a job order cost system?

It accumulates cost for each department within the factory

The following information is available for Jase Company: Market price per share of common stock$25.00Earnings per share on common stock1.25 Which of the following statements is correct?

The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year.

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and a significant portion of the total product cost.

Recording jobs completed would include a credit to

Work in Process

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the materials controlling account in the general ledger to the controlling accounts for

Work in Process and Factory Overhead

Which of the following is not a characteristic of useful managerial accounting reports?

adhere to GAAP

Based on the following data for the current year, what is the inventory turnover? Sales on account during year$700,000Cost of merchandise sold during year270,000Accounts receivable, beginning of year45,000Accounts receivable, end of year35,000Merchandise inventory, beginning of year90,000Merchandise inventory, end of year110,000

2.7

Based on the following data for the current year, what is the number of days' sales in receivables? Sales on account during year$584,000Cost of merchandise sold during year300,000Accounts receivable, beginning of year45,000Accounts receivable, end of year35,000Merchandise inventory, beginning of year90,000Merchandise inventory, end of year110,000

25 days

The relationship of $348,233 to $103,762, expressed as a ratio, is

3.4

The controller's staff often consists of several management accountants. All of the following would most likely be on the controller's staff except

investments and shareholder relations managers

The primary goal of managerial accounting is to provide information to

management

Which of the following is not a characteristic evaluated in ratio analysis?

marketability

Which of the following is most associated with managerial accounting?

may rely on estimates and forecasts

Period costs include

operating costs that are shown on the income statement in the period in which they are incurred

Which of the following is the correct flow of manufacturing costs?

raw materials, work in process, finished goods, cost of goods sold

Which of the following is a period cost?

salary of telephone receptionist in the sales office

On a common-sized income statement, 100% is assigned to

sales

The numerator for the computation of accounts receivable turnover is

sales

Which of the following would most likely use a job order cost system?

swimming pool installer

On which of the following would the labor costs for an individual job be recorded?

time tickets

The basis for recording direct labor costs incurred is a summary of the period's

time tickets

Which of the following is not a reason a firm would use a job order cost system?

to determine department costs within the firm

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

vertical analysis

Which of the following would least likely be considered a managerial accounting report?

a statement of stockholders' equity

In most business organizations, the chief management accountant is called the

controller

Which of the following are reported on the income statement as part of cost of goods?

cost of goods manufactured

Which of the following will not be found on the balance sheet of a manufacturing company?

cost of goods sold

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will

increase and remain the same, respectively

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to

increase by $1,700,000

Which of the following is not included in the computation of the quick ratio?

inventory

Which of the following are the two main types of cost accounting systems for manufacturing operations?

job order cost and process cost systems

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?

job order cost system

Short-term creditors are typically most interested in analyzing a company's

liquidity

A widely used activity base for developing factory overhead rates in highly automated settings is

machine hours

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

make a better comparison of two companies of different sizes in the same industry

The numerator for the return on common stockholders' equity computation is

net income minus preferred dividends

Costs on the income statement for both a merchandiser and a manufacturer would be

operating expenses

Horizontal analysis is a technique for evaluating financial statement data

over a period of time

What term is used to describe the process of developing the organization's objectives and translating those into courses of action?

planning

Which of the following are basic phases of the management process?

planning and controlling

Managerial accounting reports are

prepared according to management needs

Rent expense on a factory building would be treated as a

product cost

Indirect costs incurred in a manufacturing environment that are not traced directly to a product are treated as

product costs and expensed when the goods are sold

On a common-sized balance sheet, 100% is assigned to

total assets

At the end of the fiscal year, the balance in Factory Overhead is small. The balance would be

transferred to Cost of Goods Sold

The percent of fixed assets to total assets is an example of

vertical analysis

Goods that are partially completed by a manufacturer are

work in process inventory

In horizontal analysis, each item is expressed as a percentage of the

base year figure

The journal entry for the flow of direct labor costs into production in a job order cost accounting system is to

debit Work in Process, credit Wages Payable

Leverage implies that a company has

debt financing

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a

direct labor cost

The cost of a manufactured product generally consists of which of the following costs?

direct labor cost, direct materials cost, and factory overhead cost

Which of the following is a product cost?

drill bits for a drill press used in the plant assembly area

Managers use managerial accounting information for all of the following except to

evaluate the company's stock performance

Which of the following is an example of a factory overhead cost?

factory heating and lighting cost

All of the following would be reported on the balance sheet as a current asset except

factory overhead

Indirect labor and indirect materials are classified as

factory overhead and product costs

If the cost of a material is a small portion of total production cost, it may be classified as part of

factory overhead cost

All of the following could be considered a direct material except

glue

Which of the following products would be manufactured using a job order cost system?

graduation invitation

For which of the following businesses would the job order cost system be appropriate?

hospital

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?

controlling

What term refers to the cost of changing direct materials into a finished manufactured product?

conversion cost

The details concerning the costs incurred on each job order are accumulated in a work in process account and supported by a

cost ledger

Work in process inventory increased by $20,000 during the current year. Cost of goods manufactured was $180,000. Total manufacturing costs incurred are

$200,000

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was

$218,000

A company manufactured 50,000 units of a product at a cost of $450,000. It sold 45,000 units at $15 each. The gross profit is

$270,000

Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290.

$384,200

Compute conversion costs given the following data: direct materials, $381,800; direct labor, $193,400; factory overhead, $197,900 and selling expenses, $42,500.

$391,300

Thomlin Company forecasts that total factory overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000, and the actual machine hours are 330,000 hours. If Thomlin Company uses a predetermined factory overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is

$500,000 overapplied

A company reports the following: Net income$160,000Preferred dividends$10,000Shares of common stock outstanding20,000Market price per share of common stock$35 The company's earnings per share on common stock is

$7.50

A company with working capital of $720,000 and a current ratio of 2.2 pays a $125,000 short-term liability. The amount of working capital immediately after payment is

$720,000

The relationship of $325,000 to $125,000, expressed as a ratio, is

2.6

Which of the following is the most useful in analyzing companies of different sizes?

common-sized financial statements

Based on the following data, what is the accounts receivable turnover? Sales on account during year$700,000Cost of merchandise sold during year270,000Accounts receivable, beginning of year45,000Accounts receivable, end of year35,000Merchandise inventory, beginning of year90,000Merchandise inventory, end of year110,000

17.5

Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000. It had 50,000 shares of common stock outstanding during the entire year. Richards Corporation's common stock is selling for $35 per share. The price-earnings ratio is

7

Recording jobs shipped and customers billed would include a debit to

Cost of Goods Sold

Which of the following accounts will not be found on the statement of cost of goods manufactured?

Cost of Goods Sold