Acct 202 Final Review

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Acct 202 Final Review
Review for final exam in Accounting 202.

  
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  • 1. 
    Which one of the following items is not generally used in preparing a statement of cash flows?
    • A. 

      Adjusted trial balance

    • B. 

      Comparative balance sheets

    • C. 

      Current income statement

    • D. 

      Additional information


  • 2. 
    The primary purpose of the statement of cash flows is to:
    • A. 

      Provide information about the investing and financing activities during a period.

    • B. 

      Prove that revenues exceed expenses if there is a net income.

    • C. 

      Provide information about the cash receipts and cash payments during a period.

    • D. 

      Facilitate banking relationships.


  • 3. 
    The statement of cash flows will not report the:
    • A. 

      Amount of checks outstanding at the end of the period.

    • B. 

      Sources of cash in the current period.

    • C. 

      Uses of cash in the current period.

    • D. 

      Change in the cash balance for the current period.


  • 4. 
    The acquisition of land by issuing common stock is:
    • A. 

      A noncash transaction that is not reported in the body of a statement of cash flows.

    • B. 

      A cash transaction and would be reported in the body of a statement of cash flows.

    • C. 

      A noncash transaction and would be reported in the body of a statement of cash flows.

    • D. 

      Only reported if the statement of cash flows is prepared using the direct method.


  • 5. 
    The order of presentation of activities on the statement of cash flows is:
    • A. 

      Operating, investing, and financing.

    • B. 

      Operating, financing, and investing.

    • C. 

      Financing, operating, and investing.

    • D. 

      Financing, investing, and operating.


  • 6. 
    Investing activities include:
    • A. 

      Collecting cash on loans made.

    • B. 

      Obtaining cash from creditors.

    • C. 

      Obtaining capital from owners.

    • D. 

      Repaying money previously borrowed.


  • 7. 
    Generally, the most important category on the statement of cash flows is cash flows from:
    • A. 

      Operating activities.

    • B. 

      Investing activities.

    • C. 

      Financing activities.

    • D. 

      Significant noncash activities.


  • 8. 
    If accounts payable have increased during a period,
    • A. 

      Revenues on an accrual basis are less than revenues on a cash basis.

    • B. 

      Expenses on an accrual basis are less than expenses on a cash basis.

    • C. 

      Expenses on an accrual basis are greater than expenses on a cash basis.

    • D. 

      Expenses on an accrual basis are the same as expenses on a cash basis.


  • 9. 
    In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is:
    • A. 

      Added to net income.

    • B. 

      Deducted from net income.

    • C. 

      Ignored because it does not affect cash.

    • D. 

      Not reported on a statement of cash flows.


  • 10. 
    Meyer Co. reported net income of $40,000 for the year. During the year, AR increased by $14,000, AP decreased by $6,000 and depreciation expense of $10,000 was recorded. Net cash provided by operating activities for the year is:
    • A. 

      $30,000

    • B. 

      $70,000

    • C. 

      $38,000

    • D. 

      $40,000


  • 11. 
    Flynn Co. reported a net loss of $10,000 for the year ended December 31, 2002. During the year, AR decreased $10,000, merchandise inventory increased $16,000, AP increased by $20,000, and depreciation expense of $10,000 was recorded. During 2002, operating activities:
    • A. 

      Used net cash of $14,000

    • B. 

      Used net cash of $24,000

    • C. 

      Provided net cash of $14,000

    • D. 

      Provided net cash of $24,000


  • 12. 
    Which of the following would be subtracted from net income using the indirect method?
    • A. 

      Depreciation expense.

    • B. 

      An increase in AR.

    • C. 

      An increase in AP.

    • D. 

      A decrease in PPD expenses.


  • 13. 
    Which of the following would be added to NI using the indirect method?
    • A. 

      An increase in AR.

    • B. 

      An increase in PPD expenses.

    • C. 

      Depreciation expense.

    • D. 

      A decrease in AP.


  • 14. 
    The statement of cash flows will not provide insight into:
    • A. 

      Why dividends were not increased.

    • B. 

      Whether cash flow is greater than net income.

    • C. 

      The exact proceeds of a future bond issue.

    • D. 

      How the retirement of debt was accomplished.


  • 15. 
    Rodman Co. had credit sales of $650,000. The beginning AR balance was $40,000 and the ending AR balance was $140,000. What were the cash collections from customers during the period?
    • A. 

      $750,000

    • B. 

      $650,000

    • C. 

      $550,000

    • D. 

      $690,000


  • 16. 
    Which of the following statement(s) describe the principal reason(s) why investors and creditors use financial statement analysis?
    • A. 

      To assess the risks associated with expected returns and to evaluate top and middle level management.

    • B. 

      To assess the risks associated with expected returns, to evaluate top and middle level management, and to predict the amount of expected returns.

    • C. 

      To assess the risks associated with expected returns and to predict the amount of expected returns.

    • D. 

      To establish recommended dividend and interest payments.


  • 17. 
    Short-term liquidity is:
    • A. 

      A company's ability to turn AR into cash.

    • B. 

      A company's ability to meet current payments as they become due.

    • C. 

      Current assets divided by current liabilities.

    • D. 

      A company's ability to sell inventory.

    • E. 

      A company's ability to shift current liabilities into long-term liabilities.


  • 18. 
    Wages paid to the factory supply shop foreman are considered an example of:
    • A. 

      Direct labor and period cost.

    • B. 

      Direct labor not period cost.

    • C. 

      Not direct labor nor period cost.

    • D. 

      Period cost not direct labor.


  • 19. 
    An example of direct labor cost is wages paid to:
    • A. 

      Neither a factory machine operator nor a supervisor in a factory.

    • B. 

      A supervisor in a factory but not a factory machine operator.

    • C. 

      A factory machine operator and a supervisor in a factory.

    • D. 

      A factory machine operator but not a supervisor in a factory.


  • 20. 
    Direct materials cost is:
    • A. 

      A period cost but not a product cost.

    • B. 

      Not a period cost nor a product cost.

    • C. 

      A period cost and a product cost.

    • D. 

      A product cost but not a period cost.


  • 21. 
    When volume or level of activity decreases, variable cost will:
    • A. 

      Increase per unit.

    • B. 

      Increase in total.

    • C. 

      Decrease per unit.

    • D. 

      Decrease in total.


  • 22. 
    Which of the following costs could contain both variable and a fixed cost element with respect to the total output of the company?
    • A. 

      Manufacturing OH.

    • B. 

      Sales commissions.

    • C. 

      Direct material.

    • D. 

      Administrative salaries.


  • 23. 
    Within the relevant range:
    • A. 

      Variable cost per unit decreases as production decreases.

    • B. 

      Variable cost per unit increases as product decreases.

    • C. 

      Fixed cost per unit decreases as production decreases.

    • D. 

      Fixed cost per unit increases as production decreases.


  • 24. 
    Financial and managerial accounting are similar in that both:
    • A. 

      Are mandatory.

    • B. 

      Emphasize the organization as a whole.

    • C. 

      Emphasize the relevance and flexibility of data.

    • D. 

      Involve summarizing financial data.


  • 25. 
    Last month a manufacturing company had the following operating results:Beg. FG: $84,000End FG: $71,000Sales: $505,000GM: $63,000What was COG Mfg?
    • A. 

      $429,000

    • B. 

      $492,000

    • C. 

      $442,000

    • D. 

      $455,000


  • 26. 
    Haagen Inc. is a merchandising company. Last month the company's cost of goods sold was $92,000. The company's beginning merchandise inventory was $14,000 and its ending merchandise inventory was $16,000. What was the total amount of the company's merchandise purchases for the month?
    • A. 

      $90,000

    • B. 

      $94,000

    • C. 

      $122,000

    • D. 

      $92,000


  • 27. 
    During the month of May, Cassidy Manufacturers incurred $30,000, $40,000 and $20,000 of DM, DL, and OH costs, respectively. If the COG Mfg was $95,000 and the ending WIP inventory was $15,000, the beginning WIP must have been:
    • A. 

      $10,000

    • B. 

      $5,000

    • C. 

      $110,000

    • D. 

      $92,000


  • 28. 
    The manufacturing operation that would be most likely to use a job-order costing system is:
    • A. 

      Toy manufacturing.

    • B. 

      Candy manufacturing.

    • C. 

      Shipbuilding.

    • D. 

      Crude oil refining.


  • 29. 
    In computing its predetermined OH rate, Brady Co. included its factory insurance cost twice. This error will result in:
    • A. 

      The ending balance of FG to be understated.

    • B. 

      The credits to OH to be understated.

    • C. 

      The net operating income to be overstated.

    • D. 

      COG Mfg to be overstated.


  • 30. 
    In a job-order cost system, the application of OH usually would be recorded as a debit to:
    • A. 

      COGS

    • B. 

      OH

    • C. 

      WIP

    • D. 

      FG


  • 31. 
    The balance in WIP equals:
    • A. 

      The balance in FG.

    • B. 

      The balance in COGS.

    • C. 

      The balances on the job cost sheets of uncompleted jobs.

    • D. 

      The balance in OH.


  • 32. 
    Karvel Corp. uses a predetermined OH rate based on machine-hours to apply manufacturing OH to jobs. For the month of August, Karvel estimated total OH costs at $300,000 and total machine-hours at 75,000 hours. Actual results for the period were OH costs of $290,000 and 75,000 machine-hours. As a result Karvel would have:
    • A. 

      Found it necessary to recalculate the predetermined OH rate.

    • B. 

      Applied less OH to WIP than the actual amount of OH cost for the year.

    • C. 

      Applied an amount of OH to WIP that was equal to the actual amount of OH.

    • D. 

      Applied more OH to WIP than the actual amount of OH.


  • 33. 
    The Collins Co. uses predetermined OH rates to apply manufacturing to jobs. The rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the company made the following estimates:Dept. A:DL cost $65,000OH $91,000DL-hours 8,000Machine-hours 3,000Dept. B:DL cost $42,000OH $48,000DL hours $10,000Machine-hours 12,000What rates would be used in Dept. A and B. respectively?
    • A. 

      71% and $4.00

    • B. 

      140% and $4.80

    • C. 

      140% and $4.00

    • D. 

      71% and $4.80


  • 34. 
    Galbraith Co. applies OH to jobs on the basis of 70%DL cost. If job 201 shows $28,000 of OH applied, the DL cost on the job was:
    • A. 

      $28,000

    • B. 

      $19,600

    • C. 

      $40,000

    • D. 

      $36,000


  • 35. 
    Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which of the following would probably be the most accurate measure of activity to use for allocating the cost of inspecting the finished products at Guerra?
    • A. 

      Machine-hours

    • B. 

      Direct labor-hours

    • C. 

      Inspection time

    • D. 

      Number of inspections


  • 36. 
    In an activity-based costing system, activity rates are used to:
    • A. 

      Debit WIP.

    • B. 

      Set targets for how fast work should be done.

    • C. 

      Debit OH.

    • D. 

      Determine the total amount of DL-hours required to product a unit of product.


  • 37. 
    In ABC, the total OH cost in an activity pool can be computed by:
    • A. 

      Dividing the total activity in the activity cost pool by the activity rate for the activity cost pool.

    • B. 

      Multiplying the total activity in the activity cost pool by the activity rate for the activity cost pool.

    • C. 

      Dividing the total DL-hours in the activity cost pool by the activity rate for the activity cost pool.

    • D. 

      Multiplying the total DL-hours in the activity cost pool by the activity rate for the activity cost pool


  • 38. 
    In ABC,
    • A. 

      OH cannot be overapplied.

    • B. 

      OH cannot be underapplied.

    • C. 

      OH cannot be overapplied or underapplied.

    • D. 

      OH can be overapplied or underapplied.


  • 39. 
    In ABC, manufacturing OH is credited when OH is applied to products using activity rates.
    • A. 

      True.

    • B. 

      Fales.


  • 40. 
    The activity rates in ABC are computed by dividing the OH in each production department by its DL-hours.
    • A. 

      True.

    • B. 

      False.


  • 41. 
    Which of the following types of entities would most likely use a process costing system?
    • A. 

      A shipbuilder.

    • B. 

      A furniture manufacturer.

    • C. 

      A law firm.

    • D. 

      A utility producing natural gas.


  • 42. 
    Darvin company uses the weighted-average method in its process costing system. The Welding Dept. started the month with 20,000 units in beginning WIP that were 10% complete with respect to conversion costs. The conversion cost in this beginning WIP inventory was $7,000. An additional 63,000 units were started into production during the month. There were 10,000 units in the ending QIP inventory that were 10% complete with respect to conversion costs. A total of $237,600 in conversion costs were incurred in the dept. during the month.What would be the cost per equivalent unit for conversion costs for the month?
    • A. 

      $3.255

    • B. 

      $3.771

    • C. 

      $3.500

    • D. 

      $3.305


  • 43. 
    Hall Co. uses the weighted-average method in its process costing system. The Welding Dept. started the month with 18,000 units in its beginning WIP inventory that were 60% complete with respect to conversion costs. The conversion cost in this beginning WIP inventory was $64,800 . An additional 84,000 units were started into production during the month and 78,000 units were completed in the Welding Dept. and transferred to the next Dept. There were 24,000 units in the ending WIP inventory that were 30% complete with respect to conversion costs. A total of $431,520 in conversion costs were incurred in the dept. during the month. What would be the cost per equivalent unit for conversion costs for the month?
    • A. 

      $5.825

    • B. 

      $3.996

    • C. 

      $5.137

    • D. 

      $6.000


  • 44. 
    The Assembly Dept. started the month with 78,000 units in its beginning WIP. An additional 254,000 units were transferred in from the prior department during the month to begin processing in the Assembly Dept. There were 21,000 units in the ending WIP for this dept.How many units were transferred to the next processing dept. during the month?
    • A. 

      332,000

    • B. 

      311,000

    • C. 

      197,000

    • D. 

      353,000


  • 45. 
    Earnings per share of common stock is computed by:
    • A. 

      Dividing net income by the average number of common and preferred shares outstanding.

    • B. 

      Dividing net income by the average number of common shares outstanding.

    • C. 

      Dividing net income minus preferred dividends by the average number of common and preferred shares outstanding.

    • D. 

      Dividing net income minus preferred dividends by the average number of common shares outstanding.


  • 46. 
    Which of the following would be considered a "source" of cash for purposes of constructing a statement of cash flows?
    • A. 

      A decrease in AR.

    • B. 

      An increase in PPD expenses.

    • C. 

      An increase in accrued liabilities.

    • D. 

      An increase in PPE


  • 47. 
    Under the indirect method of determining net cash provided by operating activities on the statement of cash flows, which of the following would be recorded as a deduction from net income?
    • A. 

      A decrease in AR.

    • B. 

      An increase in AP.

    • C. 

      A decrease in AP.

    • D. 

      An increase in deferred revenue.


  • 48. 
    In a statement of cash flows, a change in the taxes payable account would be classified as:
    • A. 

      An operating activity.

    • B. 

      A financing activity.

    • C. 

      An investing activity.

    • D. 

      A noncash item-not on statement.


  • 49. 
    Indirect labor is a part of:
    • A. 

      Prime cost.

    • B. 

      Conversion cost.

    • C. 

      Period cost.

    • D. 

      Non-manufacturing cost.


  • 50. 
    Depreciation on a personal computer used in the marketing department of a manufacturing firm would be classified as:
    • A. 

      A product cost that is fixed with respect to the company's output.

    • B. 

      A period cost that is fixed with respect to the company's output.

    • C. 

      A product cost that is variable with respect to the company's output.

    • D. 

      A period cost that is variable with respect to the company's output.


  • 51. 
    Aable Co. manufacturing OH is 20% of its total conversion costs. If DL $45,000 and if DM are $53,000 the manufacturing OH is:
    • A. 

      $11,250

    • B. 

      $13,250

    • C. 

      $180,000

    • D. 

      $24,500


  • 52. 
    Emco Co. uses DL cost as a basis for computing its predetermined OH rate. In computing the predetermined OH rate for last year, the company misclassified a portion of DL cost as indirect labor. The effect of this misclassification will be to:
    • A. 

      Understate the predetermined OH rate.

    • B. 

      Overstate the predetermined OH rate.

    • C. 

      Have no effect on the predetermined OH rate.

    • D. 

      Cannot be determined from the information given.


  • 53. 
    On the schedule of COG Mfg, the final COG Mfg figure represents:
    • A. 

      The amount of cost charged to WIP during the period.

    • B. 

      The amount of cost transferred from FG to COGS during the period.

    • C. 

      The amount of cost placed into production during the period.

    • D. 

      The amount of cost of goods completed during the current year whether they were started before or during the current year.


  • 54. 
    Under a job-order costing system, the dollar amount transferred from WIP to FG is the sum of the costs charged to all jobs:
    • A. 

      Started in process during the period.

    • B. 

      In process during the period.

    • C. 

      Completed and sold during the period.

    • D. 

      Completed during the period.


  • 55. 
    Crich Co. uses DL-hours in its predetermined OH rate. At the beginning of the eyar, the estimated DL-hours were 21,800 hours and the total estimated OH was $497,040. At the end of the year, actual DL-hours for the year were 21,500 hours and the actual OH for the year was $492,040. OH at the end of the year was:
    • A. 

      $6,840 overapplied

    • B. 

      $6,840 underapplied

    • C. 

      $1,840 underapplied

    • D. 

      $1,840 overapplied.


  • 56. 
    In ABC, OH is credited when OH is applied to products using activity rates.
    • A. 

      True.

    • B. 

      False.


  • 57. 
    In describing the cost formula equation, Y=a + bX, which of the following is correct:
    • A. 

      Y is the independent variable.

    • B. 

      A is the variable cost per unit.

    • C. 

      A and b are valid for all levels of activity.

    • D. 

      In the high-low method, b equals the change in cost divided by the change in activity.


  • 58. 
    The CM ratio always increases when the:
    • A. 

      Break-even point increases.

    • B. 

      Break-even point decreases.

    • C. 

      Variable expenses as a percentage of net sales decrease.

    • D. 

      Variable expenses as a percentage of net sales increase.


  • 59. 
    The break-even point in unit sales is found by dividing total fixed expenses by:
    • A. 

      The CM ratio.

    • B. 

      The variable expenses per unit.

    • C. 

      The sales price per unit.

    • D. 

      The CM per unit.


  • 60. 
    Carver Co. produces a product which sells for $40. Variable manufacturing costs are $18 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and admin. costs are $4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The CM per unit is:
    • A. 

      $7

    • B. 

      $17

    • C. 

      $22

    • D. 

      $16


  • 61. 
    Wenig Inc. has some material that originally cost $73,500. The material has a scrap value of $45,600 as is, but if reworked at a cost of $6,600, it could be sold for $58,100. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as scrap?
    • A. 

      ($22,000)

    • B. 

      ($67,600)

    • C. 

      $51,500

    • D. 

      $5,900


  • 62. 
    Winger Corp. sells a product for $5 per unit. The fixed expenses are $210,000 and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Winger Corp. to realize a profit of 10% of sales?
    • A. 

      $700,000

    • B. 

      $525,000

    • C. 

      $472,500

    • D. 

      $420,000


  • 63. 
    Kahn Co. produces and sells 8,000 units of Product X each year. Each unit of Product X sells for $10 and has a CM of $6. It is estimated that if Product X is discontinued, $50,000 of the $60,000 in fixed costs charged to Product X could be eliminated. These data indicate that if Product X is discontinued, overall company net operating income should:
    • A. 

      Increase by $2,000 per year.

    • B. 

      Decrease by $2,000 per year.

    • C. 

      Increase by $38,000 per year.

    • D. 

      Decrease by $38,000


  • 64. 
    Total variable cost divided by sales revenue is:
    • A. 

      Variable cost ratio.

    • B. 

      Revenue ratio.

    • C. 

      Contribution ratio.

    • D. 

      Sales ratio.

    • E. 

      Degree of operating leverage.


  • 65. 
    Which statement is not true about cost-volume profit (CVP) analysis?
    • A. 

      CVP is a powerful tool for planning and decision making.

    • B. 

      CVP allows managers to do sensitivity analysis by examining the impact of various prices or costs on profit.

    • C. 

      CVP shows how revenues, expenses, and profits behave as volume changes.

    • D. 

      CVP can be used in both single-product and multi-product firms.

    • E. 

      All statements are true.


  • 66. 
    Which is the equation for operating income?
    • A. 

      (P*Units sold) - (Unit VC*Units sold) - FC

    • B. 

      (P*Units sold) + (Unit VC*Units sold) + FC

    • C. 

      (P+Units sold) - (Unit VC + Units sold) - FC

    • D. 

      (P - Units sold) + (Unit VC - Units sold) + FC

    • E. 

      (P*Units sold) + (Unit CV*Units sold) - FC


  • 67. 
    If actual sales equal break-even sales:
    • A. 

      The margin of safety is negative.

    • B. 

      The margin of safety equals zero.

    • C. 

      The margin of safety is positive.

    • D. 

      It is impossible to say anything about the margin of safety.

    • E. 

      The margin of safety is negative or positive.


  • 68. 
    Firm X and Firm Y are competitors within the same industry. Firm X produces its product using large amounts of DL. Firm Y has replaced DL with investment in machinery. Projected sales for both firms are 15% LESS than in the prior year. Which statement regarding projected profits is TRUE?
    • A. 

      Firm X will lose more profit than Firm Y.

    • B. 

      Firm Y will lose more profit than Firm X.

    • C. 

      Firm X and Firm Y will lose the same amount of profit.

    • D. 

      Neither Firm X nor Firm Y will lose profit.


  • 69. 
    Which of the following would probably be a VC at college?
    • A. 

      Salary of the head janitor.

    • B. 

      Cost of registration forms.

    • C. 

      Salary of the college president.

    • D. 

      None of the above.


  • 70. 
    The relevant range:
    • A. 

      Is the normal range of output.

    • B. 

      Is the range of output where cost relationships are valid.

    • C. 

      May change from period to period.

    • D. 

      All of the answers are correct.


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