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ACCT 301 Midterm exam




Question;1. Question;(TCO 1) The retained earnings;statement shows all of the following except which one?;The amounts of changes in retained earnings;during the period;The causes of changes in retained earnings;during the period;The time period following the one shown for;the income statement;Beginning retained earnings on the first line;of the statement;2. Question;(TCO 1) In the annual report;where would a financial statement reader find out if the company?s financial;statements give a fair depiction of its financial position and operating;results?;Notes to the financial statements;Management discussion and analysis section;Balance sheet;Auditor?s report;3. Question;(TCO 4) Using the following;balance sheet and income statement data, what is the earnings per share?;Current assets $ 9,000 Net income $ 12,000;Current liabilities 4,000 Stockholders? equity 27,000;Average assets 44,000 Total liabilities 6,000;Total assets 30,000;Average common shares outstanding was 10,000;$1.20;$2.00;$0.83;$0.44;4. Question;(TCO 4) A useful measure of;solvency is which of the following?;current ratio;earnings per share;return on assets ratio;debt to total assets ratio;5. Question;(TCO 2) Which pair of accounts;follows the rules of debit and credit, in relation to increases and decreases;in the same manner?;Accounts Payable and Rent Expense;Repair Expense and Notes Payable;Prepaid Insurance and Advertising Expense;Service Revenues and Equipment;6. Question;(TCO 2) Which of the following;is not part of the recording process?;Analyzing transactions;Preparing a trial balance;Entering transactions in a journal;Posting journal entries;7. Question;(TCO 3) Two individuals at a;retail store work the same cash register. You evaluate this situation as which;of the following?;a violation of establishment of responsibility;a violation of separation of duties;supporting the establishment of responsibility;supporting internal independent verification;8. Question;(TCO 3) The following;information was taken from Niland Company cash budget for the month of April;Beginning cash balance $30,000;Cash receipts 27,000;Cash disbursements 34,000;If the company has a policy of maintaining end of the month;cash balance of $25,000, the amount the company would have to borrow is which;of the following?;$29,000;$5,000;$2,000;$0;9. Question;(TCO 11) Managerial accounting;does which of the following?;is concerned with costing products;is governed by generally accepted accounting;principles;pertains to the entity as a whole and is;highly aggregated;places emphasis on special-purpose information;10. Question: (TCO 11) Which one of the following;is not a direct material?;A tire used for a lawn mower;Plastic used in the covered case for a home PC;Steel used in the manufacturing of;steel-radial tires;Lubricant for a ball-bearing joint for a large;crane;4 of 4;Comments;11. Question: (TCO 11) Which of the following are;period costs?;Raw materials;Direct materials and direct labor;Direct labor and manufacturing overhead;Selling expenses;\;12. Question: (TCO 11) Ranger Company reported;total manufacturing costs of $65,000, manufacturing overhead totaling $13,000;and direct materials totaling $16,000. How much is direct labor cost?;$49,000;$94,000;$29,000;$36,000;13. Question: (TCO 11) McNally Manufacturing;Company reported the following year-end information;Beginning work in process inventory $ 46,000;Beginning raw materials inventory 24,000;Ending work in process inventory 50,000;Ending raw materials inventory 20,000;Raw materials purchased 680,000;Direct labor 240,000;Manufacturing overhead 100,000;How much is McNally Manufacturing?s cost of goods;manufactured for the year?;$684,000;$1,024,000;$1,020,000;$1,028,000;14. Question: (TCO 5) Which statement below;describes a variable cost?;It varies in total with changes in the level;of activity.;It remains constant in total over different;levels of activity.;It varies inversely in total with changes in;the level of activity.;It varies proportionately per unit with;changes in the level of activity.;15. Question: (TCO 5) Which one of the following is;not an assumption of CVP analysis?;All units produced are sold.;Cost classifications are reasonably accurate.;Factors other than;changes in activity may affect costs.;The sales mix remains constant.;Page: 1 2;Page: 1 2;1. Question;(TCO 5) A company has total;fixed costs of $210,000 and a contribution margin ratio of 30%. How much sales;are necessary to break even?;$125,000;$630,000;$700,000;$54,000;2. Question;(TCO 5) How much sales are;required to earn a target income of $90,000, if total fixed costs are $100,000;and the contribution margin ratio is 40%?;$400,000;$200,000;$475,000;$340,000;3. Question;(TCO 6) Which one of the;following is not a benefit of budgeting?;It facilitates the coordination of activities.;It provides definite objectives for evaluating;performance.;It provides assurance that the company will;achieve its objectives.;It requires all levels of management to plan;ahead on a recurring basis.;4. Question;(TCO 6) Under what situation;might a budget be most effective?;When used to evaluate a manager?s performance.;As a tool to assess blame when costs are too;high.;When it is created by top management.;Budgets are equally effective in all;situations.;5. Question;(TCO 6) What three differences;exist between long-range planning and budgeting?;Amount of detail, content, and emphasis;Time periods involved, amount of detail, and;content;Content, emphasis, and amount of detail;Emphasis, time periods involved, and amount of;detail;6. Question;(TCO 6) Which one of the;following is a source of information used to prepare the budgeted income;statement?;Cash budget;Budgeted balance sheet;Selling and administrative expense budget;Capital expenditure budget;7. Question;(TCO 7) When is a static;budget most appropriate in evaluating a manager?s performance?;When actual costs incurred equal the amounts;on the budget.;When the actual activity level is less than;the master budget activity.;The static budget is not appropriate for;evaluating managers.;When the company performed at the same;activity level as the static budget level.;8. Question;(TCO 7) Which type of center;is the toy department in a Wal-Mart store?;An exception center;A profit center;A cost center;An investment center;4 of 4;Comments;9. Question;(TCO 7) The best measure of;the performance of the manager of a profit center is which of the following?;rate of return on investment;success in meeting budgeted goals for controllable;costs;amount of controllable margin generated by the;profit center;amount of contribution margin generated by the;profit center;0 of 4;Comments;10. Question: (TCO 7) An investment center;generated a contribution margin of $200,000, controllable fixed costs of;$100,000 and sales of $1,000,000. The center?s average operating assets were;$400,000. How much is the return on investment?;25%;175%;50%;75%;11. Question: (TCO 11) Assume you have just taken a;position as controller for a new company that manufactures and sells wrought;iron wall hangings. Although the founder of the company, who is the president;and CEO, is a great artisan, she has very limited knowledge of accounting.;Instructions;To help your new boss better understand accounting for a;manufacturing organization, prepare a response to her in which you: (1);identify, (2) describe, and (3) provide examples of the three manufacturing;costs used in accounting for a manufacturing company..;12. Question: (TCO 4) Are short-term creditors;long-term creditors, and stockholders primarily interested in the same;characteristics of a company? Explain.;13. Question: (TCO 5) In the month of September;Nixon Company sold 800 units of product. The average sales price was $30.;During the month, fixed costs were $7,200 and variable costs were 60% of sales.;Instructions;(a) Determine the contribution margin in dollars, per unit;and as a ratio;(b) Using the contribution margin technique, compute the;break-even point in dollars and in;units


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