BUSINESS

Which of the following is a nondepreciable asset?

 

 

A. Desk chairs

 

B. Land

 

C. Computer

 

D. Building

 

A depreciation method that allocates depreciation of a plant asset based on the Tax Act of 1989 is the _______ method.

 

 

A. straight-line

 

B. units-of-production

 

C. modified accelerated cost recovery

 

D. double-declining-balance

 

The credit portion of the adjustment for the depletion of a coal mine was credited to the Coal Mine account. This error would cause

 

 

A. the period’s net income to be overstated.

 

B. the period’s net income to be understated.

 

C. the period end assets to be overstated.

 

D. None of the above

 

When calculating declining-balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause

 

 

A. the period’s depreciation expense to be overstated.

 

B. the period’s depreciation expense to be understated.

 

C. the period end assets to be understated.

 

D. None of the above

 

The allocation of the cost of a natural resource is

 

 

A. depreciation.

 

B. depletion.

 

C. amortization.

 

D. accrual.

 

A company purchases a patent for $50,000. The patent will be amortized over five years. The entry to record the amortization in the first year is which of the following?

 

 

A. Debit Patents $50,000; credit Cash $50,000

 

B. Debit Amortization of Patents $10,000; credit Patents $10,000

 

C. Debit Amortization of Patents $50,000; credit Patents $50,000

 

D. Debit Patents $10,000; credit Amortization of Patents $10,000

 

Lumber used in construction of a building is part of

 

 

A. raw material costs.

 

B. labor costs.

 

C. manufacturing overhead.

 

D. None of the above

 

In a manufacturing company, the purchase of materials on account should be recorded as follows:

 

 

A.

Raw Materials Inventory

Accounts Payable

 

B.

Work-in-Process Inventory

Accounts Payable

 

C.

Finished Goods Inventory

Accounts Payable

 

D.

Accounts Payable

Raw Materials Inventory

 

The formula for cost of goods manufactured is

 

 

A. raw materials plus direct labor minus overhead plus beginning work-in-process inventory plus ending work-in-process inventory.

 

B. raw materials minus direct labor plus overhead plus beginning work-in-process inventory plus ending work-in-process inventory.

 

C. beginning work-in-process plus total manufacturing cost minus ending work-in-process.

 

D. raw materials plus direct labor less overhead plus beginning work-in-process inventory less ending work-in-process inventory.

 

Raw material inventory appears on the

 

 

A. balance sheet.

 

B. income statement.

 

C. cost of goods manufactured statement.

 

D. Both a and c

 

If direct labor for the month is $40,000, overhead is applied based on direct labor, annual overhead is $600,000, and annual direct labor is $1,000,000, what is the entry to charge direct labor to production?

 

 

A. Debit Work-in-Process Inventory $40,000; credit Payroll $40,000

 

B. Debit Overhead—Applied $40,000; credit Work-in-Process Inventory $40,000

 

C. Debit Work-in-Process Inventory $24,000; credit Overhead—Applied $24,000

 

D. Debit Work-in-Process Inventory $66,000; credit Overhead—Applied $66,000

 

Omega.com sold 25 jet skis for $7,000, which cost $5,000. The entry to record the sale would include a

 

 

A. credit to Finished Goods Inventory for $5,000.

 

B. credit to Sales for $7,000.

 

C. debit to Cost of Goods Sold for $5,000.

 

D. All of the above

 

During the week ending on November 30, total factory payroll incurred was $6,000. Of this total, 80% was for direct labor. The entry to record the payroll distribution would include which of the following?

 

 

A. Debit Work-in-Process Inventory $4,800 and Overhead—Control $1,200

 

B. Debit Work-in-Process Inventory $6,000

 

C. Debit Work-in-Process Inventory $4,800 and Overhead—Applied $1,200

 

D. Debit Work-in-Process Inventory $4,800 and Indirect Labor Expense $1,200

 

The statement of cost of goods manufactured includes

 

 

A. direct labor costs.

 

B. raw material costs.

 

C. manufacturing overhead.

 

D. All of the above

 

The entry for indirect materials (such as glue, etc.) requisitioned for use in production is which of the following?

 

 

A.

Raw Materials Inventory

Work-in-Process Inventory

 

B.

Work-in-Process Inventory

Accounts Payable

 

C.

Work-in-Process Inventory

Raw Materials Inventory

 

D. None of the above

 

What is the journal entry to record the direct labor summarized on the labor distribution report?

 

 

A. Debit Finished Goods; credit Payroll

 

B. Debit Work-in-Process; credit Payroll

 

C. Debit Payroll; credit Direct Labor

 

D. Debit Payroll; credit Cash

 

Factory Supplies Expense, Depreciation Expense—Factory, and Heat, Light, and Power—Factory appear on which section of the worksheet?

 

 

A. Statement of cost of goods manufactured

 

B. Balance sheet

 

C. Income statement

 

D. Statement of cost of goods sold

 

Candyland completed the manufacturing process. The entry to transfer the
product to finished goods is which of the following?

 

 

A.

Raw MaterialsInventory

Finished Goods Inventory

 

B.

Finished Goods Inventory

Cost ofGoods Sold

 

C.

Finished Goods Inventory

Work-in-Process Inventory

 

D.

FinishedGoods Inventory

Raw Materials Inventory

 

The entry to record rent expense of $9,000, supervision expense of $19,000, and depreciation expense of $7,000 to overhead is which of the following?

 

 

A. Debit Overhead—Applied $35,000; credit Rent Expense $9,000; credit Supervision $19,000; credit Depreciation Expense $7,000

 

B. Debit Overhead—Control $35,000; credit Rent Expense $9,000; credit Supervision $19,000; credit Depreciation Expense $7,000

 

C. Debit Overhead—Applied $35,000; credit Overhead—Control $35,000

d. none of the above

Journal entries crediting Payroll and debiting Work-in-Process Inventory are made for

 

 

A. administrative salaries.

 

B. hourly manufacturing labor.

 

C. foremen’s salaries.

 

D. raw materials.

 

Manufacturing overhead includes all manufacturing costs,

 

 

A. including raw materials.

 

B. including overhead.

 

C. excluding raw materials and direct labor.

 

D. None of the above

 

The entry to record the requisition of supplies from the storeroom would include which of the following?

 

 

A. Debit to Raw Materials; credit to Work-in-Process

 

B. Debit to Overhead—Applied; credit to Overhead—Control

 

C. Debit to Work-in-Process; credit to Overhead—Control

 

D. Debit to Overhead—Control; credit to Supplies Inventory

 

Calculate the cost of goods sold when beginning finished goods inventory equals $70,000, ending finished goods inventory is $85,000, and cost of goods manufactured is $600,000.

 

 

A. $615,000

 

B. $445,000

 

C. $685,000

 

D. $585,000

 

What is the journal entry to record issuing raw materials from the storeroom?

 

 

A. Debit Raw Materials Inventory; credit Work-in-Process

 

B. Debit Overhead—Control; credit Work-in-Process

 

C. Debit Work-in-Process; credit Overhead—Control

 

D. Debit Work-in-Process; credit Raw Materials Inventory

 

What is the journal entry to record issuing supplies from the storeroom?

 

 

A. Debit Overhead—Applied; credit Raw Materials Inventory

 

B. Debit Overhead—Control; credit Supplies Inventory

 

C. Debit Supplies Inventory; credit Overhead—Applied

 

D. Debit Overhead—Applied; credit Supplies Inventory

 

If direct labor for the month is $80,000 and overhead is applied based on 75% of direct labor dollars, what is the entry to apply overhead?

 

 

A. Debit Work-in-Process Inventory $80,000; credit Payroll $80,000

 

B. Debit Overhead—Applied $60,000; credit Work-in-Process Inventory $60,000

 

C. Debit Work-in-Process Inventory $60,000; credit Overhead—Applied $60,000

 

D. Debit Work-in-Process Inventory $80,000; credit Overhead—Applied $80,000

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