1. In the following journal entry, revenue is being recognized:
A) at the same time cash is collected
B) before the cash is collected
C) after the cash is collected
D) no revenue is being recognized
2. Up-State Corporation ordered materials from Down-State Manufacturing on October 1, 2008. Down-State shipped the materials by rail on October 5 and the railroad notified Up-State on October 12 that the goods had arrived. Up-State picked up the materials on October 13. The terms of the sale are FOB shipping point. On what date should Up-State consider this a purchase?
A) October 1
B) October 5
C) October 12
D) October 13
3. Company X produces and sells 3 products: X1, X2, and X3. The company recently developed a new advertising campaign for X3. The costs incurred to develop this ad would be considered:
A) facility-sustaining costs
B) product-sustaining costs
C) batch-related costs
D) unit-related costs
4. An unfavorable sale price variance reflects
A) Fewer units sold than budgeted.
B) A lower actual selling price than budgeted.
C) An increase in the cost of products causing a decrease in income for the period.
D) A decrease in the amount of cash received from customers.
5. A cash sale would impact the:
A) income statement only
B) balance sheet and income statement only
C) balance sheet and statement of cash flows only
D) balance sheet, income statement, and statement of cash flows
6. Limited liability means:
A) A company is only liable for an amount that is established by a pre-set limit.
B) Creditors are limited to just the cash available in the company at the time of the loss.
C) Creditors of a company can only claim the assets of the firm and not the assets of the owners of the firm.
D) Creditors of a firm can claim all the assets of a company and all of the owners’ personal assets.
7. In times of declining prices, ______ generally result(s) in the ______ cost of goods sold.
A) LIFO and FIFO, same
B) FIFO, lower
C) LIFO, lower
D) LIFO, higher
Use the following to answer questions 8 and 9:
ThinkStyles, Inc. applies manufacturing overhead on the basis of the number of indirect labor hours required. The following information is available:
Indirect Labor Hours 3,100 3,180
Manufacturing Overhead Costs $111,600 $124,000
8. The predetermined manufacturing overhead rate per indirect labor hour is:
9. The amount of over/underapplied manufacturing overhead is:
A) $9,520 underapplied
B) $3,200 underapplied
C) $12,400 underapplied
D) $12,400 overapplied
10. On April 30, Crossover Company had a general ledger cash balance of $216,854. At the end of April, the bank statement had a balance of $249,322. Deposits in transit amounted to $26,500 and there was a service charge of $180. Outstanding checks totaled $59,148. What is the reconciled/adjusted amount of cash?
D) None of the above.
11. The journal entry to record wages earned by assembly line workers would include a:
A) credit to Indirect Labor
B) debit to Finished Goods Inventory
C) debit to Work In Process Inventory
D) credit to Cost of Goods Manufactured
12. On September 1, 2009, Olpe Corporation paid $2,400 in advance for a one year insurance policy that covers the period September 1, 2009 through August 31, 2010. What amount of insurance expense should Olpe report for the year ended December 31, 2009?
13. The Pacioli Manufacturing Company has kept track of the number of units they have produced each month and the cost to produce those units for the past six months.
Month Number of Units Cost of Units Produced
July 10,000 $60,000
Aug. 11,000 $66,000
Sept. 20,000 $110,000
Oct. 16,000 $90,000
Nov. 12,000 $70,000
Dec. 18,000 $102,000
Using the high/low method, what is the estimated total cost if 14,000 units are produced in January?
14. Which of the following would be part of the entry to record a sales return?
A) credit to sales returns and allowances
B) debit to accounts receivable
C) debit to sales returns and allowances
D) debit to cash