ACC 400 Final Exam Guide

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ACC 400 Final Exam (Written Type)
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1.) Trim Force Corp. had the following information in their accounting
records:
Work in process inventory, beginning balance $50,000
Cost of direct materials used $350,000
Direct labor cost applied to production $200,000
Cost of finished goods manufactured $750,000
Manufacturing overhead during production was $250,000. What was the work
in process inventory on hand at the end of the year?
2.) Walsh Corp. uses direct labor hours to determine their applied
manufacturing overhead. They use a rate of $30 per direct labor hour. During
the production period, company employees worked 10,000 direct labor hours,
and had actual overhead costs of $305,000.
a.) Record the year-end journal entry to close out the Manufacturing
Overhead account to the Cost of Goods Sold account.
b.) Was manufacturing overhead underapplied or was it overapplied?
3.) Sorin Corp. uses process costing for its two production departments:
Cutting and Painting. The company’s manufacturing information for the month
of August is provided below:
Cutting Painting
Beginning work in process $1,000 $1,200
Costs transferred in ? ?
Costs incurred in Aug $3,500 $5,000
Ending work in process $2,000 $2,500
a.) Record the transfer costs from the cutting department to the painting
department in Aug.
b.) Record the transfer costs from the painting department to the finished
goods inventory account in Aug.
4.) Badin Corp. has the following information about its most popular product
line:
Sales price per unit $50
Variable cost per unit $25
Total fixed manufacturing & overhead
costs
$400,000
Compute the following:
a.) Unit contribution margin.
b.) Units that must be sold to break even.
c.) Units that must be sold to earn an operating income of $500,000.
5.) Complete Dillon Corp.’s flexible budget for 75,000 units using the
information listed below:
25,000 Units 50,000 Units 75,000 Units
Sales $375,000 $750,000
Cost of Goods Sold $250,000 $500,000
Gross Profit on Sales $125,000 $250,000
Operating expenses ($10,000 of it is
fixed)
$35,000 $60,000
Operating Income $90,000 $190,000
Income Taxes (30% of operating
income)
$27,000 $57,000
Net Income $63,000 $133,000
Assume that cost of goods sold and any variable operating expenses vary directly
with sales and that income taxes remain constant at 30%.
6.) Del Sol Healthcare is considering two capital investment proposals. The
information for both projects is listed below:
Proposal #1 Proposal #2
Cost of the investment $250,000 $300,000
Estimated salvage value $25,000 $30,000
Average estimated net
income
$50,000 $60,000
Calculate the return on average investment for both proposals and discuss
which one would be the best option for investment.
---------------------------------------------------------------------------------------------------
------------------------
ACC 400 Final Exam
To Purchase This Material Click below Link
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FOR MORE CLASSES VISIT
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1. Zelma Company's last financial statements provided the following ratios:
Current ratio 3:2
Quick ratio 1:2
Accounts receivable turnover 9.0 times
Inventory turnover 8.0 times
Net income percentage 12.5%
Return on equity 22.6%
Return on assets 9.8%
To the nearest day, what is the operating cycle for Zelma?
a) 80 days
b) 86 days
c) 172 days
d) 129 days
2. The following events have been projected:
A. Cash sales and collections from customers totaling $980,000
B. Cash payments for operating expenses of $560,000
C. Cash payments for income taxes and interest expense of $45,000
D. Cash payments of prior period accruals of $80,000
E. Borrowed $50,000 cash by issuing a note payable
F. Cash dividends of $20,000
The beginning balance of cash is $45,000. What is the budgeted ending balance of
cash?
a. $325,000
b. $370,000
c. $275,000
d. $245,000
3. On January 1, a business exchanged a plant asset with a cost of $18,000
and accumulated depreciation of $16,500 for a similar asset that had a list price
of $23,000. The business received a trade-in allowance of $2,100 on the old plant
asset. What was the result of the exchange?
a. A $600 gain on the disposal of a plant asset.
b. A $1,000 unrecognized gain on the exchange of a plant asset.
c. A cost basis of $22,400 for the new plant asset
d. A cost basis of $23,600 for the new plant asset
4. Which one of the following is not an objective of a system of internal controls?
a. Safeguard company assets
b. Overstate liabilities in order to be conservative
c. Enhance the accuracy and reliability of accounting records
d. Reduce the risks of errors
5. A company’s past experience indicates that 60% of its credit sales are
collected in the month of sale, 30% in the next month, and 5 % in the second
month after the sale; the remainder is never collected. Budgeted credit sales
were:
July $120,000
August 72,000
September 180,000
The cash inflow in the month of September is expected to be
a. $135,600
b. $102,600
c. $108,000
d. $129,600
6. A check for $275 is incorrectly recorded by a company as $257. On the bank
reconciliation, the $18 error should be
a. Added to the balance per books.
b. Deducted from the balance per book.
c. Added to the balance per bank.
d. Deducted from the balance per bank.
7. The Allowance for Doubtful Accounts is necessary because
a. when recording uncollectible accounts expense, it is not possible to know
which specific accounts will not pay.
b. uncollectible accounts that are written off must be accumulated in a
separate account.
c. a liability results when a credit sale is made.
d. management needs to accumulate all the credit losses over the years.
8. Under the direct write-off method of accounting for uncollectible
accounts, Bad Debts Expense is debited
a. when a credit sale is past due.
b. at the end of each accounting period.
c. whenever a pre-determined amount of credit sales have
been made.
d. when an account is determined to be uncollectible
9. Manning Company uses the percentage of receivables method for recording bad
debts expense. The accounts receivable balance is $200,000 and credit sales are
$1,000,000. Management estimates that 5% of accounts receivable will be
uncollectible. What adjusting entry will Manning Company make if the Allowance
for Doubtful Accounts has a credit balance of $2,000 before adjustment?
a. Bad Debts Expense 10,000
Allowance for Doubtful Accounts
10,000
b. Bad Debts Expense 8,000
Allowance for Doubtful Accounts
8,000
c. Bad Debts Expense 8,000
Accounts Receivable 8,000
d. Bad Debts Expense 10,000
Accounts Receivable 10,000
10. The receivables turnover ratio
a. Is computed by dividing net credit sales for the accounting period by the
cash realizable value of accounts receivable on the last day of the accounting
period.
b. Can be used to compute the average collection period.
c. Is a method of evaluating the solvency of net accounts receivable.
d. Is only important to internal users of accounting information.
11. A measure of a company’s solvency is the
a. acid-test ratio.
b. current ratio.
c. times interest earned ratio.
d. asset turnover ratio.
12. The times interest earned ratio is computed by dividing
a. net income by interest expense.
b. income before income taxes by interest expense.
c. income before interest expense by interest expense.
d. income before interest expense and income taxes by interest
expense.
13. The 2007 financial statements of Shadow Co. contain the following
selected data (in millions).
Current Assets $ 75
Total Assets 120
Current Liabilities 40
Total Liabilities 85
Cash 8
Interest Expense 5
Income Taxes 10
Net Income 16
The debt to total assets ratio is
a. 70.8%
b. 53.3%
c. 1.41%
d. 6.2 times
14. The statement "Bond prices vary inversely with changes in the market rate
of interest" means that if the
a. market rate of interest increases, the contractual interest
rate will decrease.
b. contractual interest rate increases, then bond prices will go
down.
c. market rate of interest decreases, then bond prices will go
up.
d. contractual interest rate increases, the market rate of
interest will decrease.
15. A company would not acquire treasury stock
a. in order to reissue shares to officers.
b. as an asset investment.
c. in order to increase trading of the company’s stock.
d. to have additional shares available to use in acquisitions of
other companies.
16. Which of the following is the appropriate general journal entry to record
the declaration of cash dividends?
a. Retained Earnings
Cash
b. Dividends Payable
Cash
c. Paid-in Capital
Dividends Payable
d. Retained Earnings
Dividends Payable
17. Allstate, Inc., has 10,000 shares of 6%, $100 par value, cumulative
preferred stock and 100,000 shares of $1 par value common stock outstanding at
December 31, 2007. If the board of directors declares a $50,000 dividend, the
a. preferred stockholders will receive 1/10th of what the common
stockholders will receive.
b. preferred stockholders will receive the entire $50,000.
c. $50,000 will be held as restricted retained earnings and paid out at
some future date.
d. preferred stockholders will receive $25,000 and the common
stockholders will receive $25,000.
18. When a change in accounting principle occurs
a. prior years' financial statements should not be changed to reflect
the newly adopted principle.
b. the new principle should be used in reporting the results of
operations of the current year.
c. the cumulative effect of the change in principle should be reflected
on the income statement as of the beginning of the next year.
d. the cumulative effect of the change in accounting principle should
be classified as an extraordinary item on the income statement.
19. Which of the following is not an irregular item on the income
statement?
a. Discontinued operations
b. Extraordinary items
c. Other revenues and expenses
20. Vertical analysis is a technique that expresses each item in a
financial statement
a. in dollars and cents.
b. as a percent of the item in the previous year.
c. as a percent of a base amount.
d. starting with the highest value down to the lowest value.

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ACC 400 Final Exam Guide

  • 1. ACC 400 Final Exam (Written Type) To Purchase This Material Click below Link http://www.acc400aid.com/product-53-ACC-400-Final-Exam-(Written-Type) FOR MORE CLASSES VISIT www.acc400aid.com 1.) Trim Force Corp. had the following information in their accounting records: Work in process inventory, beginning balance $50,000 Cost of direct materials used $350,000 Direct labor cost applied to production $200,000 Cost of finished goods manufactured $750,000 Manufacturing overhead during production was $250,000. What was the work in process inventory on hand at the end of the year? 2.) Walsh Corp. uses direct labor hours to determine their applied manufacturing overhead. They use a rate of $30 per direct labor hour. During the production period, company employees worked 10,000 direct labor hours, and had actual overhead costs of $305,000. a.) Record the year-end journal entry to close out the Manufacturing Overhead account to the Cost of Goods Sold account. b.) Was manufacturing overhead underapplied or was it overapplied? 3.) Sorin Corp. uses process costing for its two production departments: Cutting and Painting. The company’s manufacturing information for the month of August is provided below: Cutting Painting
  • 2. Beginning work in process $1,000 $1,200 Costs transferred in ? ? Costs incurred in Aug $3,500 $5,000 Ending work in process $2,000 $2,500 a.) Record the transfer costs from the cutting department to the painting department in Aug. b.) Record the transfer costs from the painting department to the finished goods inventory account in Aug. 4.) Badin Corp. has the following information about its most popular product line: Sales price per unit $50 Variable cost per unit $25 Total fixed manufacturing & overhead costs $400,000 Compute the following: a.) Unit contribution margin. b.) Units that must be sold to break even. c.) Units that must be sold to earn an operating income of $500,000. 5.) Complete Dillon Corp.’s flexible budget for 75,000 units using the information listed below: 25,000 Units 50,000 Units 75,000 Units
  • 3. Sales $375,000 $750,000 Cost of Goods Sold $250,000 $500,000 Gross Profit on Sales $125,000 $250,000 Operating expenses ($10,000 of it is fixed) $35,000 $60,000 Operating Income $90,000 $190,000 Income Taxes (30% of operating income) $27,000 $57,000 Net Income $63,000 $133,000 Assume that cost of goods sold and any variable operating expenses vary directly with sales and that income taxes remain constant at 30%. 6.) Del Sol Healthcare is considering two capital investment proposals. The information for both projects is listed below: Proposal #1 Proposal #2 Cost of the investment $250,000 $300,000 Estimated salvage value $25,000 $30,000 Average estimated net income $50,000 $60,000 Calculate the return on average investment for both proposals and discuss which one would be the best option for investment. --------------------------------------------------------------------------------------------------- ------------------------
  • 4. ACC 400 Final Exam To Purchase This Material Click below Link http://www.acc400aid.com/product-52-ACC-400-Final-Exam-(New) FOR MORE CLASSES VISIT www.acc400aid.com 1. Zelma Company's last financial statements provided the following ratios: Current ratio 3:2 Quick ratio 1:2 Accounts receivable turnover 9.0 times Inventory turnover 8.0 times Net income percentage 12.5% Return on equity 22.6% Return on assets 9.8% To the nearest day, what is the operating cycle for Zelma? a) 80 days
  • 5. b) 86 days c) 172 days d) 129 days 2. The following events have been projected: A. Cash sales and collections from customers totaling $980,000 B. Cash payments for operating expenses of $560,000 C. Cash payments for income taxes and interest expense of $45,000 D. Cash payments of prior period accruals of $80,000 E. Borrowed $50,000 cash by issuing a note payable F. Cash dividends of $20,000
  • 6. The beginning balance of cash is $45,000. What is the budgeted ending balance of cash? a. $325,000 b. $370,000 c. $275,000 d. $245,000 3. On January 1, a business exchanged a plant asset with a cost of $18,000 and accumulated depreciation of $16,500 for a similar asset that had a list price of $23,000. The business received a trade-in allowance of $2,100 on the old plant asset. What was the result of the exchange? a. A $600 gain on the disposal of a plant asset. b. A $1,000 unrecognized gain on the exchange of a plant asset.
  • 7. c. A cost basis of $22,400 for the new plant asset d. A cost basis of $23,600 for the new plant asset 4. Which one of the following is not an objective of a system of internal controls? a. Safeguard company assets b. Overstate liabilities in order to be conservative c. Enhance the accuracy and reliability of accounting records d. Reduce the risks of errors 5. A company’s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5 % in the second month after the sale; the remainder is never collected. Budgeted credit sales were: July $120,000
  • 8. August 72,000 September 180,000 The cash inflow in the month of September is expected to be a. $135,600 b. $102,600 c. $108,000 d. $129,600 6. A check for $275 is incorrectly recorded by a company as $257. On the bank reconciliation, the $18 error should be a. Added to the balance per books. b. Deducted from the balance per book. c. Added to the balance per bank.
  • 9. d. Deducted from the balance per bank. 7. The Allowance for Doubtful Accounts is necessary because a. when recording uncollectible accounts expense, it is not possible to know which specific accounts will not pay. b. uncollectible accounts that are written off must be accumulated in a separate account. c. a liability results when a credit sale is made. d. management needs to accumulate all the credit losses over the years. 8. Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited a. when a credit sale is past due. b. at the end of each accounting period.
  • 10. c. whenever a pre-determined amount of credit sales have been made. d. when an account is determined to be uncollectible 9. Manning Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,000 and credit sales are $1,000,000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Manning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment? a. Bad Debts Expense 10,000 Allowance for Doubtful Accounts 10,000 b. Bad Debts Expense 8,000 Allowance for Doubtful Accounts 8,000 c. Bad Debts Expense 8,000 Accounts Receivable 8,000 d. Bad Debts Expense 10,000
  • 11. Accounts Receivable 10,000 10. The receivables turnover ratio a. Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period. b. Can be used to compute the average collection period. c. Is a method of evaluating the solvency of net accounts receivable. d. Is only important to internal users of accounting information. 11. A measure of a company’s solvency is the a. acid-test ratio. b. current ratio. c. times interest earned ratio.
  • 12. d. asset turnover ratio. 12. The times interest earned ratio is computed by dividing a. net income by interest expense. b. income before income taxes by interest expense. c. income before interest expense by interest expense. d. income before interest expense and income taxes by interest expense. 13. The 2007 financial statements of Shadow Co. contain the following selected data (in millions). Current Assets $ 75 Total Assets 120 Current Liabilities 40 Total Liabilities 85
  • 13. Cash 8 Interest Expense 5 Income Taxes 10 Net Income 16 The debt to total assets ratio is a. 70.8% b. 53.3% c. 1.41% d. 6.2 times 14. The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the a. market rate of interest increases, the contractual interest rate will decrease.
  • 14. b. contractual interest rate increases, then bond prices will go down. c. market rate of interest decreases, then bond prices will go up. d. contractual interest rate increases, the market rate of interest will decrease. 15. A company would not acquire treasury stock a. in order to reissue shares to officers. b. as an asset investment. c. in order to increase trading of the company’s stock. d. to have additional shares available to use in acquisitions of other companies. 16. Which of the following is the appropriate general journal entry to record the declaration of cash dividends? a. Retained Earnings
  • 15. Cash b. Dividends Payable Cash c. Paid-in Capital Dividends Payable d. Retained Earnings Dividends Payable 17. Allstate, Inc., has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2007. If the board of directors declares a $50,000 dividend, the a. preferred stockholders will receive 1/10th of what the common stockholders will receive. b. preferred stockholders will receive the entire $50,000. c. $50,000 will be held as restricted retained earnings and paid out at some future date.
  • 16. d. preferred stockholders will receive $25,000 and the common stockholders will receive $25,000. 18. When a change in accounting principle occurs a. prior years' financial statements should not be changed to reflect the newly adopted principle. b. the new principle should be used in reporting the results of operations of the current year. c. the cumulative effect of the change in principle should be reflected on the income statement as of the beginning of the next year. d. the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement. 19. Which of the following is not an irregular item on the income statement? a. Discontinued operations b. Extraordinary items c. Other revenues and expenses
  • 17. 20. Vertical analysis is a technique that expresses each item in a financial statement a. in dollars and cents. b. as a percent of the item in the previous year. c. as a percent of a base amount. d. starting with the highest value down to the lowest value.