1. Corresponds to CLO 5(a) Lennox Corporation purchased a new delivery truck for 35,000. The sales taxes are $2,700. The logo is painted on the side of the truck for $800. The truck's annual license is $200. Annual insurance on the truck is $1,300. What should Lennox record as the cost of the new truck? (Points : 5)
- $40,000
- $38,500
- $37,700
- $35,000
2. Corresponds to CLO 5(b) On April 1, 2013, Ballard Corporation purchased equipment for $65,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5 year useful life. If Ballard uses the straight-line method of depreciation, what is the accumulated depreciation at December 31, 2013? (Points : 5)
- $13,000
- $12,000
- $9,750
- $9,000
3. Corresponds to CLO 5(c) Tyree Company purchased equipment with a cost of $90,000 and an estimated salvage value of $18,000. The equipment is expected to produce 120,000 units over its estimated useful life of 10 years. If Tyree uses the units-of-activity method, what is the depreciation cost per unit to be used in calculating depreciation? (Points : 5)
4. Corresponds to CLO 5(d) Kerns Company purchased equipment with a cost of $200,000 and an estimated salvage value of $10,000. The equipment has an estimated useful life of 10 years. If Kerns uses the double-declining balance method, what is the annual depreciation rate to be used in calculating depreciation? (Points : 5)
5. Corresponds to CLO 6(a) Marshall Machinery made a sale for $80,000 on January 6. The customer is sent a statement on January 25 and payment is received on February 20. Marshall prepares January's monthly internal financial statements on February 15. Marshall follows GAAP and applies the revenue recognition principle. When is the $80,000 considered to be earned? (Points : 5)
- February 20
- February 15
- January 25
- January 6
6. Corresponds to CLO 6(b) Mann Corporation's employees worked overtime to complete an order that is sold on July 27. The office sends a statement to the customer on August 15, and payment is received on September 5. Mann follows GAAP. In what month should the overtime wages be expensed? (Points : 5)
- either July or August, depending on when the pay period ends
- September
- August
- July
7. Corresponds to CLO 6(c) Sight Company had the following transactions during 2013: sales of $6,000 on account; collected $1,800 for services to be performed in 2014; paid $4,300 cash for 2013 salaries; purchased airline tickets for $500 in December for a trip to take place in 2014. What is Sight's 2013 net income using accrual accounting? (Points : 5)
- $1,700
- $1,200
- $3,500
- $3,000
8. Corresponds to CLO 6(d) Lyme Corporation had the following transactions during 2013: sales of $8,000 on account; collected $4,500 for services to be performed in 2014; paid $3,000 cash for 2013 salaries; paid $400 for airline tickets for a trip to take place in 2014. What is Lyme's 2013 net income using cash basis accounting? (Points : 5)
- $4,600
- $9,100
- $1,100
- $1,500
9. Corresponds to CLO 7(a) Ping Sports Company purchases $1,000 of merchandise on credit. Using the perpetual inventory approach, the journal entry to record this transaction would be: (Points : 5)
- debit: Inventory $1,000; credit: Accounts Payable $1,000
- debit: Accounts Payable $1,000; credit: Inventory $1,000
- debit: Accounts Payable $1,000; credit: Purchases $1,000
- debit: Purchases $1,000; credit: Accounts Payable $1,000
10. Corresponds to CLO 7(b) Gardner Corporation had sales of $2,400 on account on January 9, 2013. Gardner uses the periodic inventory method. The journal entry to record this transaction would include: (Points : 5)
- a debit to Sales Revenue and a credit to Accounts Receivable.
- a debit to Accounts Receivable, a credit to Sales Revenue, a debit to Cost of Goods Sold, and a credit to Inventory.
- a debit to Accounts Receivable and a credit to Sales Revenue.
- a debit to Accounts Receivable, a credit to Sales Revenue, a debit to Cost of Goods Sold, and a credit to Purchases.
11. Corresponds to CLO 7(c) Rupert Hobby's accounting records show the following for the year ending December 31, 2014: Purchase Discounts…$15,600; Freight-in…$14,000; Purchases…$540,500; Beginning Inventory…$54,200; Ending Inventory…$58,600; Purchase Returns…$20,000. Using the periodic inventory system, what is the cost of goods sold? (Points : 5)
- $573,100
- $500,500
- $536,100
- $514,500
12. Corresponds to CLO 7(d) Bay Company sold $100,000 of merchandise in the month of April, 2013. Returns that month totaled $5,000. Bay Company uses the periodic method to determine ending inventory each December 31. For interim financial statements, cost of goods sold is estimated based on the previous year's gross profit rate. If Bay Company's gross profit rate for 2012 was 40%, what is the cost of goods sold for the month of April? (Points : 5)
- $60,000
- $57,000
- $40,000
- $38,000
13. Corresponds to CLO 8(a) We Love Pets, Inc. has the following inventory data: January 1, beginning inventory of 50 units at $25; January 10, purchases of 70 units at $27; January 25, purchases of 40 units at $28. A physical count of inventory on January 31 reveals that there are 45 units on hand. Using the FIFO inventory method, cost of goods sold for January is (Points : 5)
- $3,135
- $3,005
- $2,875
- $1,255
14. Corresponds to CLO 8(b) Party Retailers has the following inventory data: May 1, beginning inventory of 200 units at $10; May 14, purchases of 300 units at $12; May 23, purchases of 250 units at $15. A physical count of inventory on May 31 reveals that there are 225 units on hand. Using the LIFO inventory method, ending inventory for May is (Points : 5)
- $2,300
- $2,250
- $7,050
- $3,375
15. Corresponds to CLO 8(c) Halting Corporation has the following inventory data: September 1, beginning inventory of 430 units at $11; September 8, purchases of 350 units at $12; September 21, purchases of 460 units at $14. A physical count of inventory on September 30 reveals that there are 400 units on hand. Using the weighted average inventory method, rounding the unit cost to the nearest penny, what is cost of goods sold for September? (Points : 5)
- $10,357
- $4,960
- $10,416
- $4,932
17. Corresponds to CLO 8(d) Unleash Corporation is a retailer operating in an industry currently experiencing high inflation. Unleash wants to show the highest cost of goods sold possible in order to reduce the company's income tax liability. Which inventory costing method should Unleash use? (Points : 5)
- FIFO because cost of goods sold represents the earliest costs.
- Average because cost of goods sold will represent an average amount.
- Specific identification because it involves the actual costs.
- LIFO because cost of goods sold represents the latest costs.
18. Corresponds to CLO 9(a) The following balance sheet and income statement data is available for Gold River Corporation: Current assets…$205,000; Total assets…$520,000; Net income…$345,000; Current liabilities…$125,000; Total liabilities…$250,000; Stockholders' equity…$270,000; Average common shares outstanding… 10,000. What is Gold River's current ratio? (Points : 5)
19. Corresponds to CLO 9(b) The following balance sheet data is available for Pinpoint Products: Current assets…$25,000; Property, plant, and equipment,…$100,000…Other assets…$15,000; Current liabilities…$15,000; Long-term liabilities…$48,000; Stockholders' equity…$77,000; Average common shares outstanding… 10,000. What is Pinpoint's debt to total assets, shown as a percentage? (Points : 5)
20. Corresponds to CLO 9(c) The following balance sheet and income statement data is available for Frame Manufacturing: Total assets…$420,000; Total liabilities…$300,000; Stockholders' equity…$120,000; Gross profit…$54,000; Net income…$42,000; Average common shares outstanding… 12,000. What is Frame Manufacturing's earnings per share? (Points : 5)
21. Corresponds to CLO 9(d) The following financial information is available for Maroon Corporation: Sales revenue…$200,000; Cost of goods sold…$120,000; Operating expenses…$40,000. What is Maroon's profit margin ratio, shown as a percentage? (Points : 5)
22. Corresponds to CLO 10(a) Which of the following is not true about a company's system of internal controls? (Points : 5)
- Internal control procedures are designed to safeguard assets from employee theft.
- Internal control measures can eliminate all irregularities in the accounting process.
- Internal controls can be rendered ineffective by employee collusion.
- Large companies often assign internal auditors to continuously evaluate the effectiveness of the company's internal control systems.
23. Corresponds to CLO 10(b) At Speedy Market, three cashiers handle cash sales from the same cash register drawer. Which of the following internal control principles does this violate? (Points : 5)
- Segregation of duties
- Physical controls
- Human resource controls
- Establishment of responsibility
24. Corresponds to CLO 10(c) At Stone Pool Supplies, one person is responsible for the related activities of ordering merchandise, receiving goods, and paying for them. Which of the following internal control principles does this violate? (Points : 5)
- Physical controls
- Segregation of duties
- Human resource controls
- Establishment of responsibility
25. Corresponds to CLO 10(d) At Beauty Bargains, the employees that handle cash are all bonded. This is an example of which of the following internal control procedures?
- Physical controls
- Establishment of responsibility
- Segregation of duties
- Human resource controls