BA464 Final Exam
Name: ID:
Part I: Multiple Choice
Select the best response to each of the following multiple choice questions:
No.
Question Text
AnsA
AnsB
AnsC
AnsD
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On December 31, the assets of a business include: Cash, $3,500, Accounts Receivable, $14,000, and Supplies, $1.050. The liabilities on December 31 total $7,600. The owner’s equity on December 31 is:
$18,550
$25,100
$10,950
$11,100
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Separate compatible units of an accounting package that are integrated to function together are defined as:
grids
cells
modules
spreadsheets
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Current liabilities:
are due within one year or one operating cycle, whichever is longer
must be of a known amount
must be of an estimated amount
are subtracted from long-term liabilities on the balance sheet
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The treasury stock account is shown on the balance sheet as a(n)
contra asset
contra stockholders’ equity account
contra liability
liability
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After the receipt of the stock dividend, a corporation’s cost basis per share in the stock of the invested will:
increase
decrease
remain the same
impossible to determine without knowing the market value of the stock
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Creditors use financial statement analysis to:
evaluate the company’s dividend payment record
evaluate the company’s stock
predict the amount of expected returns and assess the risks associated with those returns
none of the above
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An example of an inventoriable cost is:
advertising expense
depreciation on office equipment
indirect labor
research costs
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In a process costing system, the entry to record the use of direct materials in production would include a:
debit to finished goods inventory
debit to materials inventory
debit to work in process inventory
credit to finished goods inventory
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Which of the following budgets is an operating budget?
capital expenditures budget
sales budget
budgeted balance sheet
cash budget
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All of the following are likely to be cost drivers except:
production orders
cost accountant’s labor hours
product inspections
material requisitions
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Purchasing office equipment on account would:
decrease owner’s equity
increase owner’s equity
have no effect on owner’s equity
Decrease liabilities
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Posting the entries in the sales journal to the accounts receivable subsidiary ledger should be done:
on a weekly basis
only at the end of the accounting period
on a daily basis
at the end of each month
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When a company records accrued interest at year-end on a discounted note payable:
discount on note payable is credited
note payable is credited
interest expense is credited
note payable is debited
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Restrictions on retained earnings:
require a journal entry
are usually reported in the notes to the financial statements
are disclosed on the income statement
reduce total assets on the balance sheet
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For available-for-sale investments, GAAP requires that:
the long-term available-for-sale investment account be reported at cost and an allowance to adjust investment to market account be established
the long-term available-for-sale investment account be adjusted to its market value on the balance sheet date
the unrealized gain or loss from adjusting cost to market flow through the income statement
none of the above
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The fact that cost of goods sold decreased by $20,000 from 2005 to 2006 would most likely be revealed by:
trend analysis
vertical analysis
horizontal analysis
ratio analysis
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Rent expense incurred on a factory building would be treated as a(n):
indirect cost
product cost
period cost
both a and b are correct
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The number of equivalent units in work in process regarding direct materials and conversion costs:
must be lower for materials
must always be equal
may be different
must be higher for conversion
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Which of the following alternatives reflects the proper order of preparing components of the master budget?
financial budget, operating budget, capital expenditures budget
financial budget, capital expenditures budget, operating budget
operating budget, capital expenditures budget, financial budget
capital expenditures budget, financial budget, operating budget
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Activity-based costing systems:
accumulate overhead costs by departments
are less complex and therefore less costly than traditional systems
can be used in manufacturing firms only
have separate indirect cost allocation rates for each activity
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A payment of $400 to a creditor will cause:
cash to be debited for $400
accounts receivable to be credited for $400
accounts payable to be debited for $400
accounts payable to be credited for $400
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A __________ limits access to a local network.
computer virus device
marker
firewall
point-of-sale terminal
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A limited partnership:
must have at least two general partners
is illegal in most states
must have at least one general partner
none of the above
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On January 2, 2003, Laser Corporation issues $200,000 face value, 6% bonds for $204,000. It may be derived that the effective rate of interest was:
less than 6%
more than 6%
equal to 6%
impossible to determine from the given data
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Investments accounted for using the equity method are initially recorded at:
cost
the total of the investee’s equity accounts multiplied by the percentage ownership acquired
the fair market value of the investee company multiplied by the percentage ownership acquired
either a or c, depending on how the investor classifies the investment
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When calculating trend percentages, all percentages shown are relative to:
the immediately preceding year
the current year
the base year
an average index calculated for all the years shown
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Which costing system would better account for a unique individual product?
period costing system
process costing system
product costing system
job costing system
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A company began its operations by starting 30,000 units in production. During the month, 22,000 were completed and transferred out while the remaining units were 45% complete. The equivalent units for conversion costs would be:
25,600 units
22,000 units
26,400 units
30,000 units
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Desired ending inventory is 80% of beginning inventory, If cost of goods sold is $300,000, purchases will always:
be more than cost of goods sold
be less than cost of goods sold
equal cost of goods sold
be 80% of cost of goods sold
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A common problem in developing an ABC costing system is:
identifying too few activities
identifying too many activities
failing to identify any activities
none of the above
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Providing services for $2,000 where cash is immediately received, will cause:
service revenue to be debited for $2,000
service revenue to be credited for $2,000
cash to be credited for $2,000
accounts receivable to be credited for $2,000
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All of the following are documents used to control a bank account except a(n):
bank reconciliation
signature card
invoice
deposit ticket
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An individual partner’s signing of a contract to buy coffee for a doughnut shop that the partnership owns and operates falls under which characteristic of partnerships:
unlimited liability
limited life
mutual agency
co-ownership of property
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Mickey Corporation issues 50, $1,000 face value, 10% bonds at 95. The journal entry includes a:
debit to cash for $47,500
credit to bonds payable for $47,500
debit to cash for $50,000
debit to premium on bonds payable for $2,500
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When using the equity method to account for long-term investments in stock:
an adjusting entry is made to adjust the investment to market value
an adjusting entry is made only if the current market value on balance sheet date is lower than cost
an adjusting entry is made only if the current market value on balance sheet date is higher than cost
no adjusting entry is made
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Assuming the inventory balance at the end of 2005 is $30,000, and it has decreased 5% since the end of 2004, the balance at the end of 2004 (rounded to the nearest whole dollar) was:
$27,075
$28,500
$33,241
$31,579
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Which of the following industries is most likely not to use a job costing system?
printing
aircraft
custom furniture
Chemicals
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Beginning work in process is 900 units, units completed and transferred out in October are 3,200 units, and ending work in process is 500 units. Under FIFO costing, what are units started in production in October?
3,600
2,800
3,200
none of the above
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Operating budgets include all of the following except:
cash receipts and payments
sales budget
budgeted income statement
inventory budget
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A JIT production system will:
produce goods in smaller batches than a traditional production system
require longer setup times than a traditional production system
have like machines grouped together in the production facility
require higher inventory levels