1. Which financial statement is prepared first? Balance sheet Income statement Retained earnings statement

1.  Which financial statement is prepared first?

        Balance sheet

        Income statement

        Retained earnings statement

        Statement of cash flows 

2.  The information needed to determine whether a company is using accounting methods similar to those of its competitors, would be found in which of the following?  

        auditor’s report

        balance sheet

        management discussion and analysis section

        notes to the financial statements

3.   Using the following balance sheet and income statement data, what is the earnings per share?

Current assets   $ 7,000 Net income   $ 12,000

Current liabilities  4,000 Stockholders’ equity  27,000

Average assets  40,000 Total liabilities  9,000

Total assets  30,000

Average common shares outstanding was 10,000  

        $3.60

        $4.00

        $1.20     

        $0.83

4.   Which measure would a long-term creditor be least interested in reviewing?  

        free cash flow

        debt to total assets ratio

        current ratio

        solvency measure

5.   Which pair of the listed accounts follows the rules of debits and credits, in relation to increases and decreases, in the same manner?

        Salary Expense and Notes Payable

        Common Stock and Rent Expense

        Accounts Receivable and Advertising Expense

        Service Revenue and Equipment

6.  The usual sequence of steps in the recording process is which of the following?  

        analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts

        analyze each transaction, enter the transaction in the ledger, and transfer the information to the journal

        analyze each transaction, enter the transaction in the book of accounts, and transfer the information to the journal

        analyze each transaction, enter the transaction in the book of original entry, and transfer the information to the journal

7.   Joe is a warehouse custodian, and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates ______________________ .  

        documentation procedures are violated

        independent internal verification is violated

        segregation of duties is violated

        establishment of responsibility is violated

8.  The following information was taken from Mitchell Company cash budget for the month of July:

Beginning cash balance $50,000

Cash receipts 48,000

Cash disbursements 68,000

If the company has a policy of maintaining end of the month cash balance of $50,000, the amount the company would have to borrow is which of the following?  

        $20,000     

        $10,000

        $30,000

        $12,000

9.   Managerial accounting does which of the following?  

        is concerned with costing products

        is governed by generally accepted accounting principles

        pertains to the entity as a whole and is highly aggregated

        places emphasis on special-purpose information

10.   A manufacturing process requires small amounts of glue. The glue used in the production process is classified as which of the following?  

        period cost

        indirect material

        direct material

        miscellaneous expense

11.   Sales commissions are classified as which of the following?  

        overhead costs

        period costs

        product costs

        indirect labor

12.   Ranger Company reported total manufacturing costs of $65,000, manufacturing overhead totaling $13,000, and direct materials totaling $16,000.  How much is direct labor cost?  

        $49,000

        $94,000

        $29,000

        $36,000  

13.   Hardigan Manufacturing Company reported the following year-end information:

beginning work in process inventory, $80,000

cost of goods manufactured, $980,000

beginning finished goods inventory, $50,000 

ending work in process inventory, $70,000 

and ending finished goods inventory, $40,000

How much is Hardigan’s cost of goods sold for the year?

        $980,000

        $990,000   

        $970,000

        $1,000,000

14.   What effect do changes in activity have on fixed costs per unit?  

        No effect. Fixed costs per unit stay the same at every activity level.

        An inverse effect.

        A directly proportional effect.

        It depends on the particular level of activity.

15.   Which one of the following is not an assumption of CVP analysis?  

        All units produced are sold.

        Cost classifications are reasonably accurate.

        Factors other than changes in activity may affect costs.

        The sales mix remains constant.