Accounting MCQS

10 multiple choice questions

(Notes)

For quiz three, there are a couple of problems, (number 4 and 5 on the quiz), that require quite a bit of math. Many of these problems have you using simple multiplication. For problems number 8 and 9 on your quiz, use the labor or materials price variance formulas. For problem number 10 on your quiz, to get net income, take the revenue shown minus all of the expenses shown. To get the final Retained Earnings, just add the net income you calculated to the current retained earnings balance ($3720). This will all make a little more sense after you read the chapters.

***Question 1***

Gerstenberger, Inc., operates a child day care center in a major metropolitan area. It offers three child care services: full day, half-day, and after-school care. Gerstenberger charges $200 per week for full day care, $100 per week for half-daycare, and $75 per week for after-school care per child. Projected enrollments for the next week follow. Use this information to estimate the revenue per week for Gerstenberger.

Week____Full Day care___Half-day care___After-school care

1-----------------30--------------------25--------------------20

2-----------------30--------------------30--------------------25

3-----------------30--------------------26--------------------31

4-----------------30--------------------30--------------------30

5-----------------35--------------------25--------------------27

6-----------------35--------------------27--------------------28

A) $10,875

B) $10,000

C) $11,000

D) $12,000

***Question 2***

Amadio, Inc., has a beginning accounts receivable balance of $20,000. It expects the following sales for the first quarter:

January $140,000

February 150,000

March 160,000

Based on past experience, Amadio believes that 60 percent of sales will be collected in the month of sale receiving a 2% discount. The remaining sales will be collected in the month after that sale. What are the estimated cash receipts for January through March.

A) $102,320

B) $142,800

C) $75,660

D) $74,680

***Question 3***

Neidringhaus Corporation’s sales revenue follows:

---------------November (Actual sales)___December(Projected sales)____January(Projected sales)

Cash sales------------$80,000------------------------$100,000-----------------------------$60,000

Credit sales----------340,000-------------------------460,000------------------------------280,000

Neidringhaus’s management estimates that 2% of credit sales are uncollectible, that 55 percent of credit sales will be collected in the month of sale, and that 43 percent will be collected following sale. What are the expected cash collections for December and January?

A) $499,200

B) $411,800

C) $502,600

D) $506,000

***Questions 4 and 5***

Required: Prepare the production budget, by month, for the first three months.

Frausto, Inc., plans to produce 22,000; 24,000; 26,000; 28,000; 30,000; and 32,000 units for the first six months, respectively, of the coming year. Each unit requires 2 liters of direct materials that cost $3 per liter. Frausto indicates that the beginning inventory of direct materials is 5,000 liters, but Frausto wants to reduce inventory by 5 percent of what is needed for the next month’s production. Frausto pays for 70 percent of its purchases in the month of purchase, taking a 3 percent discount. The remaining purchases are paid in the month following purchase. Frausto indicates that the beginning accounts payable balance is $24,000.

4. Prepare Frausto’s direct materials purchases budget by month for the first quarter. (month one)

Direct Material Purchases in month one:

A) $135,100

B) $124,200

C) $190,000

D) $150,000

5. Prepare Frausto’s cash disbursements schedule by month in the first quarter. (month one)

Total Cash Disbursements in month one.

A) $108,332

B) $106,800

C) 135,443

D) $149,711

***Question 6***

Prepare the adjusting entry for the month ended October 31 and indicate the effect the adjustment would have on net income: Davis, Inc., a real estate company, rents office space to a lawyer for $1,200 per month. The invoice for October has not been sent as of October 31.

A) Accounts Payable $1,200, Rental fees earned $1,200

B) Accounts receivable $1,200, Rental fees earned $1,200

***Question 7***

Winters, Inc., is a manufacturing firm that makes table tennis paddles. Each paddle consists of a handle, a wooden paddle, and a rubber backing for each side of the wooden paddle. As the paddles progress through the assembly process, workers attach the handles and glue the rubber backing into place. Classify the following costs as one of the four options by placing the number of the correct answer in the space provided.

1. Direct materials cost

2. Direct labor cost

3. Manufacturing overhead cost

4. Selling and administrative cost

___ A. Cost of handles for paddles

___ B. Wages of assembly workers

___ C. Rent on production facilities

___ D. Wages of sales personnel

A) a)3, b)4, c)4, d)2

B) a)1, b)4, c)3, d)2or1

C) a)1, b)2, c)3, d)3or4

***Question 8***

Based on the standard set by Tish Company, 5,500 direct labor hours should have been used in production this period at a cost of $20 per hour. The actual results indicate that 5,400 hours were used at a total cost of $113,400. What are the direct labor price and direct labor usage variances?

A) $5,600 F & $2,100 U

B) $5,300 F & $2,000 U

C) $5,400 U & $2,000 F

D) $5,200 F & $2,200 U

***Question 9***

Jorrey Company manufactures bookcases. Direct materials standards are 10 board feet of lumber per bookcase at a cost of $2.50 per board foot. During the month of July, Jorrey purchased 25,000 board feet of lumber at a cost of $60,000. Production during July used 21,000 board feet of lumber to manufacture 1,950 bookcases. What are the direct materials price, usage, and inventory variances?

A) $2,500 F; $3,750 U; $10,000 U

B) $4,800 U; $1,200 F; $1,000 F

C) $4,800 U; $1,200 F; $1,200 U

(Question 10 may be easier read on the attached word document)

***Question 10***

The adjusted trial balance of Murphy’s Taxi Service, Inc., follows. Determine the net income of loss for the month of May and the balance in the Retained Earnings account that would appear on the balance sheet.

______________________________________________________________________________

Murphy’s Taxi Service, Inc.

Adjust trial balance

May 31, 2008

_______________________________________________________________________________

Debits Credits

Cash $1,920 

Prepaid Insurance 690

Automobiles 29,500

Accumulated depreciation- automobiles $12,800

Capital stock 15,000

Retained earnings 3,720

Passenger fee revenue 4,250

Salary expense 2,400

Fuel expense 485

Depreciation expense 615

Repairs and maintenance expense __ 160 __ _______

TOTAL $35,770 $35,770

====== =======

(net income and retained earnings)

A) $590 & $3,310

B) $690 & $3,210

C) $590 & $4,310

D) $610 & $4,210