ACC 102

1 . Cash receipts from sales equals sales minus a(n)

a. decrease in accounts payable.

b. decrease in accounts receivable.

c. increase in accounts receivable.

d. increase in accounts payable.

2 . The settlement of a debt by issuing stock is considered a(n)

a. financing activity.

b. investing activity.

c. operating activity.

d. noncash transaction.

3. During 20xx, cost of goods sold totaled $75,000, inventory increased by $18,000, and accounts payable decreased by $9,000. Cash payments for purchases totaled

a. $48,000.b.$66,000.c.$84,000.d.$102,000.

4. Which of the following transactions produces a cash outflow?

a. Issuance of debt

b. Receipt of interest and/or dividends from loans and investments

c. Reacquisition of common or preferred stock

d. Issuance of preferred or common stock for cash

5. Operating activities do not include

a. cash payments for dividends.

b. cash payments to the government for taxes.

c. cash payments for inventory.

d. cash inflows from the sale of goods or services.

6. Investors and creditors would be least likely to use the statement of cash flows to assess a companys

a. ability to generate positive future cash flows.

b. ability to pay interest and dividends.

c. need for additional financing.

d. profitability during the period reported upon.

Use the following information to answer the question(s) below.

Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year:

1. Sold machinery for $9,000 cash.

2. Purchased a building for $80,000 cash.

3. Issued $70,000 worth of stock to acquire an airplane.

4. Converted long-term bonds by issuing $100,000 worth of stock.

5. Declared and paid a $10,000 cash dividend.

7). Transaction 1 would be found on the statement of cash flows in the

a. cash flows from operating activities section.

b cash flows from financing activities section.

c. noncash investing and financing transactions section.

d. cash flows from investing activities section.

8). Transaction 2 would be found on the statement of cash flows in the

[A] cash flows from operating activities section.

[B] cash flows from financing activities section.

[C] cash flows from investing activities section.

[D] noncash investing and financing transactions section.

9). Transaction 3 would be found on the statement of cash flows in the

[A] cash flows from operating activities section.

[B] cash flows from financing activities section.

[C] noncash investing and financing transactions section.

[D] cash flows from investing activities section.

10). Transaction 4 would be found on the statement of cash flows in the

[A] cash flows from investing activities section.

[B] cash flows from operating activities section.

[C] cash flows from financing activities section.

[D] noncash investing and financing transactions section.

11). Transaction 5 would be found on the statement of cash flows in the

[A] noncash investing and financing transactions section.

[B] cash flows from financing activities section.

[C] cash flows from operating activities section.

[D] cash flows from investing activities section.

12. Which of the following describes the order in which costs flow through a manufacturers inventory accounts?

a. Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Cost of Goods Sold

b. Work in Process Inventory, Materials Inventory, Finished Goods Inventory, Cost of Goods Sold

c. Materials Inventory, Work in Process Inventory, Cost of Goods Sold, Finished Goods Inventory

d. Cost of Goods Sold, Materials Inventory, Work in Process Inventory, Finished Goods Inventory

e. none of the above

13. Which of the following are manufacturing overhead costs?

a. Direct materials, indirect materials, and depreciation on manufacturing equipment

b. Direct labor, indirect labor, and depreciation on manufacturing equipment

c. Direct materials, direct labor, and depreciation on manufacturing equipment

d. Indirect materials, indirect labor, and depreciation on manufacturing equipment

e. None of the above

14. Scanlon Division manufactured 3,000 units of Product Z during the year; costs are as follows:

Direct materials $ 250,000

Direct labor 200,000

Indirect materials and labor 40,000

Depreciation on plant and equipment 20,000

Total $ 510,000

The product unit cost for Product Z this year is

a. $150.b.$152.c.$163. d.$170.e.none of the above.

15. In a manufacturing organization, completed but unsold units would be included in which of the following accounts?

a. Pending-Sale Inventory

b. Materials Inventory

c. Work in Process Inventory

d. Finished Goods Inventory

e. None of the above

16. Direct materials used totaled $64,750; direct labor incurred totaled $198,400; manufacturing overhead totaled $394,800; Work in Process Inventory on January 1, 2004, was $189,100; and Work in Process Inventory on December 31, 2004, was $197,600. What is the cost of goods manufactured for the year ended December 31, 2004?

a. $1,044,650b.$657,950c.$649,450d.$197,600e.None of the above

Use the following information to answer the questions 17-29 below.

Royer Corporation engaged in the following transactions. For each transaction, indicate where, if at all, it would be classified on the statement of cash flows.

17.) Declared and issued a stock dividend.

[A] Financing activities section

[B] Operating activities section

[C] Does not represent a cash flow

[D] Investing activities section

18.) Collected accounts receivable.

[A] Does not represent a cash flow

[B] Operating activities section

[C] Financing activities section

[D] Investing activities section

19.) Purchased inventory with cash.

[A] Does not represent a cash flow

[B] Investing activities section

[C] Operating activities section

[D] Financing activities section

20). Retired long-term debt with cash.

[A] Operating activities section

[B] Does not represent a cash flow

[C] Investing activities section

[D] Financing activities section

21). Paid interest on note.

[A] Financing activities section

[B] Schedule of non-cash investing and financing transactions

[C] Investing activities section

[D] Operating activities section

22) Issued stock for equipment.

[A] Financing activities section

[B] Operating activities section

[C] Investing activities section

[D] Schedule of non-cash investing and financing transactions

23. Alpine Company reported an increase of $190,000 in its accounts receivable during the year 2005. The company's statement of cash flows for 2005 reported $1 million of cash received from customers. What amount of net sales must Alpine have recorded in 2005?

A) $ 810,000.

B) $1,190,000.

C) $1,000,000.

D) $ 190,000

Use the following to answer questions 24-27:

The financial statements of Wines, Inc., provide the following information for the current year:

Dec.31 Jan.1

Accounts receivable $210,000 $180,000

Inventory 200,000 190,000

Prepaid expenses 14,000 10,000

Accounts payable (for merchandise) 176,000 161,000

Accrued expenses payable 13,000 19,000

Net sales 2,900,000

Cost of goods sold 1,500,000

Operating expenses (including depreciation of $40,000) 300,000

24. Refer to the above data. Compute the amount of cash received from customers during the current year.

A) $2,900,000.

B) $2,690,000.

C) $2,870,000.

D) Some other amount.

25. Refer to the above data. Compute the amount of Wine's cash payments for purchases of merchandise during the current year.

A) $1,500,000.

B) $1,495,000.

C) $1,505,000.

D) Some other amount.

26. Refer to the above data. Compute the amount of Wine's cash payments for operating expenses.

A) $260,000.

B) $270,000.

C) $250,000.

D) Some other amount.

27. Refer to the above data. Wine's net cash flow from operating activities for the current year is:

A) $1,105,000.

B) $1,375,000.

C) $1,495,000.

D) Some other amount.

Use the following to answer questions 28-31:

An analysis of Webb Corporation's Investment in Marketable Securities account during 2005 disclosed the following:

Debit entries $395,000

Credit entries 220,000

Webb's 2005 income statement included a $40,000 loss on sale of marketable securities and $15,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash.

28. Refer to the above data. The amount of cash paid by Webb Corporation in 2005 for the purchase of marketable securities was:

A) $395,000.

B) $435,000.

C) $355,000.

D) $360,000.

29. Refer to the above data. The cash proceeds received by Webb Corporation in 2005 for the sale of marketable securities was:

A) $220,000.

B) $260,000.

C) $195,000.

D) $180,000.

30. Refer to the above data. How should the transactions involving marketable securities be classified in Webb's statement of cash flows for 2005?

A) The purchase of marketable securities, sales of marketable securities, and receipt of dividends are all classified as investing activities.

B) The purchase and the sale of marketable securities are classified as investing activities; the receipt of dividends is classified as an operating activity.

C) The purchase of marketable securities is classified as an investing activity; the sale of marketable securities is classified as a financing activity; the receipt of dividends is classified as an operating activity.

D) The purchase and the sale of marketable securities are classified as investing activities; the receipt of dividends is classified as a financing activity.

31. Refer to the above data. Based solely on the above information, Webb's net cash flow from investing activities for 2005 is:

A) $175,000 net cash used by investing activities.

B) $130,000 net cash provided by investing activities.

C) $215,000 net cash used by investing activities.

D) $280,000 net cash provided by investing activities.

The manufacturing cost accounts of Prestige Manufacturing Co. provide the following information for the year ended December 31, 2005:

Direct materials used $510,000

Direct materials purchased 530,000

Direct labor cost assigned to production 140,000

Wages paid to direct workers 130,000

Manufacturing overhead costs applied to production 200,000

Cost of finished goods manufactured 860,000

Inventories at the beginning and end of the year were as follows:

Dec. 31 Jan. 1

Materials $75,000 $ ?

Work in process 25,000 10,000

Finished goods 45,000 75,000

Answer the following questions. If you select answer d, indicate the correct amount.

32 Refer to the above data. The total amount of inventory that should appear in the companys balance sheet at December 31, 2005, is:

a $145,000. c $860,000.

b $350,000. d Some other amount. $____________

33 Refer to the above data. The total manufacturing costs charged to the Work in Process Inventory account during 2005 amounted to:

a $825,000. c $860,000.

b $850,000. d Some other amount. $____________

34 Refer to the above data. The total manufacturing costs deducted from revenue in 2005 amounted to:

a $890,000. c $865,000.

b $880,000. d Some other amount. $____________

35 Refer to the above data. The balance in the Materials Inventory account at the beginning of 2005 was:

a $75,000. c $55,000.

b $95,000. d Some other amount. $____________

The flow of manufacturing costs through the ledger of Raymond Mfg. Co. during April is summarized in the following T accounts. Certain amounts have been omitted and are represented by question marks.

Materials Inventory Work in Process Inventory

Beg. Bal. 32,000

35,000

End. Bal. ?

33,000 Beg. Bal. 3,000

?

End. Bal. 5,000

72,000

Direct Labor Finished Goods Inventory

13,000 Beg. Bal. 0

?

End. Bal. 1,000 Beg. Bal. 47,000

72,000

End. Bal. 39,000

?

Manufacturing Overhead Cost of Goods Sold

27,000 27,000 ?

Answer the following questions. If you select answer d, indicate the correct amount.

36 Refer to the above data. The total amount of inventory that should appear in the companys balance sheet at April 30 is:

a $39,000. c $73,000.

b $82,000. d Some other amount. $____________

37 Refer to the above data. The amount of wages paid to direct workers during April amounted to:

a $14,000. c $13,000.

b $12,000. d Some other amount. $____________

38 Refer to the above data. The total manufacturing costs charged to production during April were:

a $74,000. c $76,000.

b $72,000. d Some other amount. $____________

39 Refer to the above data. The cost of finished goods manufactured in April amounted to:

a $72,000. c $47,000.

b $80,000. d Some other amount. $____________

40 Refer to the above data. The cost of goods sold in April amounted to:

a $72,000. c $39,000.

b $80,000. d Some other amount. $____________

41. The Allowance for Doubtful Accounts will appear on the

A) Income statement

B) Balance sheet

C) Cash flow statement

D) Owners Equity statement

42. When there is an allowance for doubtful accounts in use, the writing-off of an uncollectible accounts receivable will:

A) Reduce income.

B) Reduce an expense.

C) Not change income nor total assets.

D) Increase total assets.

43. Juliet Inc. had accounts receivable of $300,000 and an allowance for doubtful accounts of $18,500 just before writing off as worthless an account receivable from Arrow Company of $1,200. The net realizable values of the accounts receivable before and after the write-off were:

A) $281,500 before and $280,300 after.

B) $281,500 before and $281,500 after.

C) $300,000 before and $298,800 after.

D) $318,500 before and $317,300 after.

44. Romeo Inc. had accounts receivable of $250,000 and an allowance for doubtful accounts of $9,700 just before writing off as worthless an account receivable from Juliet Company of $1,500. After writing off this receivable what would be the balance in Romeo's Allowance for Doubtful Accounts?

A) $9,700 credit balance.

B) $10,900 credit balance.

C) $8,200 credit balance.

D) $8,200 debit balance.

45. At December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Westbury Corporation showed a debit balance of $3,500. An aging of the accounts receivable indicated the amount probably uncollectible to be $2,300. Under these circumstances, a year-end adjusting entry for uncollectible accounts expense would include a:

A) Debit to the Allowance for Doubtful Accounts for $1,200.

B) Credit to the Allowance for Doubtful Accounts for $1,200.

C) Debit to Uncollectible Accounts Expense of $2,300.

D) Debit to Uncollectible Accounts Expense of $5,800.

Use the following to answer questions 46-47:

Olsten, Inc. had credit sales of $650,000 for March. Accounts receivable of $5,000 were determined to be worthless and were written off during March. Accounts receivable total $550,000 at March 31. Management feels that based on past experience, approximately 3% of net credit sales will prove to be uncollectible.

46. Refer to the above data. Assuming Olsten, Inc. uses the direct write-off method of accounting for uncollectible accounts, uncollectible accounts expense for March is:

A) $19,500.

B) $ 5,000.

C) $16,500.

D) $21,500.

47. Refer to the above data. Assuming Olsten, Inc. uses the income statement

approach (an allowance method) to account for uncollectible accounts,

uncollectible accounts expense for March is:

A) $16,500.

B) $21,500.

C) $23,500.

D) $19,500.

Use the following to answer questions 48-50:

At the end of January, the unadjusted trial balance of VIP, Inc., included the following accounts:

Debit Credit

Sales (80% represent credit sales) $400,000

Accounts Receivable $240,000

Allowance for Doubtful Accounts 700

48. Refer to the above data. VIP uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,200. What is the amount of uncollectible accounts expense recognized in VIP's income statement for January?

A) $6,200.

B) $5,500.

C) $6,900.

D) Some other amount.

49. Refer to the above data. VIP uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,200. The net realizable value of VIP's accounts receivable in the January 31 balance sheet is:

A) $233,100.

B) $240,000.

C) $233,800.

D) $246,200.

50. Refer to the above data. VIP uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 2% of credit sales. What is the amount of uncollectible accounts expense recognized in VIP's income statement for January?

A) $6,400.

B) $8,000.

C) $8,700.

D) $7,200.