Principles of Accounting -Spring-2021 PDF

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AMERICAN INTERNATIONAL UNIVERSITY – BANGLADESH Fac ul t yofBus i nes sAdmi ni s t r a t i on De pa r t me ntofAc c ount i ng Under gr adua t ePr ogr a m BBA –22 0 1: Pr i nc i pl esofAc c ount i ng( Se c t i ons : C,G & M) Spr i ng2 0 2 0–2 02 1 Tot a lMar ks : 5 0 Ti me :9 0mi nut e s ============================================================================= == St ude ntNa me : Ra i hanMi aHr i doy St ude ntI D :2 0 4 4 09 3 2 =========================================================================== =====

[ Mar ks :5 0 ] Mul t i pl eChoi c eQues t i ons :Ti c kt heboxt ha tc or r e s pondst ot hec or r e c ta ns we r :

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An auto manufacturer would classify vehicles in various stages of production as ❑finished goods. ❑merchandise inventory. ❑raw materials. ❑work in process. ❑None of the above Manufacturers usually classify inventory into all the following general categories except ❑work in process ❑finished goods ❑merchandise inventory ❑raw materials ❑None of the above Which of the following assets has physical characteristics? ❑Leasehold improvements ❑Leaseholds ❑Patents ❑Copyrights ❑None of the above Asset amortization is calculated to the nearest ❑Hour ❑Day ❑Week ❑Month ❑None An asset having a four-year service life and a salvage value of $5,000 was acquired for $45,000 cash on April 5. Using straight-line amortization, the amortization expense at the end of the first year, December 31, will be ❑$10,000 ❑$,7,500 ❑$5,000 ❑$11,250 ❑None of the above Equipment is purchased for $50,000 and is expected to last 10 years with no salvage value. After using the asset for 4 years, the company estimates that at the end of its useful life, the salvage value will be $6,000. In the 5th year of owning the asset, amortization expense will be:❑$5,000 ❑ $4,000 ❑$4,400 ❑$9,000 ❑None of the above An asset that cost $65,000 has accumulated amortization of $23,000 is sold for $50,000. The journal entry to record the sale of the asset would include: ❑ a debit to Gain on Disposal of Asset of $8,000 ❑ a credit to Gain on Disposal of Asset of $8,000 ❑ a debit to Gain on Disposal of Asset of $15,000 ❑ a credit to Gain on Disposal of Asset of $15,000 ❑None of the above

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The cost of a capital asset is the total of the following except ❑carrying costs directly attributable ❑discounts on purchase price ❑freight-in. ❑purchase price. ❑None of the above The cost allocation of an asset is known as all of the following except ❑amortization. ❑depreciation .❑allotment. ❑depletion. ❑None of the above An asset with a purchase price of $100,000 is expected to last 5 years. Using the double declining method of amortization, the rate for amortization would be ❑10% ❑20% ❑40% ❑50% ❑None of the above Macht Company uses a predetermined overhead rate based on direct labor hours (DLHs) to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $200,000 and DLHs would be 20,000. The actual figures for the year were $215,000 for manufacturing overhead and 21,000 DLHs. What is the amount of over- or underapplied overhead for the year? ❑Over-applied overhead of $5,000❑Underapplied overhead of $5,000❑Over-applied overhead of $10,000❑Under-applied overhead of $10,000 ❑None of the above Zahn Company manufactures a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. What is the contribution margin per unit? ❑$104❑$72❑$60❑$48 ❑None of the above Jovovich Corporation produced and sold 80,000 units and reported sales of $4,000,000 during the past year. Management determined that variable expenses totaled $2,800,000 and fixed expenses totaled $720,000. What is the company's contribution margin ratio? ❑30%❑70%❑150%❑250% ❑None of the above Brolin Company sells a single product. The product has a selling price of $50 per unit and variable expenses of 80% of sales. If the company's fixed expenses total $150,000 per year, what is the company's break-even point in sales dollars? ❑$750,000❑$187,500❑$15,000❑$3,750 ❑None of the above Portis, Inc. reported sales of $8,000,000 for the month and incurred variable expenses totaling $5,600,000 and fixed expenses totaling $1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. What is the company's break-even point in units? ❑0 units❑48,000 units❑72,000 units❑80,000 units ❑None of the above Portis, Inc. reported sales of $8,000,000 for the month and incurred variable expenses totaling $5,600,000 and fixed expenses totaling $1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) How many units would the company have to sell to achieve a desired profit of $1,200,000? ❑88,000❑100,000❑1,06,668 ❑1,50,000 ❑None of the above

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Portis, Inc. reported sales of $8,000,000 for the month and incurred variable expenses totaling $5,600,000 and fixed expenses totaling $1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) What is the company's margin of safety in dollars? ❑$480,000❑$2,400,000❑$3,200,000❑$3,520,000 ❑None of the above Pepper Company sells three products: X, Y and Z. Product X's unit contribution margin is higher than Product Y's and Product Y's is higher than Products Z's. Which one of the following events is most likely to increase the company's overall break-even point? ❑The installation of new automated equipment and subsequent lay-off of factory workers. ❑A decrease in Product Z's selling price. ❑An increase in the overall market demand for Product Y.❑A change in the relative market demand for the products, with the increase favoring Product Z relative to Product Y and Product X. ❑None of the above Opening inventory was $20,000, purchases were $50,000, and closing inventory was $15,000. What was cost of goods sold? ❑$45,000❑$75,000❑$55,000❑$25,000 ❑None of the above Beginning inventory was $30,000, purchases were $60,000, purchase discounts and allowances $10,000 and closing inventory was $20,000. What was cost of goods sold? ❑$45,000❑$75,000❑$55,000❑$60,000 ❑None of the above Purchases totaled $500,000, purchase returns totaled $40,000, purchase discounts totaled $50,000 and freight-in totaled $60,000. What was net purchases? ❑$610,000 ❑$550,000 ❑$570,000 ❑$470,000 ❑None of the above What does FIFO mean?❑Finished stock In Finished stock out ❑Fabrications inward fabrications outward ❑Final input final output ❑First in first out ❑None of the above Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a? ❑ Current asset ❑Current liability ❑Long-term asset ❑Stockholder's equity ❑None of the above The latest cost of inventories is changed to production but the old prices are changed to inventories on hand? ❑Average ❑LIFO❑FIFO ❑HIFO ❑NIFO ❑None of the above An increase in inventories indicates that? ❑More merchandise was purchased then the amount sold to customer ❑Less merchandise was purchased then sold to the customer ❑Not all purchases were cash ❑ Cash payments were more than purchases on account ❑None of the above What is the principal criterion used to distinguish between tangible assets and inventories? ❑The physical substance of the asset ❑The acquisition cost of the asset ❑The nature of the company’s activity, which determines the purpose for which the asset is held ❑The moment in the accounting period when the asset is acquired ❑None of the above Which of the following method is suitable for calculating the cost of inventory when actual costs of individual units of merchandise can be determined from the

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accounting records? ❑FIFO Method ❑LIFO Method ❑Specific Identification Method ❑Average Method ❑None of the above The inventories are recorded at the latest price but the production cost is changed old cost price? ❑FIFO ❑Average ❑Both FIFO &Average ❑None Which one of the following methods for inventory valuation may be misleading when the units are identical? ❑FIFO ❑Average ❑Both FIFO & Average ❑None During September, Khan had sales of 148,000, which made a gross profit of 40,000. Purchases amounted to 100,000 and opening inventory was 34,000. The value of closing inventory was? ❑24,000m ❑26,000❑42,000❑54,000❑None of the above Net Purchases equal the invoice amount and? ❑Plus freight-in, plus discounts ❑Less purchase returns, plus purchase allowances ❑Plus freight-in, less purchase discounts ❑Plus discounts, less purchase returns ❑None of the above Sales revenues are usually considered earned when? ❑Cash is received from credit sales ❑An order is received ❑Goods have been transferred from the seller to the buyer ❑Adjusting entries are made ❑None of the above A retail firm would normally use an inventory account titled? ❑Finished Goods Inventory ❑Merchandise Inventory ❑Goods in Process Inventory ❑Raw Materials Inventory❑None of the above In a manufacturing business, inventory that is ready for sale is called ❑raw materials inventory. ❑work in process inventory. ❑finished goods inventory. ❑store supplies inventory. ❑None of the above The first year's amortization for an asset costing $100,000 that is expected to last 4 years with no residual value using the sum-of-the-digits method is❑$25,000❑$30,000❑$35,000 ❑$40,000 ❑None of the above A machine costing $100,000 is expected to have a useful life of 100,000 machine hours with a salvage value of $25,000 at the end of 5 years. During the first year the machine worked 40,000 machine hours. What was the amortization for the first year? ❑$15,000❑$20,000❑$30,000 ❑$40,000 ❑None of the above Equipment costing $100,000 with accumulated amortization of $90,000 is sold for $2,000. The entry to record this transaction would include ❑a credit to equipment of $10,000.❑ a credit to accumulated amortization of $90,000.❑ a credit to gain on disposal of $8,000. ❑ a credit to equipment of $100,000.❑None of the above The loss on the sale of a patent would have the following impact on ratios. ❑current ratio improves ❑total debt-to-equity ratio improves ❑earnings per share improves ❑total asset turnover worsens ❑None of the above Within the relevant range: ❑both total variable costs and total fixed costs will remain constant.❑ both total variable costs and total fixed costs fluctuate.❑ fixed costs per unit will remain constant and variable costs per unit will fluctuate.❑ variable costs per unit will remain constant and fixed costs per unit will fluctuate ❑None of the above Dane Company's predetermined overhead rate is based on direct labor hours (DLHs). At the beginning of the current year, the company estimated that its

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manufacturing overhead would total $220,000 during the year. During the year, the company incurred $200,000 in actual manufacturing overhead costs. The Manufacturing Overhead account showed that overhead was under-applied by $8,000 during the year. If the predetermined overhead rate was $40.00 per DLH, how many DLHs were worked during the year? ❑ 5,500 hours❑5,200 hours ❑4,800 hours ❑5,000 hours ❑None of the above Leigh Company's predetermined overhead rate is based on direct labor costs. The company's Work in Process account has a balance of $2,400, which relates to the one job that was in process at the end of an accounting period. The related job cost sheet includes total charges of $400 for direct materials and $1,000 for direct labor. If overhead is applied on the basis of direct labor costs, what is the company's predetermined overhead rate?❑100%❑50%❑40%❑17% ❑None of the above In a job order cost system, what account is debited when direct materials are requisitioned for use in production? ❑Finished Goods ❑Manufacturing Overhead ❑Raw Materials ❑Work in Process ❑None of the above In a job-order cost system, what account is debited when indirect materials are requisitioned for use in production?❑Finished Goods ❑Manufacturing Overhead ❑Raw Materials ❑Work in Process ❑None of the above Cost of sales totaled $500,000 and inventory turnover was 5. What was the value of inventory? ❑$100,000❑$2,500,000 ❑$250,000❑none of the above Which one of the following costs would not be considered an indirect cost of serving a particular customer at a delicatessen?❑The salary of the manager ❑The cost of the tables and chairs used to furnish the restaurant ❑The cost of the bread used to make the sub sandwich that is ordered ❑The cost of lighting and heating the restaurant ❑None of the above Which of the following would not be classified as manufacturing overhead?❑ Wages of supervisor of the machining shop ❑Depreciation of the equipment in the machining shop ❑Property taxes relating to the building that houses the machining shop ❑All of the above would be classified as manufacturing overhead ❑None of the above An analysis of a particular cost incurred in a factory revealed that the cost averages $0.40 per machine-hour at an activity level of 20,000 machine hours and increases to an average of $0.50 per machine-hour at an activity level of 16,000 machine hours. Assuming that this activity is within the relevant range, what is the total expected cost if the activity level is 17,300 machine hours? ❑$1,600❑$6,960❑$8,000❑$9,000❑None of the above Given the cost formula Y = $30,000 + $5X, what is the expected total cost at an activity level of 16,000 units? ❑$30,000❑$46,000 ❑$80,000❑$1,10,000❑None of the above Hadron Company incurred $40,000 to ship 19,000 pounds and $34,000 to ship 16,000 pounds. If the company ships 18,000 pounds, what is its expected shipping expense? ❑$37,000 ❑$37,895 ❑$38,000❑$38,250❑None of the above

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Which of the following matches the definition of an opportunity cost? ❑The difference between the total cost of one alternative and the total cost of another alternative.❑ The potential benefit that is given up when one alternative is selected rather than another.❑ A cost that is saved by not adopting a given alternative.❑ A cost that continues to be incurred even when there is no activity. ❑None of the above...