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Jun 2, 2006, 08:39 AM
1. A credit entry to an account will:
A. Always decrease the account balance.
B. Always increase the account balance.
C. Increase the balance of a revenue account.
D. Increase the balance of an expense account.

2. Standard costs are used in which of the following phases of the management process?
A. Planning.
B. Control.
C. Organizing.
D. Both a and b.
E. All of the above.

3. Significant accounting policies are described in the explanatory notes to the financial statements because:
A. there isn't enough space for them to be included in the captions of the financial statements.
B. if the accrual basis of accounting is used, "matching" of revenues and expenses may not take place.
C. the reader must be aware of which of the alternative generally accepted accounting practices have been used.
D. none of the above.

4. The key data element on which the entire budget is based is the:
A. sales/revenue forecast.
B. income statement budget.
C. cash budget.
D. balance sheet forecast.

5. An audit conducted in accordance with generally accepted auditing standards includes each of the following except:
A. examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements.
B. evaluation of the efficiency and effectiveness of management.
C. assessment of the accounting principles used and significant estimates made by management.
D. planning and performance of the audit to obtain reasonable assurance that the financial statements are free of material misstatements.

6. Which of the following require an explanatory note in the auditors' report.
A. basing the opinion on the work of another auditor
B. Uncertainties about the outcome of a significant event that would have affected the presentation of the financial statement.
C. Substantial doubt about the entity's viability to continue as a going concern.
D. None of the above
E. Items a, b and c are correct

7. The purchase of merchandise on account would, in the buyer's records:
A. Increase assets and increase expenses.
B. Increase assets and increase liabilities.
C. Increase liabilities and increase paid-in capital.
D. Have no effect on total assets.

8. If a firm's payment terms for sales made on account to its customers were 2/10, n30, the number of days' sales in accounts receivable would be expected to be:
A. less than 10.
B. between 10 and 25.
C. between 25 and 40.
D. over 40.

9. Each of a company's several product lines has a different contribution margin ratio. Total sales in 2004 were 20% higher than total sales in 2003. Total contribution margin for 2004 will be:
A. the same as it was in 2003, regardless of changes in sales mix.
B. 20% higher than it was in 2003, regardless of changes in sales mix.
C. more than 20% higher than it was in 2003, if the sales mix changes and proportionately more high contribution margin ratio products are sold in 2004 than in 2003.
D. less than 20% higher than it was in 2003, if the sales mix changes and proportionately more high contribution margin ratio products are sold in 2004 than in 2003.

10. When the cost behavior pattern has been identified as fixed at a certain volume of activity:
A. any change in volume will probably cause the cost to change.
B. it is appropriate to express the cost on a per unit of activity basis.
C. the total cost will not change even if the volume of activity changes substantially.
D. the total cost may change if the volume of activity changes substantially.

11. Management's statement of responsibility:
A. usually refers to the company's system of internal controls.
B. emphasizes that the auditors are responsible for the financial statements.
C. includes a disclaimer of responsibility for the level of the P/E ratio of the company's common stock.
D. gives the president of the company an opportunity to explain why profits changed.

12. A firm's cash dividends were $3.96 per share of common stock for calendar 2003. In 2004 the stock was split 3 for 1, and in 2005 a 10% stock dividend was issued. Dividends per share for 2003, to be reported in the firm's annual report for 2005, are:
A. $3.96
B. $1.45
C. $1.32
D. $1.20

13. When a firm purchases supplies for use in its business, and the cost of the supplies purchased is recorded as an asset, the following adjustment to recognize the cost of supplies used will probably be required:
A. Dr Supplies
Cr Accounts payable
B. Dr Supplies
Cr Supplies expense
C. Dr Supplies expense
Cr Supplies
D. No adjustment will probably be required.

14. A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses that total $56,000. If revenues increase $20,000, then:
A. operating income will increase by $6000.
B. operating income will be 0.
C. fixed expenses will increase $8000.
D. the contribution margin ratio will increase by 1/8.

15. The cash budget is especially important to a firm when:
A. there is not a lot of confidence in the sales forecast.
B. it has a relatively large amount of operating cash.
C. the P/E ratio has been trending downwards.
D. it may have to negotiate a short-term bank loan.

16. Which of the following is(are) an example of a measure of leverage?
A. Debt yield.
B. Debt payout ratio.
C. Preferred dividend coverage ratio.
D. Debt/equity ratio.
E. All of the above.

17. The provisions of the Sarbanes-Oxley Act of 2002 had the following components:
A. Enforce auditing
B. Attestation
C. Quality control
D. None of the above are provisions
E. A, B and C are correct.

18. Standards are likely to be most useful when expressed in:
A. dollars per unit of input to the manufacturing process.
B. quantities per unit of output from the process being evaluated.
C. total costs for the accounting period for the department being evaluated.
D. terms easily related to by the individual whose performance is being evaluated.

19. In accounting what does the Acroynm CMA stand for?
A. Certified Material Analyst
B. Classified Management Analysis
C. Certified Management Accountant
D. Certified Material Accountant

20. Cost accounting is a subset of which of the following?
A. Internal auditing.
B. Public auditing.
C. Cost analysis.
D. Managerial accounting.

21. Retained Earnings represents:
A. the amount invested in the entity by the owners.
B. cash that is available for dividends.
C. cumulative net income that has not been distributed to owners as dividends.
D. par value of common stock outstanding.

Martin & Associates borrowed $5,000 on April 1, 2003 at 8% interest with both principal and interest due on March 31, 2004.
Reference: 4-1

22. How much should be in the firm's interest payable account at December 31, 2003?
A. $300
B. $400
C. $0
D. $333

Martin & Associates borrowed $5,000 on April 1, 2003 at 8% interest with both principal and interest due on March 31, 2004.
Reference: 4-1

23. Which of the following journal entries should the firm use to record the payment of interest on March 31, 2004?




24. If a firm borrowed money on a six-month bank loan, the firm's working capital immediately after obtaining the loan, relative to its working capital just prior to the loan, would be:
A. Higher.
B. Lower.
C. The same.
D. Would depend on the amount borrowed.

25. Which one of the following methods is no longer a Generally Accepted Accounting Method?
A. Purchase accounting
B. Fair market value method.
C. Pooling method
D. None of the Above.

26. A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because:
A. not all of the firm's costs will change in proportion to the revenue change.
B. the firm has financial leverage.
C. the contribution margin ratio will change in proportion to the revenue change.
D. only fixed expenses will change in proportion to the revenue change.

27. A potential creditor's judgment about granting credit would be most influenced by the potential customer's:
A. current ratio at the end of the prior fiscal year.
B. most recent acid-test ratio.
C. trend of acid-test ratio over the past three years.
D. practice with respect to taking cash discounts offered by current suppliers.

28. Which of the following is another term for mixed costs?
A. semifixed costs.
B. semivariable costs.
C. component costs.
D. none of the above.

29. Which of the following is not a strong reason for budgeting?
A. Budgets provide a benchmark for judging performance.
B. Budgeting requires little effort by non-accounting managers.
C. Budgeting requires management to plan.
D. Budgeting requires coordination among the functional areas of the firm.

30. The income statement shows amounts for:
A. revenues, expenses, losses, and liabilities.
B. revenues, expenses, gains, and market value per share.
C. revenues, assets, gains, and losses.
D. revenues, gains, losses, and earnings per share.

Jun 2, 2006, 03:04 PM
Some answers to selected questions:

1) C
7) B
12) D
19) C
20) D
22) A
23) You did not give any options. So here is the JE you need:

Dr. Notes Payable 5,000
Dr. Interest Expense 100
Dr. Interest Payable 300
Cr. Cash 5,400

May 19, 2007, 06:03 AM
2. Standard costs are used in which of the following phases of the management process?

D. Both a and b.

May 21, 2007, 11:26 PM
For those posting answers to the original question now, I hope that you took a look at the date of the original question. I would assume that all of the original posters questions have been answered one way or the other by now.