1. The journal entry to pay a cash dividend is to:
a) debit dividends payable; credit cash
b) debit retained earnings; credit cash
c) debit dividends payable; credit retained earnings
d) debit retained earnings; credit dividends payable
2. When a stock dividend was declared above par, the excess was ignored and only the par value was used. This error would cause:
a) the period’s end assets to be overstated
b) the period’s end liabilitoes to be overstated
c) the period’s end stockholders’ equity to be overstated
d) none of the above
3. Which of the following is not a direct departmental expense in a sales department?
a) sales salaries
b) delivery expense for related items
c) advertising for the sales department
d) all are direct departmental expenses
4. If direct labor for the month is $30,000, overhead is applied based on direct labor, annual overhead is estimated to be $500,000, and annual direct labor is estimated to be $800,000, what is the entry to apply overhead to production?
a) debit work-in-progress inventory $18,750; credit payroll $18,750
b) debit overhead-applied $18,750; credit work-in-progress inventory $18,750
c) debit work-in-progress inventory $18,750; credit overhead applied $18,750
d) debit work-in-progress inventory $30,000; credit overhead-applied $30,000
5. Interest expense was $10,000, income tax expense $20,000, ad net income after taxes is $60,000. The number of times interest was earned is:
a) nine times
b) eight times
c) seven times
d) six times
6. Tricia and Jennifer formed a partnership. Tricia invested $10,000 in cash, and Jennifer invested $5,000 in cash, equipment valued at $6,000, and $1,000 accounts payable. The proper entry to record this is:
a) debit cash 15,000; debit equipment 6,000; credit accounts payable 1,000; credit Tricia’s capital 10,000; credit Jennifer’s capital 10,000
b) debit cash 15,000; debit equipment 6,000; debit accounts payable 1,000; credit Tricia’s capital 10,000; credit Jennifer’s capital 10,000
c) debit cash 15,000; debit equipment 6,000; credit Tricia’s capital 10,000; credit Jennifer’s capital 10,000
d) debit cash 15,000; debit equipment 6,000; credit Tricia’s capital 10,000; credit Jennifer’s capital 11,000
7. Which would not go into the operating activities section of a statement of cash flows using the direct method?
a) deprecitation expense
b) payment for dividends
c) selling of plant, property, and equipment
d) all of the above
8. Which of the following is true of a partnership?
a) actions of one partner are binding on all the other partners
b) each partner is individually liable for partnership debts.
c) all of the owners always share income and losses equally
d) both a and b
9. The overhead-control account is used for the:
a) application of overhead to production, and it has a debit balance
b) accumulation of all actual overhead costs, and it has a credit balance
c) application of overhead to production, and it has a debit balance
d) accumutation of all actual overhead costs, and it has a debit balance
10. What inventories are included in determining total maufacturing costs?
a) beginning and ending finished goods
b) beginning and ending raw materials
c) beginning and ending work-in-progress
d) none of the above
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