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					Name: ________________________ Class: ___________________ Date: __________                                  ID: A


ACCT1B - Managerial Accounting: Sample Exam 1

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____    1. Which of the following concepts of cash is not appropriate to use in preparing the statement of cash flows?
           a. cash
           b. cash and money market funds
           c. cash and cash equivalents
           d. cash and U.S. treasury bonds
____    2. On the statement of cash flows, the cash flows from operating activities section would include:
           a. receipts from the issuance of capital stock
           b. receipts from the sale of investments
           c. payments for the acquisition of investments
           d. cash receipts from sales activities
____    3. Cash paid to purchase long-term investments would be reported in the statement of cash flows in:
           a. the cash flows from operating activities section
           b. the cash flows from financing activities section
           c. the cash flows from investing activities section
           d. a separate schedule
____    4. A statement of cash flows would not disclose the effects of which of the following transactions?
           a. stock dividends declared
           b. bonds payable exchanged for capital stock
           c. purchase of treasury stock
           d. capital stock issued to acquire fixed assets
____    5. Which of the following represents an inflow of cash and therefore would be reported on the statement of cash
           flows?
           a. appropriation of retained earnings
           b. acquisition of treasury stock
           c. declaration of stock dividends
           d. issuance of long-term debt
____    6. Cash paid for preferred stock dividends should be shown on the statement of cash flows under:
           a. investing activities
           b. financing activities
           c. noncash investing and financing activities
           d. operating activities
____    7. A company purchases equipment for $29,000 cash. This transaction should be shown on the statement of
           cash flows under:
           a. investing activities
           b. financing activities
           c. noncash investing and financing activities
           d. operating activities




                                                            1
Name: ________________________                                                                              ID: A


____    8. Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect
           method in:
           a. the cash flows from financing activities section
           b. the cash flows from investing activities section
           c. a separate schedule
           d. the cash flows from operating activities section
____    9. Which of the following should be deducted from net income in calculating net cash flow from operating
           activities using the indirect method?
           a. depreciation expense
           b. amortization of premium on bonds payable
           c. a loss on the sale of equipment
           d. dividends declared and paid
____   10. Which of the following below increases cash?
           a. depreciation expense
           b. acquisition of treasury stock
           c. borrowing money by issuing a six-month note
           d. the declaration of a cash dividend
____   11. Which one of the following below should be added to net income in calculating net cash flow from operating
           activities using the indirect method?
           a. a gain on the sale of land
           b. a decrease in accounts payable
           c. an increase in accrued liabilities
           d. dividends paid on common stock
____   12. The net income reported on the income statement for the current year was $275,000. Depreciation recorded
           on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of
           current asset and current liability accounts at the end and at the beginning of the year are as follows:

                                                                                    End        Beginning
           Cash                                                                  $ 50,000       $ 60,000
           Accounts receivable                                                    112,000        108,000
           Inventories                                                            105,000         93,000
           Prepaid expenses                                                         4,500          6,500
           Accounts payable (merchandise creditors)                                75,000         89,000

         What is the amount of cash flows from operating activities reported on the statement of cash flows prepared
         by the indirect method?
         a. $198,000
         b. $324,000
         c. $352,000
         d. $296,000
____ 13. Equipment with an original cost of $50,000 and accumulated depreciation of $20,000 was sold at a loss of
         $7,000. As a result of this transaction, cash would:
         a. increase by $23,000
         b. decrease by $7,000
         c. increase by $43,000
         d. decrease by $30,000




                                                          2
Name: ________________________                                                                            ID: A


____ 14. Cash dividends of $80,000 were declared during the year. Cash dividends payable were $10,000 and
         $15,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends
         during the year is:
         a. $85,000
         b. $80,000
         c. $95,000
         d. $75,000
____ 15. The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and
         $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the
         beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating
         activities, cash payments for merchandise total:
         a. $49,000
         b. $47,000
         c. $51,000
         d. $63,000
____ 16. Income tax was $400,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and
         end of the year. Cash payments for income tax reported on the cash flow statement using the direct method
         is:
         a. $400,000
         b. $390,000
         c. $430,000
         d. $440,000
____ 17. Free cash flow is cash from operations, less cash for:
         a. dividends and cash for fixed assets needed to maintain productivity
         b. dividends and cash to redeem bonds payable
         c. fixed assets needed to maintain productivity
         d. dividends, cash for fixed assets needed to maintain productivity, and cash to redeem
              bonds payable
____ 18. Based on the following data, what is the quick ratio, rounded to one decimal point?

           Accounts payable                                                                    $ 30,000
           Accounts receivable                                                                   65,000
           Accrued liabilities                                                                    7,000
           Cash                                                                                  20,000
           Intangible assets                                                                     40,000
           Inventory                                                                             72,000
           Long-term investments                                                                100,000
           Long-term liabilities                                                                 75,000
           Marketable securities                                                                 36,000
           Notes payable (short-term)                                                            20,000
           Property, plant, and equipment                                                       625,000
           Prepaid expenses                                                                       2,000

           a.   2.4
           b.   3.4
           c.   2.1
           d.   1.5



                                                         3
Name: ________________________                                                                                   ID: A


____ 19. Which of the following is a measure of the liquid position of a corporation?
         a. earnings per share
         b. inventory turnover
         c. current ratio
         d. number of times interest charges earned
____ 20. Which of the following is not included in the computation of the quick ratio?
         a. inventory
         b. marketable securities
         c. accounts receivable
         d. cash
____ 21. Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or
         bondholders and also gives an indication of the potential ability of the business to borrow additional funds on
         a long-term basis?
         a. ratio of fixed assets to long-term liabilities
         b. ratio of net sales to assets
         c. number of days' sales in receivables
         d. rate earned on stockholders' equity
____ 22. The balance sheets at the end of each of the first two years of operations indicate the following:

                                                                                       2006            2005
            Total current assets                                                    $600,000        $560,000
            Total investments                                                         60,000          40,000
            Total property, plant, and equipment                                     900,000         700,000
            Total current liabilities                                                150,000          80,000
            Total long-term liabilities                                              350,000         250,000
            Preferred 9% stock, $100 par                                             100,000         100,000
            Common stock, $10 par                                                    600,000         600,000
            Paid-in capital in excess of par-common stock                             60,000          60,000
            Retained earnings                                                        325,000         210,000

            If net income is $115,000 and interest expense is $30,000 for 2006 what is the rate earned on total assets for
            2006 (round percent to one decimal point)?
            a. 9.3%
            b. 10.1%
            c. 8.0%
            d. 7.4%




                                                             4
Name: ________________________                                                                              ID: A


____ 23. The following information is available for Watson Corp.:

                                                                                                2006
           Market price per share of common stock                                              $25.00
           Earnings per share on common stock                                                    1.25

           Which of the following statements is correct?
           a. The price-earnings ratio is 20 and a share of common stock was selling for 20 times the
                amount of earnings per share at the end of 2006.
           b. The price-earnings ratio is 5.0% and a share of common stock was selling for 5.0% more
                than the amount of earnings per share at the end of 2006.
           c. The price-earnings ratio is 10 and a share of common stock was selling for 125 times the
                amount of earnings per share at the end of 2006.
           d. The market price per share and the earnings per share are not statistically related to each
                other.
____ 24.   The independent auditor's report does which of the following?
           a. describes which financial statements are covered by the audit
           b. gives the auditor's opinion regarding the fairness of the financial statements
           c. summarizes what the auditor did
           d. states that the financial statements are truthful
____ 25.   In order to be useful to managers, management accounting reports should possess all of the following
           characteristics except:
           a. provide objective measures of past operations and subjective estimates about future
                decisions
           b. be prepared in accordance with generally accepted accounting principles
           c. be provided at any time management needs information
           d. be prepared to report information for any unit of the business to support decision making
____ 26.   The cost of a manufactured product generally consists of which of the following costs?
           a. Direct materials cost and factory overhead cost
           b. Direct labor cost and factory overhead cost
           c. Direct labor cost, direct materials cost, and factory overhead cost
           d. Direct materials cost and direct labor cost
____ 27.   Which of the following is an example of a factory overhead cost?
           a. Repair and maintenance cost on the administrative building
           b. Factory heating and lighting cost
           c. Insurance premiums on salespersons' automobiles
           d. President's salary
____ 28.   Which of the following items would not be classified as part of factory overhead?
           a. Direct labor used
           b. Amortization of manufacturing patents
           c. Production supervisors' salaries
           d. Factory supplies used
____ 29.   Which of the following is considered a part of factory overhead cost?
           a. Sales commissions
           b. Depreciation of factory buildings
           c. Depreciation of office equipment
           d. Direct materials used


                                                          5
Name: ________________________                                                                              ID: A


____ 30. Which of the following manufacturing costs is an indirect cost of producing a product?
         a. Oil lubricants used for factory machinery
         b. Commissions for sales personnel
         c. Hourly wages of an assembly worker
         d. Memory chips for a microcomputer manufacturer
____ 31. Which of the following are the two main types of cost accounting systems for manufacturing operations?
         a. Process cost and general accounting systems
         b. Job order cost and process cost systems
         c. Job order and general accounting systems
         d. Process cost and replacement cost systems
____ 32. For which of the following businesses would the process cost system be appropriate?
         a. Book publisher
         b. Dress designer
         c. Lumber mill
         d. Printing firm
____ 33. The document authorizing the issuance of materials from the storeroom is the:
         a. materials requisition
         b. purchase requisition
         c. receiving report
         d. purchase order
____ 34. The entry to record direct labor costs into production in a job order cost accounting system is:
         a. debit Factory Overhead, credit Work in Process
         b. debit Finished Goods, credit Wages Payable
         c. debit Work in Process, credit Wages Payable
         d. debit Factory Overhead, credit Wages Payable
____ 35. The recording of the jobs completed would include a credit to:
         a. Factory Overhead
         b. Finished Goods
         c. Work in Process
         d. Cost of Goods Sold
____ 36. The finished goods account is the controlling account for the:
         a. cost ledger
         b. materials ledger
         c. work in process ledger
         d. stock ledger
____ 37. Materials purchased on account during the month amounted to $195,000. Materials requisitioned and placed
         in production totaled $168,000. From the following, select the entry to record the transaction on the day the
         materials were bought.
         a. Materials                     168,000
               Accounts Payable                       168,000
         b. Materials                     195,000
               Accounts Payable                       195,000
         c. Materials                     195,000
               Cash                                   195,000
         d. Accounts Payable              195,000
               Materials                              195,000



                                                          6
Name: ________________________                                                                              ID: A


____ 38. The cost of production of completed and finished goods during the period amounted to $400,000, and the
         finished products shipped to customers had total production costs of $337,000. From the following, select
         the entry to record the transfer of costs from finished goods to cost of goods sold.
         a. Finished Goods                     400,000
               Cost of Goods Sold                     400,000
         b. Finished Goods                     337,000
               Cost of Goods Sold                     337,000
         c. Cost of Goods Sold                   337,000
               Finished Goods                          337,000
         d. Cost of Goods Sold                   400,000
               Finished Goods                          400,000
____ 39. Costs that are treated as assets until the product is sold are called:
         a. product costs
         b. period costs
         c. conversion costs
         d. selling expenses
____ 40. For the manufacturing business, inventory which is in the process of being manufactured is referred to as:
         a. supplies inventory
         b. work in process inventory
         c. finished goods inventory
         d. direct materials inventory


Problem

      41. On the basis of the details of the common stock account presented below, assemble in memorandum form the
          data needed to prepare a statement of cash flows, indicating the section of the statement in which the data
          would appear.

                                              Common Stock, $10 Par
                                                                                           Balance
           Date                                    Item       Debit      Credit      Debit      Credit
           20--
           Jan. 1    Balance, 50,000                ...         ...         ...                500,000
                     shares
           Mar. 7 5,000 shares issued at            ...         ...      50,000                550,000
                    par for cash
           Sept. 20 1000-share stock                ...         ...      10,000                560,000
                    dividend
           Dec. 10 1,000 shares issued at           ...         ...      20,000                580,000
                          $20 for cash




                                                          7
Name: ________________________                                                                              ID: A


     42. The board of directors declared cash dividends totaling $242,000 during the current year. The comparative
         balance sheet indicates dividends payable of $48,000 at the beginning of the year and $59,000 at the end of
         the year. What was the amount of cash payments to stockholders during the year?




                                                         8
Name: ________________________                                                                            ID: A


     43. The comparative balance sheet of Nelson Company, for 2006 and the preceding year ended December 31,
         2005, appears below in condensed form:

                                                                              Year             Year
                                                                             2006             2005
         Cash                                                                 $ 68,000         $ 42,500
         Accounts receivable (net)                                              61,000           70,200
         Inventories                                                           121,000          105,000
         Investments                                                                .....       100,000
         Equipment                                                             515,000          425,000
         Accumulated depreciation-equipment                                  (153,000)        (175,000)
                                                                            $612,000         $567,700
                                                                           ========         ========

         Accounts payable                                                    $ 59,750         $ 47,250
         Bonds payable, due 2010                                                   .....        75,000
         Common stock, $20 par                                                375,000          325,000
         Premium on common stock                                               50,000           25,000
         Retained earnings                                                    127,250           95,450
                                                                            $612,000         $567,700
                                                                           ========         ========

         Additional data for the current year are as follows:

         (a)   Net income, $71,800.
         (b)   Depreciation reported on income statement, $38,000.
         (c)   Fully depreciated equipment costing $60,000 was scrapped, no salvage, and
               equipment was purchased for $150,000.
         (d)   Bonds payable for $75,000 were retired by payment at their face amount.
         (e)   2,500 shares of common stock were issued at $30 for cash.
         (f)   Cash dividends declared and paid, $40,000.
         (g)   Investments of $100,000 were sold for $125,000.

         Prepare a statement of cash flows using the indirect method.




                                                          9
Name: ________________________        ID: A




                                 10
Name: ________________________                                                                              ID: A


     44. The cash flows from operating activities are reported by the direct method on the statement of cash flows.
         Determine the following:

          a.   If sales for the current year were $475,000 and accounts receivable increased by
               $37,000 during the year, what was the amount of cash received from customers?
          b.   If income tax for the current year was $38,000 and income tax payable decreased by
               $10,000 during the year, what was the amount of cash payments for income tax?




                                                         11
Name: ________________________                                                                          ID: A


     45. Condensed data taken from the ledger of Jefferson Company at December 31, 2006 and 2005, are as follows:

                                                                                2006            2005
         Current assets                                                      $150,000        $130,000
         Property, plant, and equipment                                       450,000         400,000
         Intangible assets                                                     20,700          30,000
         Current liabilities                                                   70,000          80,000
         Long-term liabilities                                                200,000         250,000
         Common stock                                                         225,000         150,000
         Retained earnings                                                    125,700          80,000

         Prepare a comparative balance sheet, with horizontal analysis, for December 31, 2006 and 2005. (Round
         percents to one decimal point.)




                                                       12
Name: ________________________                                                                                ID: A




     46. The following information has been condensed from the December 31 balance sheets of Henry Co.:

                                                                             2006                2005
         Assets:
          Current assets                                                    $ 825,500           $ 674,300
          Fixed assets (net)                                                 1,473,600           1,275,300
         Total assets                                                      $2,299,100          $1,949,600
                                                                         ==========          ==========

         Liabilities:
          Current liabilities                                                $ 313,500            $ 309,600
          Long-term liabilities                                                703,000              545,000
         Total liabilities                                                  $1,016,500            $ 854,600
         Stockholders' equity                                               $1,282,600           $1,095,000
         Total liabilities and
         stockholders' equity                                              $2,299,100          $1,949,600
                                                                         ==========          ==========

         (a)   Determine the ratio of fixed assets to long-term liabilities for 2006 and 2005.
         (b)   Determine the ratio of liabilities to stockholders' equity for 2006 and 2006.
         (c)   Comment on the year-to-year changes for both ratios.




                                                         13
Name: ________________________                                                                             ID: A


     47. KCT Printing Company uses a job order cost system.

         (a)   Indicate the source of the data for debiting Work in Process for each of the following:
               (1) Direct materials requisitioned
               (2) Direct labor used

         (b)   Indicate the source of the data for crediting Work in Process for jobs completed.

         (c)   Present a list of the three controlling accounts used in the general ledger to record the
               inventories and, in each case, indicate the related subsidiary ledger.




                                                          14
Name: ________________________                                                                                  ID: A


     48. During June, the receipts and issuances of Material No. A2FO are as follows:

                                                 Received
               June 3     Balance            1,100 units at $15
                   16                        1,700 units at $17
                   29                          900 units at $18

                                                   Issued
               June 11                  700 units for Job No. 116
                    18                1,900 units for Job No. 117
                    30                  800 units for Job No. 118

         (a)     Determine the cost of each of the three issues under a perpetual system, using the
                 first-in, first-out method.

         (b)     Present the journal entry to record the issuance of the materials for the month,
                 assuming that the cost of issuances is determined by the first-in, first-out method.




     49. The balance of Material Q on May 1 and the receipts and issuances during May are as follows:

         Balance May 1                                                                               8 at $32
         Received May 11                                                                            23 at $34
         Received May 25                                                                            15 at $35

         Issued May 17                                                                                    14
         Issued May 27                                                                                    18

         Determine the cost of each of the issuances under a perpetual system, using the first-in, first-out method.




                                                            15
Name: ________________________                                                                        ID: A


     50. List the accounts used in the cost flow for (a) a manufacturer and (b) a service provider.




                                                          16
                                                              ID: A


ACCT1B - Managerial Accounting: Sample Exam 1
Answer Section

MULTIPLE CHOICE

     1.   ANS:   D     PTS:   1        DIF:   2   OBJ:   01
     2.   ANS:   D     PTS:   1        DIF:   2   OBJ:   01
     3.   ANS:   C     PTS:   1        DIF:   2   OBJ:   01
     4.   ANS:   A     PTS:   1        DIF:   2   OBJ:   01
     5.   ANS:   D     PTS:   1        DIF:   2   OBJ:   01
     6.   ANS:   B     PTS:   1        DIF:   2   OBJ:   01
     7.   ANS:   A     PTS:   1        DIF:   2   OBJ:   01
     8.   ANS:   D     PTS:   1        DIF:   2   OBJ:   02
     9.   ANS:   B     PTS:   1        DIF:   2   OBJ:   02
    10.   ANS:   C     PTS:   1        DIF:   2   OBJ:   02
    11.   ANS:   C     PTS:   1        DIF:   2   OBJ:   02
    12.   ANS:   D     PTS:   1        DIF:   3   OBJ:   02
    13.   ANS:   A     PTS:   1        DIF:   2   OBJ:   02
    14.   ANS:   D     PTS:   1        DIF:   2   OBJ:   02
    15.   ANS:   A     PTS:   1        DIF:   2   OBJ:   03
    16.   ANS:   B     PTS:   1        DIF:   2   OBJ:   03
    17.   ANS:   A     PTS:   1        DIF:   1   OBJ:   04
    18.   ANS:   C     PTS:   1        DIF:   3   OBJ:   02
    19.   ANS:   C     PTS:   1        DIF:   2   OBJ:   02
    20.   ANS:   A     PTS:   1        DIF:   1   OBJ:   02
    21.   ANS:   A     PTS:   1        DIF:   1   OBJ:   02
    22.   ANS:   A     PTS:   1        DIF:   3   OBJ:   03
    23.   ANS:   A     PTS:   1        DIF:   3   OBJ:   03
    24.   ANS:   B     PTS:   1        DIF:   2   OBJ:   05
    25.   ANS:   B     PTS:   1        DIF:   1   OBJ:   01
    26.   ANS:   C     PTS:   1        DIF:   1   OBJ:   03
    27.   ANS:   B     PTS:   1        DIF:   5   OBJ:   03
    28.   ANS:   A     PTS:   1        DIF:   5   OBJ:   03
    29.   ANS:   B     PTS:   1        DIF:   5   OBJ:   03
    30.   ANS:   A     PTS:   1        DIF:   5   OBJ:   03
    31.   ANS:   B     PTS:   1        DIF:   1   OBJ:   04
    32.   ANS:   C     PTS:   1        DIF:   5   OBJ:   04
    33.   ANS:   A     PTS:   1        DIF:   1   OBJ:   05
    34.   ANS:   C     PTS:   1        DIF:   5   OBJ:   05
    35.   ANS:   C     PTS:   1        DIF:   5   OBJ:   05
    36.   ANS:   D     PTS:   1        DIF:   1   OBJ:   05
    37.   ANS:   B     PTS:   1        DIF:   5   OBJ:   05
    38.   ANS:   C     PTS:   1        DIF:   5   OBJ:   05
    39.   ANS:   A     PTS:   1        DIF:   1   OBJ:   05

                                          1
                                                                                   ID: A


   40. ANS: B               PTS: 1                DIF:   1   OBJ: 05


PROBLEM

   41. ANS:
       Cash flows from financing activities:
        Cash received from sale of common stock                          $70,000

       PTS: 1                DIF: 2                OBJ: 02
   42. ANS:
       Dividends declared                                               $242,000
       Less increase in dividends payable                                 11,000
       Dividends paid to stockholders during the year                   $231,000
                                                                       ========

       PTS: 1               DIF:   2              OBJ: 02




                                                     2
                                                                                            ID: A


43. ANS:

                                          Nelson Company
                                      Statement of Cash Flows
                                 For Year Ended December 31, 2006

   Cash flows from operating activities:
    Net income, per income statement                                $ 71,800
    Add: Depreciation                                  $38,000
       Decrease in accts. rec.                           9,200
       Increase in accts. pay.                          12,500        59,700
                                                                    $131,500
    Deduct: Increase in inventories                    $16,000
          Gain on sale of investments                   25,000        41,000
    Net cash flow from operating
    activities                                                                   $ 90,500

   Cash flows from investing activities:
    Cash from sale of investments                                   $125,000
    Less: Cash paid for purchase of
         equipment                                                   150,000
    Net cash flow used for investing
    activities                                                                   (25,000)
   Cash flows from financing activities:
    Cash from sale of common stock                                  $ 75,000
    Less: Cash paid to retire bonds
         payable                                       $ 75,000
         Cash paid for dividends                         40,000      115,000
    Net cash flow used for financing
    activities                                                                   (40,000)

   Increase in cash                                                              $ 25,500
   Cash at the beginning of the year                                               42,500
   Cash at the end of the year                                                   $ 68,000
                                                                               ========

   PTS: 1                DIF:   5            OBJ: 02




                                                 3
                                                                                              ID: A


44. ANS:
    a.

   Sales                                                                          $475,000
   Less increase in accounts receivable                                             37,000
   Cash received from customers                                                   $438,000
                                                                                 ========

   b.

   Income tax                                                                      $ 38,000
   Add decrease in income taxes payable                                              10,000
   Cash payments for income tax                                                    $ 48,000
                                                                                 ========

    PTS: 1               DIF:   2             OBJ: 03
45. ANS:

                                        Jefferson Company
                                    Comparative Balance Sheet
                                    December 31, 2006 and 2005
                                                                       Increase (Decrease)
                                              2006         2005       Amount       Percent
                Assets
   Current assets                          $150,000     $130,000     $ 20,000      15.4%
   Property, plant,
    and equipment                           450,000      400,000       50,000      12.5%
   Intangible assets                         20,700       30,000       (9,300)    (31.0%)
   Total assets                            $620,700     $560,000     $ 60,700      10.8%
                                          ========     ========    ========
               Liabilities
   Current liabilities                      $ 70,000    $ 80,000    $(10,000)     (12.5%)
   Long-term liabilities                     200,000     250,000     (50,000)     (20.0%)
   Total liabilities                       $270,000     $330,000    $(60,000)     (18.2%)
         Stockholders' Equity
   Common stock                            $225,000     $150,000     $ 75,000      50.0%
   Retained earnings                        125,700       80,000       45,700      57.1%
   Total stockholders'
   equity                                  $350,700     $230,000    $120,700       52.5%
   Total liabilities and
   stockholders' equity                    $620,700     $560,000     $ 60,700      10.8%
                                          ========     ========    ========

   PTS: 1                DIF:   3             OBJ: 02




                                                  4
                                                                                                                ID: A


46. ANS:
    (a)

                                                                             2006              2005
    Ratio of fixed assets to long-term liabilities...............            2.10              2.34

    (b)

    Ratio of liabilities to stockholders’ equity                              .79                  .78

    (c)    There are fewer fixed assets on a proportionate basis to protect the interests of the
           long-term creditors. The interests of all the creditors in the total assets of the
           company, however, are rising slightly from year to year when compared to the
           shareholders' equity in those same assets.

    PTS: 1             DIF: 3                OBJ: 03
47. ANS:
    (a) (1) Summary of materials requisitions
         (2) Summary of time tickets

    (b)    Summary of job cost sheets for jobs completed

    (c)      Controlling Account                         Subsidiary Ledger
                  Materials                               Materials ledger
              Work in Process                               Cost ledger
               Finished Goods                  Finished goods ledger (or stock ledger)

    PTS: 1                   DIF:    1                 OBJ: 05
48. ANS:
    (a) June 11         issue:      700 at $15                                                  $10,500
             18         issue:      400 at $15 plus 1,500 at $17                                 31,500
             31         issue:      200 at $17 plus 600 at $18                                   14,200
                                                                                                $56,200
                                                                                               =======

    (b)    Work in Process                                                          56,200
            Materials                                                                               56,200

    PTS: 1                   DIF:    3                 OBJ: 05
49. ANS:
    May 17 issue:          8 at $32 plus 6 at $34                                                        $460
    May 27 issue:         17 at $34 plus 2 at $35                                                        $648

    PTS: 1                   DIF:    1                 OBJ: 05




                                                           5
                                              ID: A


50. ANS:
    (a) Materials
         Wages Payable
         Factory Overhead
         Work in Process
         Finished Goods
         Cost of Goods Sold

    (b)   Supplies
          Wages Payable
          Overhead
          Work in Process
          Cost of Services

    PTS: 1               DIF:   4   OBJ: 07




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