Q: A company uses the weighted-average method for process costing. If 2,000 units are completed and transferred out, and 500 units are 60% complete at the end of the period, what are the equivalent units of production for conversion costs?

$$2,000 + (500 \times 0.6) = 2,300$$

Q: A company issued $200,000 of 10-year, 5% bonds at 98. What is the cash received from the issuance?

$$200,000 \times 0.98 = 196$$,000$

Question 1

A company issues $100,000 of 8% bonds at a time when the market (effective) interest rate is 6%. Which of the following statements is correct regarding the issuance of these bonds?

Accepted Answer

The bonds will sell at a premium because the contract rate is greater than the market rate.

Question 2

Which of the following costs would be classified as a conversion cost in a manufacturing company?

Accepted Answer

Direct labor and factory overhead

Question 3

A company uses the weighted-average method for process costing. If 2,000 units are completed and transferred out, and 500 units are 60% complete at the end of the period, what are the equivalent units of production for conversion costs?

Accepted Answer

$$2,000 + (500 	imes 0.6) = 2,300$$

Question 4

Which of the following journal entries correctly records the payment of factory overhead that was previously applied in excess (overapplied) to production?

Accepted Answer

Debit Factory Overhead; Credit Cost of Goods Sold

Question 5

Which of the following is NOT a characteristic of job-order costing?

Accepted Answer

Used when products are homogeneous and produced in a continuous process.

Question 6

A company purchased equipment for $50,000 cash. In which section of the statement of cash flows would this transaction appear?

Accepted Answer

Investing activities

Question 7

Which of the following best describes the goal of managerial accounting?

Accepted Answer

To provide relevant information to managers for planning, controlling, and decision making.

Question 8

A company issued $200,000 of 10-year, 5% bonds at 98. What is the cash received from the issuance?

Accepted Answer

$$200,000 	imes 0.98 = 196$$,000$

Question 9

Which of the following accounts is used by both manufacturing and service organizations?

Accepted Answer

Cost of Goods Sold

Question 10

Which of the following is a direct method cash flow from operating activities?

Accepted Answer

Cash received from customers

Question 11

A company has the following costs for the period: Direct materials used $$40,000; Direct labor 25$$,000; Factory overhead $$15,000; Selling expenses 10$$,000. What are the total prime costs?

Accepted Answer

$$40,000 + 25$$,000 = $$65,000$$

Question 12

Which of the following statements about bond discounts and premiums is correct?

Accepted Answer

A bond issued at a premium has a contract rate higher than the market rate.

Question 13

Which of the following is true regarding the presentation of bonds payable on the balance sheet?

Accepted Answer

Bonds payable are presented in the long-term liabilities section, net of unamortized discounts or premiums.

Question 14

A company uses the straight-line method to amortize a $5,000 bond discount over 10 years. What is the annual amortization amount?

Accepted Answer

$$5,000 \div 10 = 500$

Question 15

Which of the following is a characteristic of process costing but NOT job-order costing?

Accepted Answer

Costs are accumulated by department or process.

Question 16

A company has $$10,000 in bonds payable, 500 $$unamortized bond premium, and $200 unamortized bond discount. What is the carrying value of the bonds?

Accepted Answer

$$10,000 + 500$$ - $$200 = 10$$,300$

Question 17

Which of the following is included in the schedule of non-cash investing and financing activities?

Accepted Answer

Purchasing equipment by issuing a note payable

Question 18

Which costing system utilizes average costing?

Accepted Answer

Process costing

Question 19

A company using the indirect method for the statement of cash flows starts with net income and adjusts for changes in current assets and liabilities. Which of the following adjustments is correct?

Accepted Answer

Add depreciation expense

Question 20

A company has the following information for the month: Beginning Work in Process Inventory: $$5,000; Direct Materials Used: 20$$,000; Direct Labor: $$10,000; Factory Overhead: 8$$,000; Ending Work in Process Inventory: $7,000. What is the cost of goods manufactured?

Accepted Answer

$$5,000 + 20$$,000 + $$10,000 + 8$$,000 - $$7,000 = 36$$,000$

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