Question 1:

In an effort to concentrate its resources in more profitable areas, Frick Corporation recently sold its family pizza restaurant segment. The disposal constitutes:

a.   an extraordinary item.

b.   a discontinued operation which should be treated as a prior period adjustment.

c.   a discontinued operation which should be disclosed net-of-tax effects.

d.   a portion of income from continuing operations.

Question 2:

Frick Corporation has 100,000, 5%, $100 par preferred shares outstanding. The stock is callable at 102, but was originally issued at 99. The current dividend has been fully paid. Total stockholders' equity is $20,000,000. The residual common equity is:

a.   $20,000,000

b.   $10,100,000

c.   $10,000,000

d.   $9,800,000

Question 3:

Frick Company's balance sheet included cash ($4,000,000), accounts receivable ($16,000,000), inventories ($10,000,000), prepaid expenses ($2,000,000), accounts payable ($9,000,000), and accrued expenses ($7,000,000). These are the only current items.

a.   The quick ratio is 2:1.

b.   The quick ratio is 1.25:1.

c.   The current ratio is 1.875:1.

d.   Both A and C.

Question 4:

Selected information for 2014 is: cost of goods sold, $5,400,000; average inventory, $1,800,000; net sales, $7,200,000; average receivables, $960,000; and net income, $720,000. Assuming a 360-day year, what was the inventory turnover ratio for 2014?

a.   333

b.   3

c.   7.5

d.   20

Question 5:

On the schedule of cost of goods manufactured:

a.   beginning work-in-process plus direct materials used equals manufacturing costs.

b.   cost of goods manufactured is the same thing as total manufacturing costs.

c.   work-in-process will necessarily increase if total manufacturing costs increase.

d.   factory overhead plus beginning work-in-process equals manufacturing costs.

Question 6:

Which costing method seems ideally suited to the production of homogenous products in continuous throughput?

a.   Activity-based costing.

b.   Job order costing.

c.   Process costing.

d.   Absorption costing.

Question 7:

Frick Company uses a job order cost system and applies overhead based on estimated rates. The overhead application rate is based on total estimated overhead costs of $200,000 and direct labor hours of 50,000. For job 836, direct labor hours were 800.

a.   Factory Overhead should be debited for $3,200.

b.   Factory Overhead should be credited for $3,200.

c.   Overhead Expense should be debited for $3,200.

d.   Overhead Expense should be credited for $3,200.

Question 8:

For job 1838, there were 1,000 direct labor hours, and actual overhead was $500 for depreciation and $1,400 for indirect labor. Overhead is applied at $2 per direct labor hour. Which account should be debited for $1,900?

a.   Work in Process.

b.   Cost of Goods Sold.

c.   Factory Overhead.

d.   Cost of Goods Manufactured.