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Multiple choice questions on accounts

1. Sample data on sales for small retailers are as follows:
Sales ($ in 0000s) # of Retailers

Lower sales < Upper
100-120 5
120-140 7
140-160 9
160-180 16
180-200 10
200-220 3

The mean sales level of the retailers is:

a. $148,600
b. $152,500
c. $161,200
d. $164,490

For questions 2-3 use the following data.
A sample of the rate of return for a group of investment companies showed the following returns: 10.6%; 12.6%; 14.8%; 18.2%; 12.0%; 14.8%; 12.2%; 15.6%

2. The variance of the data is approximately:

a. 5.26
b. 6.00
c. 7.01
d. 42.06

3. The standard deviation of the data is approximately:

a. 2.29
b. 2.45
c. 2.65
d. 6.49

4. Records at a manufacturing firm indicate that 300 of a typical production run of 7,500 units did not pass quality inspection. What is the likelihood that the next unit off the line will be defective?

a. 0.03
b. 0.04
c. 0.05
d. 0.08

Please answer questions 5 and 6 using the following information.

Class scores Frequency - f
Lower limit score < upper limit
10-30 10
30-50 14
50-70 16
70-90 12
90-110 8

5. The probability that a selected observation is greater than or equal to 50 is:

a. 0.36
b. 0.40
c. 0.48
d. 0.60
e. 0.72

6. The chance that a selected observation is greater than 49 but less than 90 is:

a. 28%
b. 46.67%
c. 50%
d. 53.33%
e. 60%

Please use the following information to answer questions 7-12.

McCormick Trading Company
Comparative Income Statement, 12/31/99 and 12/31/2000

1999 2000
Net sales $500,000 $750,000
Beginning inventory 30,000 40,000
Net purchases 230,000 380,000
Ending inventory 32,000 40,000
Transportation - in 7,000 20,000
Operating Expenses:
Supplies 6,000 8,000
Wages and salaries 117,000 145,000
Depreciation 10,000 13,000
Advertising 4,000 6,000
Utilities 3,000 3,000
Provision for taxes 35,000 45,000

7. For the year 2000, net income was:
a. $130,000
b. $170,000
c. $175,000
d. $215,000

8. For the year 1999, net income represented what percentage of net sales?
a. 11%
b. 18%
c. 22%
d. 25%

9. For the year 2000, total operating expenses represented what percentage of net sales?
a. 23.33%
b. 28,00%
c. 35.00%
d. 47.00%

10. Total operating expenses increased by _% in 2000 over 1999?
a. 15.50
b. 25.00
c. 27.00
d. 40.00

11. Gross profit:
a. fell by 6.12%
b. fell by 24.28%
c. rose by 32.07%
d. rose by 39.78%
e. rose by 41.25%

12. Net income:
a. fell by 30.76%
b. fell by 21.7%
c. rose by 30.76%
d. rose by 44.44%

Please answer questions 13-16 based on the following information from Mason Company's accounts on 12/31/2000:

Current Assets $ 400,000 Current Liabilities $250,000
Fixed Assets $1,200,000 Long-term Liabilities $380,000
Net Sales $2,500.000 Total Owner's Equity $960,000
Net Income (after taxes) $ 225,000 Average Owner's Equity $920,000

13. The current ratio is:
a. 0.9:1
b. 1.6:1
c. 2.54:1
d. 3:1

14. The return on net sales ratio is:
a. 5.49%
b. 9.00%
c. 14.06%
d. 24.46%

15. If assets totaled $1,200,000 on 01/01/2000, the asset turnover ratio is:
a. 16.07%
b. 1.56 times
c. 1.79 times
d. 2.083 times

16. The firm's return on investment is:
a. 9.00%
b. 14.06%
c. 23.44%
d. 24.46%

17. A store receives $240 cash after offering a series discount of 15/10/5 on a good. The list price was:
a. $174.42
b. $312.00
c. $330.24
d. $342.86

18. An invoice for a purchase of $5,000 is dated 9/14 with terms 3/10, 2/15, n/30 ROG. The order arrives on 10/12 and payment is made on 10/25. The payment made is:
a. $4,850
b. $4,900
c. $5,000

19. Klein Company marks up its goods 60% of cost. What is the selling price of an item that costs the company $80?
a. $ 50
b. $ 88
c. $128
d. $140

20. A retailer wants to sell an item that costs $42 at a list price that will provide 30% markup on selling price and give the customer a 25% discount. The list price is:
a. $62.00
b. $65.10
c. $68.25
d. $80.00

21. A merchant buys a good for $250. Her store's operating expenses are 30% of cost. The selling price of the good, $519, is marked down by 35%. The transaction results in a:
e. net loss of $13.60
f. net loss of $2.25
g. net profit of $12.35
h. net profit of $59.44

22. A trader buys a good at a cost of $12.00 per unit. Operating expenses are 40% of selling price and net profit is 12% of selling price. The maximum dollar markdown allowed without incurring an operating loss on the sale of the good is:
a. $1.82
b. $2.00
c. $3.00
d. $4.56

23. Telethon Services borrows $100,000 at 12% simple interest for 9 months. The amount of interest paid is:
a. $ 9,000
b. $10,800
c. $12,000
d. $16,000

24. Martha receives $4,800 every six months from an investment paying 12% simple interest. She receives all interest paid on her investment and never reduces the principle. Her investment totals:
a. $10,752
b. $40,000
c. $68,000
d. $80,000
25. Lang receives $15,000 from an investment made at 15% simple interest exactly 10 years ago. The initial sum invested was:
a. $ 6,000
b. $ 7,500
c. $ 9,000
d. $12,900

26. Juan needs $20,000 in cash to purchase equipment. If he is offered a discounted loan at 8% for 24 months, how much will he have to borrow to be able to use $20,000 today?
a. $ 21,600
b. $ 21,739.14
c. $23,328.00
d. $23,809.52

27. The true rate of interest for the loan described in question #26 is:
a. 8.0%
b. 8.7%
c. 9.5%
d. 19.05%

28. ABC needs to borrow $10,000 for 9 months. Friendly Finance Corporation offers a loan at 9.75% simple interest for 9 months, and Better Bank offers a loan of $10,000 discounted at 9% for 9 months. Based on the true rate of interest and amount of interest paid, ABC will opt for the loan from:
a. Friendly Finance Corporation
b. Better Bank

29. Palletto invests $500 at the end of each quarter for five years in an account paying 8% compounded quarterly. The total value of the investment after four years is:
a. 9,319.65
b. 11,265.28
c. 12,148.69
d. 12,391.66

30. An asset purchased by Able Corporation for $50,000 on 01/01/98 also incurred freight charges of $1,000 and installation cost of $2,500. The asset had a life expectancy of 10 years and salvage value of $5,000. Accumulated straight-line depreciation and book value on 01/01/00 are, respectively,:
a. $9,500;$43,000
b. $9,700;$43,800
c. $10,000;$40,000
d. $10,700;$42,800

31. An asset is purchased for $75,000. It has an estimated useful life of 12 years and salvage value of $6,000. If the asset is depreciated using the double-declining balance method, the depreciation expense at the end of year one is:
a. $6,250
b. $9,375
c. $11,500
d. $12,500

32. Baker Company purchases a new delivery truck for $30,000. The truck is expected to have a useful life of 120,000 miles before replacement, and a salvage value of $1,500. In its first year the truck was driven 20,000 miles, and a further 24,000 miles in year two. The accumulated depreciation and book value at the end of year two is:
a. $ 9,750;$18,750
b. $10,450;$19,550
c. $11,000;$29,000
d. $12,540;$17,460

33. A delivery truck is purchased for $32,000, has a salvage value of $4,000 and is depreciated using MACRS. The first-year depreciation expense is:
a. $5,600.00
b. $6,400.00
c. $8,960.00
d. $9,333.33

Please use the following information to answer questions 34-37.

Gladstone Corporation sold 8,000 boxes of type ribbons @ $15 each in the first quarter of 1991. Their inventory at January 1, 1991, totaled 1,600 boxes and cost $11,200. During January, Gladstone purchased 3,200 boxes @ $8 each: in February purchases totaled 3,600 boxes @ $9 each, and in March 1,600 boxes were purchased at $8 each

34. Using the average cost method of inventory calculation, ending inventory is:
a. $ 1,600
b. $16,000
c. $16,400
d. $17,000

35. Using the average cost method of inventory calculation, cost of goods sold is:
a. $16,600
b. $64,000
c. $65,000
d. $65,600

36. Using the LIFO method of inventory calculation, ending inventory is:
a. $12,600
b. $14,000
c. $14,400
d. $15,000

37. Gross profit using LIFO is:
a. $51,600
b. $52,000
c. $52,400
d. $53,000

38. Estimate the cost of ending inventory based on the retail method using the following information:

COST RETAIL
Beginning Inventory $ 336,000 $ 480,000
Purchases $1,820,000 $2,600,000
Net Sales $2,840,000

a. $153,803
b. $168,000
c. $240,000
d. $342,857

39. A firm has sales of $700,000, cost of goods available for sale of $600,000, and typical gross margin as a percentage of sales has been 20%. Using the gross margin method, estimated ending inventory is:
a. $ 20,000
b. $ 40,000
c. $ 60,000
d. $140,000

40. Billings earns $8.00 per hour and is paid time-and-a-half for all time over eight hours per day. Her firm also pays double time for work on Sundays. In one week she works the following hours: Tuesday-10 hours; Wednesday - 9 hours; Thursday - 11 ½ hours; Sunday - 3 ¾ hours. Calculate her gross earnings using the standard overtime method.
a. $304
b. $315
c. $330
d. $394

41. Brantly has a production requirement of 120 units during an eight-hour shift. His employer pays a bonus factor of 125%. Determine her gross earnings for a day in which he produces 150 units, given an hourly rate of $7.50.
a. $60.00
b. $64.00
c. $75.00
d. $93.75

42. Jenson earns a weekly salary of $560, is paid time-and-a-half for hours over 40 worked in a week, and double-time for any hours worked on Sundays. In a week where she worked a regular 35-hour workweek on Monday-Friday, 8 hours on Saturday, and 3 hours on Sunday, her gross earnings are:
a. $728
b. $794
c. $808
d. $848

43. A married individual has biweekly earnings of $2,000, and claims 2 allowances. Using the percentage method (use 1998 information), total federal taxes due are:
a. $223.45
b. $231.65
c. $268.85
d. $296.93

44. Walker buys good worth $2,000 on 4/25/2000 at a trade discount of 15% and terms of 2/10, net 30. If sales tax totals 6% and he remits payment on 5/3/2000, how much is the actual payment for the goods?
a. $1,598
b. $1,760
c. $1,768
d. $1,802

45. A townhouse is determined to have a market value of $140,000. If the assessment rate is 40% of fair market value and the tax rate is 25 mills, property tax for the townhouse totals:
a. $ 140
b. $ 210
c. $1400
d. $2100

Please see attached file for the complete description of problems.

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Solution Summary

Answers to 45 Multiple choice questions on variance, standard deviation, net income, operating expenses , gross profit, current ratio, return on net sales ratio, asset turnover ratio, return on investment, series discount , markup, list price, interest, investments, accumulated straight-line depreciation, book value, MACRS, ending inventory, cost of goods sold, average cost method, LIFO, retail method, gross margin method, standard overtime method, gross earnings, property tax, total federal taxes due

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