1. The B Bank loans Joe Smith some money. Joe signs a promissory note obligating him to pay the money back at 8% interest. The note is a standard form prepared by the bank. For this reason, the bank is the maker of this note.
2. A check payable to the order of cash is an example of bearer paper.
3. Ed pays for a gambling debt in State X using a check made payable to Tony Soprano, to whom he owes the debt. State X has a statute that makes any instrument in payment of a gambling debt void. The effect of this statute is:
A) The instrument is still negotiable,
B) The instrument is void.
C) The instrument is voidable.
D) Both A and B.
4. Which of the following is a promise to pay money rather than an order to pay money?
A) A certificate of deposit.
B) A draft.
C) A check.
D) All of the above are promises to pay money.
5. The drawer of a negotiable instrument:
A) Promises to pay a fixed sum of money on demand.
B) Is the party (usually a bank or another financial institution) who drafts a note.
C) Includes a checking account customer who writes a check on his account.
D) Is the party who receives payment on a note.
6. A check that is payable "to Jay Zucker" is negotiated by Jay writing his name on the back of the check and giving it to the person to whom he wants to transfer it.
7. The new Article 3 recognizes and enforces indorsements that prohibit further negotiation of the instrument.
8. Mel threatens that he will get Kim fired from her job if she does not sign a check made payable to Bob for $1,000. Bob witnesses Mel's threats. Bob is still a holder in due course.
9. The new Article 3 refuses to recognize or enforce:
A) Indorsements for deposit.
B) Conditional indorsements.
C) Indorsements directing the indorsee to act for someone else's benefit.
D) Indorsements for collection.
10. In which of the following situations has the holder of a negotiable instrument not given value for it?
A) Where the holder takes the instrument as security for a preexisting claim.
B) Where the holder gives a negotiable instrument in return for the one received.
C) Where the holder receives the instrument as a gift.
D) Where the holder acquires a security interest in the instrument.
11. A bank that certifies a check becomes primarily liable on that check.
12. One who presents a negotiable instrument for payment warrants to the party making payment that the instrument has not been altered.
13. Discharge of a negotiable instrument by cancellation of the instrument requires a writing stating that the instrument is being cancelled.
14. Potter owes George $500.00. Potter writes a check payable to George for that amount. Later, George lost the check. Potter is now discharged from his liability on the check.
15. Maya Efrat, Chief Financial Officer for BAZ Inc., is authorized to sign checks for BAZ Inc. She signs a check "BAZ Inc. by Efrat, Chief Financial Officer." Which of the following statements is most accurate?
A) Maya and not BAZ Inc. is liable on the check.
B) BAZ Inc. and not Maya is liable on the check.
C) Both BAZ Inc. and Maya are liable on the check.
D) Neither BAZ Inc. nor Maya are liable on the check.
16. A bank may pay a post-dated check before the date on the check and charge the amount to the customer's account, unless the customer has given notice to the bank.
17. An oral stop-payment order normally is good for 14 days.
18. The Electronic Funds Transfer Act governs "check conversion" transactions.
19. A drawer whose bank paid checks over a stop-payment order may not be entitled to have his account recredited if he is unable to show he suffered any loss.
20. A written stop-payment order is good for:
A) 14 days, with a 14-day extension.
B) 14 days, with a six-month extension.
C) Six months, with a 14-day extension.
D) Six months, with a six-month extension.
Answer:© BrainMass Inc. brainmass.com October 25, 2018, 1:34 am ad1c9bdddf
Thank you for using BM.
Below are my answers.
Anna Liza Gaspar
Question 1: False
Question 2: True
Question 3: B
Question 4: A
Question 5: A
Question 6: True
Question 7: True Revised Article 3 follows original Article 3 by honoring certain ...
True/False and Multiple Choice Accounting Problems
1. The vice presidents of production and sales and the controller hold line positions in most large organization.
2. Managerial accounting information includes both historical and estimated data.
3. As product costs are incurred in the manufacturing process, they are accounted for as assets and reported on the balance sheet as inventory.
4. A manufacturer may employ a job order cost system for some of its products and a process cost system for others.
5. A process cost accounting system accumulates costs for each of the departments or processes within the factory.
6. In a perpetual inventory system, when the goods are sold, their costs are transferred from Work in Process to Finished Goods.
7. The document that serves as the basis for crediting accounts in the materials ledger is the purchase order.
8. Factory overhead is applied to production using a predetermined overhead rate.
9. The inventory accounts generally maintained by a manufacturing firm are Finished Goods and Materials.
10. Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges.
11. Generally accepted accounting principles require companies to use only one factory overhead rate for product costing.
12. In the job order system, the finished goods account is the controlling account for the factory overhead ledger.
13. The cost of production report reports the cost of the goods sold.
14. In a process cost system, product costs are accumulated by processing departments rather than by job.
15. Conversion costs are usually incurred evenly throughout a process.
16. Both process and job order cost systems maintain perpetual inventory accounts with subsidiary ledgers.
17. The direct materials costs and direct labor costs incurred by a production department are referred to as conversion costs.
18. Both job order and process cost accounting use equivalent units of production to determine cost.
19. One of the primary uses of a cost of production report is to assist management in controlling production costs.
20. The first step in determining the cost of goods completed and ending inventory valuation using process costing is to calculate equivalent units of production.
21. Process manufacturers typically use large machines to process a continuous flow of raw materials into a finished state.
22. Cost allocation is the process of assigning indirect costs to a cost object, such as a job.
23. The cost of finished products on hand that have not been sold is work in process inventory.
24. If 20,000 units of materials enter production during the first year of operations, 16,000 of the units are finished, and 4,000 are 40% completed, the number of equivalent units of production would be 18,400.
25. If the costs for direct materials, direct labor, and factory overhead were $436,800, $54,600, and $26,600, respectively, for 14,000 equivalent units of production, the conversion cost per equivalent unit was $5.80.
1. What is the primary criterion for the preparation of managerial accounting reports?
A. Relevance of the reports
B. Meet the manager needs
C. Timing of the reports
D. Cost of the reports
2. All of the following employees hold line positions in Althea Electric except:
A. Vice president of production
B. Vice president of finance
C. Manger of the Valhalla Plant
D. Vice president of sales
3. Compute conversion costs given the following data: Direct Materials, $247,800; Direct Labor, $183,400; Factory Overhead, $121,300.
4. 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
5. The source of the data for debiting Work-in-Process for direct materials is the:
A. Purchase order
B. Purchase requisition
C. Materials requisition
D. Receiving report
6. In a job order cost accounting system, the entry to record the flow of direct materials into production is:
A. Debit Work in Process, credit material
B. Debit Materials, credit Work in Process
C. Debit Factory Overhead, credit materials
D. Debit Work in Process, credit Supplies
7. In a process cost system, ending inventory is valued by:
A. Finding the sum of all open job costs
B. Allocating departmental costs between completed and partially completed units
C. Multiplying units in ending inventory by the direct materials cost per unit
D. All of the above
8. In a process cost accounting, the costs of direct materials and direct labor are charged to:
A. Service departments
B. Processing departments
C. Customer accounts receivable
D. Job orders
9. Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?
A. Advertising costs
B. Raw lumber
C. Machine operator's wages
D. Sales salaries
10. The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and:
A. Indirect expenses
B. Direct expenses
C. Sales salaries expense
D. Factory overhead
11. Another term often used to refer to factory overhead is:
B. Other manufacturing cost
C. Supervisory cost
D. Factory burden
12. What term is used to refer to the cost of changing direct materials into a finished manufactured product?
A. Factory overhead cost
B. Period cost
C. Conversion cost
D. Direct labor cost
13. Which of the following is not a way in which process and job order cost systems are similar?
A. Both accumulate product costs?direct materials, direct labor, and factory overhead
B. Both allocate product cost to unit produced
C. Both maintain perpetual inventories
D. Both use job order cost cards
14. If the cost of direct materials is a small portion of total production cost, it may be classified as part of:
A. Direct labor cost
B. Selling and administrative costs
C. Miscellaneous costs
D. Factory overhead cost
15. 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
16. The amount of time spent by each employee and the labor cost incurred for each individual job or for factory overhead are recorded on:
A. Clock cards
B. In-and-out cards
C. Time tickets
D. Employees' earnings records
17. 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
18. At the end of the fiscal year, the balance in Factory Overhead is small. This balance would normally be:
A. Transferred to Work in Process
B. Transferred to Cost of Goods Sold
C. Transferred to Finished Goods
D. Allocated between Work in Process and Finished Goods
19. The details concerning the costs incurred on each job order are accumulated in a subsidiary ledger known as the:
A. Stock ledger
B. Materials ledger
C. Cost ledger
D. Creditors ledger
20. Each account in the cost ledger is called a:
A. Finished goods sheet
B. Stock record
C. Materials requisition
D. Job cost sheet
21. The recording of the application of factory overhead costs to jobs would include a credit to:
A. Factory Overhead
B. Wages Payable
C. Work in Process
D. Cost of Goods Sold
22. The finished goods account is the controlling account for the:
A. Cost ledger
B. Materials ledger
C. Work in process ledger
D. Cost of Goods Sold
23. A widely used activity base for developing factory overhead rates in highly automated settings is:
A. Direct labor hours
B. Direct labor dollars
C. Direct materials
D. Machine hours
24. When job 711 was completed, direct materials totaled $3,000;direct labor, $3,500; and factory overhead, $1,500, respectively. Units produced totaled 1,000. Unit costs are:
25. A difference in quantity of materials used on two comparable jobs may be caused by:
A. Inadequately trained employees
B. Poor quality materials
C. Employee carelessness
D. All of the above