Mathematics for Business and Personal Finance

Chapter 18: Accounting

Practice Tests

1
Aviva Katz is verifying her paycheck to ensure that the deductions are correct. Determine her net pay for the week when her gross pay was $375, Medicare is 1.45% of gross, Social Security is 6.2% of gross, and federal income tax is $53.
A)$293.31
B)$298.75
C)$316.55
D)$314.35
2
Ali Patel is verifying his paycheck to ensure that the deductions are correct. Determine his net pay for the week when his gross pay was $295, Medicare is 1.45% of gross, Social Security is 6.2% of gross, and federal income tax is $41.
A)$227.45
B)$231.43
C)$254.00
D)$287.35
3
Jake's Jewelry specializes in crafting sterling silver jewelry. Records of Jake's Jewelry's expenses for the first quarter show the following: payroll was $12,750; raw materials were $13,470; rent was $4,000; utilities were $1,600; office supplies were $1,200; insurance was $4,400; and advertising was $960. What percent of total expenses did Jake's Jewelry spend on raw materials during the first quarter?
A)18%
B)27%
C)35%
D)42%
4
Candy's Sweet Shoppe reviewed its record of expenses for the first quarter. Payroll was $22,560; raw materials were $6,870; rent was $6,000; utilities were $3,300; office supplies were $1,200; insurance was $5,400; and advertising was $1,860. What percent of total expenses did Candy's spend on payroll during the first quarter?
A)14.6%
B)26.6%
C)30.4%
D)47.8%
5
Trina Williams packs gourmet coffees for mail orders. Trina works an 8-hour day less two 15-minute coffee breaks and one 30-minute lunch. It takes Trina 12 minutes to retrieve the correct coffee for the customer's orders, pack, wrap, and address the box. How many boxes a day should Trina be able to get ready for shipment?
A)35 boxes
B)37 boxes
C)38 boxes
D)40 boxes
6
Mark-It produces glow-in-the dark plastic bookmarks shaped like an "M". The machine operator stamps 24 bookmarks from each strip of glow-in-the-dark plastic. Each strip costs $8.00. The operator can stamp 720 bookmarks per hour. The direct labor charge is $16.50 per hour. To the nearest cent, what is the prime cost of manufacturing a bookmark?
A)$0.056
B)$0.356
C)$0.562
D)$0.688
7
Tag-URit manufacturers clothing price tags. It plans to manufacture 30,000,000 tags to be sold to garment factories and clothing stores at $0.005 each. The fixed costs are estimated to be $124,500. Variable costs are $0.0005 per unit. To the nearest whole number, how many tags must be sold for Tag-URit to break even?
A)15,000
B)22,636,364
C)24,900,000
D)27,666,667
8
Muggsy Inc. manufactures ceramic coffee mugs. The company plans to manufacture 50,000 mugs to be sold for $6.00 each. The fixed costs are estimated to be $187,000. Variable costs are $1.25 per unit. To the nearest whole number, how many mugs must be sold for Muggsy to break even?
A)8,333
B)31,167
C)39,369
D)40,000
9
Bradley's Linen Service purchased a heavy-duty triple-load washer that cost $2,475. The life of the washing machine is estimated to be 10 years. The total salvage value after 10 years of use is $300. Using the straight-line method, find the annual depreciation of the washer.
A)$217.50
B)$247.50
C)$277.50
D)$300.00
10
The Steakhouse purchased a freezer that cost $2,850. The life of the freezer is estimated to be 5 years. The total salvage value after 5 years of use is $200. Using the straight-line method, find the annual depreciation of the washer.
A)$200
B)$530
C)$570
D)$2,320
11
The Book Nook purchased a computerized system to track inventory for $3,450. The total resale value after 5 years is $350. Using the straight-line method, the owner determined that the computer would depreciate $620 per year. What is the book value at the end of the first year of depreciation?
A)$350
B)$620
C)$2,830
D)$3,100
12
Mega Mulch purchased a wood chipper for $3,900. The total resale value after 5 years is $500. Using the straight-line method, the owner determined that the computer would depreciate $680 per year. What is the book value at the end of the second year of depreciation?
A)$2,540
B)$1,860
C)$1,180
D)$500
13
Bradley's Linen Service purchased a box-truck for delivery and pick-up service to area restaurants for $24,750. MACRS allows delivery vans to be depreciated fully in 6 years according to six fixed percents: 20% the first year, 32% the second year, 19.2% the third year, 11.52% the fourth and fifth years, and 5.76% the sixth year. What is the accumulated depreciation after the second year?
A)$4,950
B)$7,920
C)$9,900
D)$12,870
14
MACRS depreciates over-the-road tractor units for 4 years at the following percents: 33.33%, 44.45%, 14.81%, and 7.41%. If Johnson Controls purchases a unit for $120,000, what is the accumulated depreciation after the third year?
A)$8,892
B)$93,336
C)$111,108
D)$120,000
15
Dotty and Peggy Marks recently opened The Hair Fair. They used $40,000 of their own money and took out a bank loan of $50,000. From the $90,000, they paid $60,000 for equipment and $4,000 for supplies. This left a cash balance of $26,000. They received another shipment of $3,000 worth of merchandise. They did not pay for this merchandise immediately. What was their owner's equity?
A)$7,000
B)$26,000
C)$40,000
D)$90,000
16
The Marks, who recently opened The Hair Fair, used $40,000 of their own money and took out a bank loan of $50,000. They received two shipments of merchandise. They paid cash for the $4,000 shipment. They did not pay immediately for the $3,000 shipment. They also bought equipment for $60,000. A cash balance of $26,000 was left. What were liabilities on their balance sheet?
A)$40,000
B)$53,000
C)$60,000
D)$93,000
17
Kitten Kaboodle began the quarter with an inventory valued at $18,562. During the quarter, it received 864 cases of pet food valued at $10,368 and pet supplies valued at $3,456. The ending inventory was valued at $9,573. What was the cost of goods sold?
A)$22,813
B)$28,930
C)$32,386
D)$48,350
18
The Halfpipe began the quarter with an inventory valued at $12,112. During the quarter it received skateboards valued at $8,054 and clothing valued at $5,305. The ending inventory was valued at $10,569. What was the cost of goods sold?
A)$14,902
B)$15,874
C)$25,471
D)$36,040
19
Three months after opening Hike and Bike, Josh Frank prepares an income statement. Sales for the first three months totaled $57,600. Returns totaled $876. Frank's inventory record shows that the goods he sold cost him $33,720. Records show that his operating expenses totaled $5,750. What is the net income?
A)$17,254
B)$23,880
C)$27,970
D)$56,724
20
Three months after opening Candy's Sweet Shoppe, Candy Baker prepares an income statement. Sales for the first three months totaled $58,154. There are no returns or allowances. The goods she sold cost her $6,870 and her operating expenses totaled $40,320. What is the net income?
A)$6,870
B)$10,964
C)$17,834
D)$58,154
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