ACCT 200 STUDY GUIDE
QUESTIONS WITH
ACCT 200 Study GuideANSWERS
Questions WithAND EXPLANATIONS
Answers and Explanations
| American Public University
1. Management at Lakeshore Products asks the accounting team to resolve the following matter. Which feature most
clearly distinguishes a note receivable from a typical account receivable?
A. A note can never be current
B. A note is a formal written promise that commonly specifies interest and a maturity date
C. An account receivable always earns interest
D. A note is a liability of the lender
Correct Answer: B. A note is a formal written promise that commonly specifies interest and a maturity date
Explanation: Notes receivable are formal written claims with stated terms, often including interest and a maturity date.
2. Juniper Market has fixed costs of $165,000 and a contribution margin ratio of 50%. What sales dollars are required to
break even?
A. $82,500
B. $330,000
C. $165,000
D. $495,000
Correct Answer: B. $330,000
Explanation: Break-even sales dollars = fixed costs / contribution margin ratio = $330,000.
3. Xenia Services collects 70% of sales in the month of sale and 30% in the following month. Current-month sales are
$260,000 and prior-month sales were $195,000. What are expected current-month cash receipts?
A. $260,000
B. $182,000
C. $58,500
D. $240,500
Correct Answer: D. $240,500
Explanation: Cash receipts = 70% of current sales + 30% of prior sales = $240,500.
4. A staff accountant for Keystone Studio is evaluating this transaction. Which statement about revenue and expense
accounts is correct?
A. Both revenues and expenses normally increase with credits
B. Revenues normally increase with debits, while expenses increase with credits
C. Revenues normally increase with credits, while expenses normally increase with debits
D. Both revenues and expenses normally increase with debits
Correct Answer: C. Revenues normally increase with credits, while expenses normally increase with debits
Explanation: Revenue increases equity and normally has a credit balance; expenses reduce equity and normally have debit
balances.
,5. An accountant at Northgate Traders receives the following exhibit. Based on the information shown, use the control
diagram. Which principle is best illustrated by assigning these duties to different employees?
Cash-Receipt Duties
Receive cash Record receivable Deposit cash Bank reconciliation
Employee A Employee B Employee C Employee D
A. Matching principle
B. Segregation of duties
C. Lower of cost or market
D. Revenue recognition
Correct Answer: B. Segregation of duties
Explanation: Separating custody, recording, depositing, and reconciliation reduces the opportunity for one person to conceal
errors or fraud.
6. Summit Manufacturing sells a product for $70.00 per unit and has variable cost of $28.00 per unit. What is
contribution margin per unit?
A. $28.00
B. $70.00
C. $98.00
D. $42.00
Correct Answer: D. $42.00
Explanation: Contribution margin per unit = selling price - variable cost = $42.00.
7. Management at Evergreen Goods asks the accounting team to resolve the following matter. Selling receivables to
another party primarily allows a company to:
A. Increase the face amount of receivables
B. Avoid recognizing any financing cost
C. Convert receivables into cash sooner
D. Convert current assets into long-term assets
Correct Answer: C. Convert receivables into cash sooner
Explanation: Factoring or selling receivables accelerates cash collection, generally at a fee or discount.
8. Harbor Retail purchases equipment on October 1. Annual straight-line depreciation is $12,000. Assuming monthly
allocation, how much depreciation is recorded for the acquisition year?
A. $12,000
B. $9,000
C. $1,000
D. $3,000
Correct Answer: D. $3,000
Explanation: Three months of depreciation are recognized from October through December: $12,000 x 3/12 = $3,000.
, 9. Zenith Works's managers establish next year's sales target and decide how many employees and machines will be
needed. Which management function is illustrated?
A. Planning
B. Controlling
C. External reporting
D. Auditing
Correct Answer: A. Planning
Explanation: Planning sets objectives and identifies actions and resources needed to achieve them.
10. A staff accountant for Juniper Market is evaluating this transaction. Yellowstone Supply reports total assets of
$134,000 and total liabilities of $43,000. What amount is stockholders' equity?
A. $43,000
B. $177,000
C. $134,000
D. $91,000
Correct Answer: D. $91,000
Explanation: Assets = Liabilities + Equity, so equity is $134,000 - $43,000 = $91,000.
11. Management at Union Creek Inc. asks the accounting team to resolve the following matter. Bonds are issued exactly
at face value. Which initial entry is appropriate?
A. Debit Bonds Payable and credit Cash
B. Debit Interest Expense and credit Cash
C. Debit Discount on Bonds Payable and credit Bonds Payable
D. Debit Cash and credit Bonds Payable for the same amount
Correct Answer: D. Debit Cash and credit Bonds Payable for the same amount
Explanation: At face value, cash proceeds equal the face amount, so no premium or discount is recorded.
12. While checking the current-period records for Juniper Market, an analyst notes the following. Valley Creek Inc. paid
$13,200 for a 12-month insurance policy. After 4 months have expired, how much Insurance Expense should have been
recognized?
A. $8,800
B. $13,200
C. $4,400
D. $1,100
Correct Answer: C. $4,400
Explanation: Monthly insurance cost is $1,100; 4 months of coverage equals $4,400 of expense.
QUESTIONS WITH
ACCT 200 Study GuideANSWERS
Questions WithAND EXPLANATIONS
Answers and Explanations
| American Public University
1. Management at Lakeshore Products asks the accounting team to resolve the following matter. Which feature most
clearly distinguishes a note receivable from a typical account receivable?
A. A note can never be current
B. A note is a formal written promise that commonly specifies interest and a maturity date
C. An account receivable always earns interest
D. A note is a liability of the lender
Correct Answer: B. A note is a formal written promise that commonly specifies interest and a maturity date
Explanation: Notes receivable are formal written claims with stated terms, often including interest and a maturity date.
2. Juniper Market has fixed costs of $165,000 and a contribution margin ratio of 50%. What sales dollars are required to
break even?
A. $82,500
B. $330,000
C. $165,000
D. $495,000
Correct Answer: B. $330,000
Explanation: Break-even sales dollars = fixed costs / contribution margin ratio = $330,000.
3. Xenia Services collects 70% of sales in the month of sale and 30% in the following month. Current-month sales are
$260,000 and prior-month sales were $195,000. What are expected current-month cash receipts?
A. $260,000
B. $182,000
C. $58,500
D. $240,500
Correct Answer: D. $240,500
Explanation: Cash receipts = 70% of current sales + 30% of prior sales = $240,500.
4. A staff accountant for Keystone Studio is evaluating this transaction. Which statement about revenue and expense
accounts is correct?
A. Both revenues and expenses normally increase with credits
B. Revenues normally increase with debits, while expenses increase with credits
C. Revenues normally increase with credits, while expenses normally increase with debits
D. Both revenues and expenses normally increase with debits
Correct Answer: C. Revenues normally increase with credits, while expenses normally increase with debits
Explanation: Revenue increases equity and normally has a credit balance; expenses reduce equity and normally have debit
balances.
,5. An accountant at Northgate Traders receives the following exhibit. Based on the information shown, use the control
diagram. Which principle is best illustrated by assigning these duties to different employees?
Cash-Receipt Duties
Receive cash Record receivable Deposit cash Bank reconciliation
Employee A Employee B Employee C Employee D
A. Matching principle
B. Segregation of duties
C. Lower of cost or market
D. Revenue recognition
Correct Answer: B. Segregation of duties
Explanation: Separating custody, recording, depositing, and reconciliation reduces the opportunity for one person to conceal
errors or fraud.
6. Summit Manufacturing sells a product for $70.00 per unit and has variable cost of $28.00 per unit. What is
contribution margin per unit?
A. $28.00
B. $70.00
C. $98.00
D. $42.00
Correct Answer: D. $42.00
Explanation: Contribution margin per unit = selling price - variable cost = $42.00.
7. Management at Evergreen Goods asks the accounting team to resolve the following matter. Selling receivables to
another party primarily allows a company to:
A. Increase the face amount of receivables
B. Avoid recognizing any financing cost
C. Convert receivables into cash sooner
D. Convert current assets into long-term assets
Correct Answer: C. Convert receivables into cash sooner
Explanation: Factoring or selling receivables accelerates cash collection, generally at a fee or discount.
8. Harbor Retail purchases equipment on October 1. Annual straight-line depreciation is $12,000. Assuming monthly
allocation, how much depreciation is recorded for the acquisition year?
A. $12,000
B. $9,000
C. $1,000
D. $3,000
Correct Answer: D. $3,000
Explanation: Three months of depreciation are recognized from October through December: $12,000 x 3/12 = $3,000.
, 9. Zenith Works's managers establish next year's sales target and decide how many employees and machines will be
needed. Which management function is illustrated?
A. Planning
B. Controlling
C. External reporting
D. Auditing
Correct Answer: A. Planning
Explanation: Planning sets objectives and identifies actions and resources needed to achieve them.
10. A staff accountant for Juniper Market is evaluating this transaction. Yellowstone Supply reports total assets of
$134,000 and total liabilities of $43,000. What amount is stockholders' equity?
A. $43,000
B. $177,000
C. $134,000
D. $91,000
Correct Answer: D. $91,000
Explanation: Assets = Liabilities + Equity, so equity is $134,000 - $43,000 = $91,000.
11. Management at Union Creek Inc. asks the accounting team to resolve the following matter. Bonds are issued exactly
at face value. Which initial entry is appropriate?
A. Debit Bonds Payable and credit Cash
B. Debit Interest Expense and credit Cash
C. Debit Discount on Bonds Payable and credit Bonds Payable
D. Debit Cash and credit Bonds Payable for the same amount
Correct Answer: D. Debit Cash and credit Bonds Payable for the same amount
Explanation: At face value, cash proceeds equal the face amount, so no premium or discount is recorded.
12. While checking the current-period records for Juniper Market, an analyst notes the following. Valley Creek Inc. paid
$13,200 for a 12-month insurance policy. After 4 months have expired, how much Insurance Expense should have been
recognized?
A. $8,800
B. $13,200
C. $4,400
D. $1,100
Correct Answer: C. $4,400
Explanation: Monthly insurance cost is $1,100; 4 months of coverage equals $4,400 of expense.
