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Chapter M2 Accounting

25 Questions
Accounting Quizzes & Trivia
Questions and Answers
  • 1. 
    The salary of a corporate office security guard is considered a(n):
    • A. 

      Period cost

    • B. 

      Factory overhead

    • C. 

      Inventoriable cost

    • D. 

      Product cost

  • 2. 
    The following information is available:    Assembly line labor costs                              $175,000    Raw materials purchased                                 120,000    Indirect materials used                                         8,000    Depreciation on factory                                     25,000    Depreciation on administrative equipment          9,000    Sales salaries                                                      78,000    Factory supervision                                            33,000    Sales office security guard cost                          28,000 Based on the above, cost of factory overhead was:
    • A. 

      $181,000

    • B. 

      $66,000

    • C. 

      $476,000

    • D. 

      None of these answers is correct.

  • 3. 
    The following information is available:    Beginning raw materials inventory               $100,000    Ending raw materials inventory                      120,000    Beginning work-in-process inventory              270,000    Ending work-in-process inventory                   300,000    Beginning finished goods inventory                 560,000    Ending finished goods inventory                      480,000    Raw materials purchased                                 990,000 Based on the above, the raw materials transferred to production was:
    • A. 

      $970,000

    • B. 

      $990,000

    • C. 

      $1,020,000

    • D. 

      None of these answers is correct.

  • 4. 
    Touch labor is another term used interchangeably with:
    • A. 

      Administrative salaries

    • B. 

      Indirect labor

    • C. 

      Direct labor

    • D. 

      Independent contractor

  • 5. 
    A cost that is incurred by the firm that is not a merchandise cost is called a(n):
    • A. 

      Product cost

    • B. 

      None of these answers is correct.

    • C. 

      Period cost

    • D. 

      Inventoriable cost

  • 6. 
    The procedures for identifying product costs for a service firm differ from a merchandiser or manufacturer because:
    • A. 

      Manufacturers do not deal with the general public

    • B. 

      Service firms use different advertising methods

    • C. 

      Merchandisers have no inventory

    • D. 

      Service firms have no inventory

  • 7. 
    The following information is available:    Direct materials cost                                      $100,000    Direct labor cost                                               120,000    Manufacturing overhead cost                          270,000    Beginning work-in-process inventory                30,000    Ending work-in-process inventory                     36,000    Beginning finished goods inventory                   56,000    Ending finished goods inventory                        48,000 Based on the above, the cost of goods manufactured was:
    • A. 

      $492,000

    • B. 

      $484,000

    • C. 

      $100,000

    • D. 

      None of these answers is correct.

  • 8. 
    When a product is sold, its cost is reflected by:
    • A. 

      Reducing the cost of goods sold on the income statement

    • B. 

      Increasing the cost of goods sold on the income statement

    • C. 

      Increasing inventory on the balance sheet

    • D. 

      None of these answers is correct.

  • 9. 
    When goods have been completed and are transferred to finished goods, the account that will be debited is:
    • A. 

      Finished Goods Inventory

    • B. 

      Cost of Goods Manufactured

    • C. 

      Cost of Goods Sold

    • D. 

      Work-in-Process Inventory

  • 10. 
    At what point do raw materials become a part of raw materials inventory?
    • A. 

      When a product is complete and ready for sale

    • B. 

      Never

    • C. 

      Immediately after they have been purchased

    • D. 

      As they are used in the production process

  • 11. 
    When goods have been sold to customers, the entry to remove the goods from inventory will have a credit to:
    • A. 

      Finished Goods Inventory

    • B. 

      Cost of Goods Sold

    • C. 

      Cost of Goods Manufactured

    • D. 

      Work-in-Process Inventory

  • 12. 
    Any cost associated with the operation of a manufacturing facility that is not direct labor or direct materials is considered:
    • A. 

      Finished goods inventory

    • B. 

      Administrative cost

    • C. 

      Merchandise inventory

    • D. 

      Manufacturing overhead

  • 13. 
    The following information is available:    Beginning raw materials inventory               $  11,000    Ending raw materials inventory                        13,000    Beginning work-in-process inventory                20,000    Ending work-in-process inventory                     28,000    Beginning finished goods inventory                   56,000    Ending finished goods inventory                        48,000    Raw materials purchased                                   90,000    Cost of goods manufactured                            229,000 Based on the above, the cost of goods sold was:
    • A. 

      $98,000

    • B. 

      $237,000

    • C. 

      $317,000

    • D. 

      None of these answers is correct.

  • 14. 
    Depreciation taken on the desk located in the office of the controller is a(n):
    • A. 

      Inventoriable cost

    • B. 

      Period cost

    • C. 

      Product cost

    • D. 

      None of these answers is correct.

  • 15. 
    A cost which would be included in inventory for any unsold products is:
    • A. 

      The cost of purchasing the product

    • B. 

      Advertising charges

    • C. 

      Freight-out

    • D. 

      Sales commissions paid

  • 16. 
    If managers believe labor cost is insignificant, such cost can be:
    • A. 

      Ignored

    • B. 

      Treated as an operating cost of the business

    • C. 

      Deferred until it is significant, at which point it can be treated as direct labor

    • D. 

      Treated as an indirect labor cost

  • 17. 
    Another term used to describe manufacturing overhead is:
    • A. 

      Factory overhead

    • B. 

      Factory burden

    • C. 

      Overhead

    • D. 

      All of these answers are correct.

  • 18. 
    Raw materials that are used in the production process can be considered:
    • A. 

      Direct materials only

    • B. 

      Administrative use only

    • C. 

      Indirect materials only

    • D. 

      Either direct or indirect materials

  • 19. 
    The following information is available:    Direct material cost                                          $20,000    Direct labor cost                                                 30,000    Manufacturing overhead cost                            40,000    Beginning raw materials inventory                   10,000    Ending raw materials inventory                        12,000    Beginning work-in-process inventory                27,000    Ending work-in-process inventory                     30,000    Beginning finished goods inventory                   56,000    Ending finished goods inventory                        48,000 Based on the above, the cost of goods manufactured was:
    • A. 

      $90,000

    • B. 

      $18,000

    • C. 

      $87,000

    • D. 

      None of these answers is correct.

  • 20. 
    The following information is available:    Assembly line labor costs                               $175,000    Factory supplies used                                           4,000    Depreciation on factory                                     22,000    Depreciation on administrative equipment          9,000    Sales salaries                                                      78,000    Factory security guard cost                               33,000    Sales office security guard cost                          28,000 Based on the above, cost of factory overhead was:
    • A. 

      $349,000

    • B. 

      $174,000

    • C. 

      $59,000

    • D. 

      None of these answers is correct.

  • 21. 
    For a merchandising firm, product costs includes all of the following items except:
    • A. 

      Freight-in costs

    • B. 

      Merchandise packaging

    • C. 

      Advertising expense

    • D. 

      The cost of the merchandise itself

  • 22. 
    When goods have been completed and are transferred to finished goods, the account that will be credited is:
    • A. 

      Cost of Goods Sold

    • B. 

      Work-in-Process Inventory

    • C. 

      Cost of Goods Manufactured

    • D. 

      Finished Goods Inventory

  • 23. 
    If the production process is considered reality, work-in-process inventory is considered:
    • A. 

      A measurement of reality

    • B. 

      Reality

    • C. 

      A theoretical concept which has nothing to do with accounting

    • D. 

      None of these answers is correct.

  • 24. 
    An example of a product cost is:
    • A. 

      Advertising charges

    • B. 

      Sales commissions paid

    • C. 

      Freight-in

    • D. 

      Freight-out

  • 25. 
    The cost of delivering an item to a customer is classified as a(n):
    • A. 

      Inventory cost

    • B. 

      Manufacturing cost

    • C. 

      Product cost

    • D. 

      Selling cost