Accounting 202: MCQ Quiz Exam!

2.

The journal entry needed to record the completion of a job includes a:

Debit to cost of goods sold
Debit to finished goods inventory
Debit to work in process inventory
Debit to raw materials inventory

Correct Answer

A. Debit to finished goods inventory

Explanation

The completion of a job indicates that the goods produced are now ready to be sold to customers. As a result, the cost of producing these goods should be transferred from the work in process inventory to the finished goods inventory. Therefore, a debit to finished goods inventory is necessary to reflect the increase in the value of finished goods.

Rate this question:

3.

Under a perpetual inventory system, the journal entry needed to record the sale of a job includes a:

Debit to sales revenue and credit to accounts receivable
Debit to cost of goods sold and credit to finished goods inventory
Debit to finished goods inventory and credit to cost of goods sold
Debit to cost of goods sold and credit to sales revenue

Correct Answer

A. Debit to cost of goods sold and credit to finished goods inventory

Explanation

The correct answer is debit to cost of goods sold and credit to finished goods inventory. This is because when a job is sold, it is considered a cost of goods sold since it is no longer part of the inventory. The cost of goods sold is debited to reflect the expense, and the finished goods inventory is credited to reduce its value.

Rate this question:

4.

Which of the following would be debited to record the costs of indirect labor?

Manufacturing overhead
Work in process inventory
Finished goods inventory
Wages payable

Correct Answer

A. Manufacturing overhead

Explanation

Indirect labor refers to the labor cost that is not directly involved in the production process, such as supervisors or maintenance workers. These costs are considered part of manufacturing overhead, which includes all indirect costs related to the production process. Therefore, to record the costs of indirect labor, it would be debited to the manufacturing overhead account.

Rate this question:

5.

Which of the following would be debited to record direct labor costs incurred?

Finished goods inventory
Manufacturing overhead
Wages payable
Work in process inventory

Correct Answer

A. Work in process inventory

Explanation

Direct labor costs are the wages paid to workers who directly contribute to the production of goods. These costs are typically recorded in the Work in Process Inventory account, as it represents the cost of partially completed goods. By debiting the Work in Process Inventory, the company recognizes the direct labor costs as an expense and includes them in the value of the goods in progress. This helps in accurately tracking the cost of production and determining the cost of goods sold.

Rate this question:

1

6.

Which of the following would be debited to record the requisition of direct materials?

Finished goods inventory
Raw materials inventory
Work in process inventory
Cost of goods manufactured

Correct Answer

A. Work in process inventory

Explanation

When direct materials are requisitioned, they are used in the production process and become part of the work in process inventory. Work in process inventory represents the partially completed goods that are still undergoing production. Since the requisition of direct materials is a direct cost of production, it is debited to the work in process inventory account to reflect the decrease in the value of materials and the increase in the value of work in process.

Rate this question:

7.

The entry to record the purchase of raw materials on account using a job costing system would include a:

Credit to work in process inventory
Debit to accounts payable
Debit to raw materials inventory
Debit to work in process inventory

Correct Answer

A. Debit to raw materials inventory

Explanation

When raw materials are purchased on account in a job costing system, the entry would include a debit to raw materials inventory. This is because the raw materials are being added to the inventory and increasing its value. The credit to work in process inventory is not necessary at this stage as the materials have not yet been used in production. The debit to accounts payable would be recorded when the payment is made for the materials, not at the time of purchase.

Rate this question:

8.

When job costing is used as a service firm

Indirect costs are traced to client jobs
Direct costs are allocated to client jobs
All costs are allocated to client jobs
Indirect costs are allocated to client jobs

Correct Answer

A. Indirect costs are allocated to client jobs

Explanation

In job costing, indirect costs refer to the costs that cannot be directly attributed to a specific client job. These costs include overhead expenses such as rent, utilities, and administrative salaries. In a service firm, indirect costs are allocated to client jobs rather than being traced directly. This means that these costs are distributed among different client jobs based on a predetermined allocation method, such as the percentage of direct costs incurred by each job. By allocating indirect costs to client jobs, the service firm can accurately determine the total cost of each job and make informed pricing decisions.

Rate this question:

9.

When job costing is used at a service firm, the bill to the client shows:

Actual direct cost of providing the service
The allocation of indirect costs
The profit on the job
The billing rate and hours spent on the job

Correct Answer

A. The billing rate and hours spent on the job

Explanation

When job costing is used at a service firm, the bill to the client shows the billing rate and hours spent on the job. This means that the client is charged based on the agreed-upon rate for the service provided and the number of hours it took to complete the job. The actual direct cost of providing the service, the allocation of indirect costs, and the profit on the job may not be explicitly mentioned on the bill, but they are factors that the service firm considers when determining the billing rate.

Rate this question:

10.

The hourly price charged to clients for professional labor is called the

Billing rate.
Salary rate.
Wage rate.
Job rate.

Correct Answer

A. Billing rate.

Explanation

The hourly price charged to clients for professional labor is referred to as the billing rate. This rate is determined by the company or individual providing the service and is used to calculate the total cost of the services rendered. It includes factors such as the expertise and experience of the professional, the overhead costs of the company, and any additional expenses incurred during the provision of the service. The billing rate is an important factor in determining the profitability of a project or job.

Rate this question:

11.

Service firms develop a predetermined rate for some costs. What is this rate called?

Labor rate
Indirect cost allocation rate
Direct cost rate
Hourly cost rate

Correct Answer

A. Indirect cost allocation rate

Explanation

Service firms develop an indirect cost allocation rate to determine how to allocate indirect costs to their products or services. Indirect costs are expenses that cannot be directly attributed to a specific product or service, such as rent, utilities, or administrative salaries. The indirect cost allocation rate helps service firms distribute these costs fairly and accurately among their various products or services. This rate is calculated by dividing the total indirect costs by a relevant cost driver, such as labor hours or machine hours.

Rate this question:

Accounting 202: MCQ Quiz Exam!

The journal entry needed to record the receipt of a bill from the company’s marketing agency would include a:

Quiz Preview

The journal entry needed to record the completion of a job includes a:

Under a perpetual inventory system, the journal entry needed to record the sale of a job includes a:

Which of the following would be debited to record the costs of indirect labor?

Which of the following would be debited to record direct labor costs incurred?

Which of the following would be debited to record the requisition of direct materials?

The entry to record the purchase of raw materials on account using a job costing system would include a:

When job costing is used as a service firm

When job costing is used at a service firm, the bill to the client shows:

The hourly price charged to clients for professional labor is called the

Service firms develop a predetermined rate for some costs. What is this rate called?