Business Exam
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Text Coverage: We covered ONLY LOs 1 through 3, pp 362—373. And we covered Homework Assignments: E10-2, E10-3, and P10-18, P10-19 as extended: That is besides recording the transactions for these two problems we answered questions like: what was the gross margin, what was net income, what was the net cash flow from operations.
- 1.All of the following are features of managerial accounting except
- A.
Information is historically based and usually reported annually
- B.
Information includes economic and nonfinancial data as well as financial data
- C.
Information is provided primarily to insiders such as managers
- D.
Information is reported continuously with a present or future orientation
- 2.Managerial accounting information is limited or restricted by which of the following authories or principles?
- A.
Securities and Exchange Commission
- B.
Financial Accounting Standards Board
- C.
Generally Accepted Accounting Principles
- D.
Value Added Principle
- 3.Which of the following is a product cost for a construction company?
- A.
Costo of transporting raw materials to the job site
- B.
Selling costs
- C.
Wages paid to the companys office manager
- D.
Salary of the company chief executive officer
- 4.Which of the following costs would not be classified as overhead for a company that produces small appliances?
- A.
Assembly Labor
- B.
Plant supervisory labor
- C.
Indirect material costs
- D.
Plant utilities costs
- 5.Product costs include all of the following except
- A.
Direct material costs
- B.
Direct labor costs
- C.
Research and development costs
- D.
Overhead costs
- 6.During its first year of operations, the Johnson Company paid $16,000 for direct material and $17,000 in wages for production workers. Lease payments and utilities on the production facilities amounted to $7,000. General, selling, and administrative expenses were $6,000. The company produced 5,000 units and sold 4,000 units at a price of $15.00 a unit. The average cost per unit is which of the following amounts?
- A.
$8
- B.
$10
- C.
$9.20
- D.
$11
- 7.Which of the following costs is not considered to be a product cost
- A.
Raw materials cost
- B.
Depreciation of delivery vehicles
- C.
Wages paid to production workers
- D.
Factory utilities costs
- 8.Which of the following should be recorded as an asset?
- A.
Paid for a new advertising campaign
- B.
Paid rent on the warehouse used to store finished goods
- C.
Paid salary for the vice president of marketing
- D.
Paid for raw materials to be used in production
- 9.Which of the following should not be recorded as an expense?
- A.
Paid office salaries
- B.
Paid factory maintenence costs
- C.
Paid product advertising costs
- D.
Paid sales commissions
- 10.Select the correct equation for product costs.
- A.
Product Costs = Cost of finished goods inventory – Cost of goods sold
- B.
Product Costs = Cost of goods sold + General, selling, and administrative
- C.
Product Costs = Cost of finished goods inventory + Cost of goods sold
- D.
Product Costs = Cost of goods sold – General, selling, and administrative costs
- 11.Which of the following transactions would cause net income for the period to be lower?
- A.
Paid $1,600 cash for raw material
- B.
Paid administrative salaries of $2,500
- C.
Recorded depreciation on production equipment, $3,
- D.
Paid $2,800 in wages for production workers
- 12.Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner are
- A.
Manufacturing, overhead costs
- B.
General selling and administrative costs
- C.
Indirect costs
- D.
A and C
- 13.Which of the following types of labor costs will not initially flow through the balance sheet?
- A.
Salaries for sales staff
- B.
Plant supervision salaries
- C.
Factory insurance
- D.
Product delivery costs
- 14.Managerial accounting is designed to satisfy needs of external users including creditors, investors, and governmental agencies.
- A.
T
- B.
F
- 15.The managerial accounting system includes economic and non-financial data as well as financial statement data.
- A.
T
- B.
F
- 16.Operating workers (lower-level employees) need more nonfinancial data than financial data to do their jobs.
- A.
T
- B.
F
- 17.Senior executives focus on financial data when comparing the performance of their companies to that of competitors.
- A.
T
- B.
F
- 18.Financial accounting focuses primarily on the performance of the company as a whole.
- A.
T
- B.
F
- 19.Most internal users of accounting information primarily need global information that reflects the performance of the company as a whole.
- A.
T
- B.
F
- 20.Product costs include materials, labor, and selling and administrative costs.
- A.
T
- B.
F
- 21.Incurring product costs is an asset exchange transaction
- A.
T
- B.
F
- 22.A cash payment for materials to be used in manufacturing a product is an asset use transaction.
- A.
T
- B.
F
- 23.Most companies expense product costs at the time production is completed.
- A.
T
- B.
F
- 24.A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its storeroom. Its product costs related to these transactions were $2,550.
- A.
T
- B.
F
- 25.The primary challenge in computing the total cost per unit of product is determining the amount of overhead cost that should be assigned to each unit.
- A.
T
- B.
F
- 26.Cash paid to production workers should be recorded as Wages Expense in the period incurred.
- A.
T
- B.
F
- 27.Product costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.
- A.
T
- B.
F
- 28.Product costs are immediately recorded in expense accounts when the products are manufactured.
- A.
T
- B.
F
- 29.A company that incurred $1,000 in production costs reported cost of goods sold of $800 and selling costs of $100. Based on this information only, its ending finished goods inventory was $200.
- A.
T
- B.
F
- 30.Costs that are not classified as product costs are normally expensed in the period incurred.
- A.
T
- B.
F
- 31.Direct labor costs are classified as product costs, while indirect labor costs are classified as general and administrative costs.
- A.
T
- B.
F
- 32.Depreciation on manufacturing equipment is an indirect product cost, while depreciation on office equipment is a period cost.
- A.
T
- B.
F
- 33.Product costs flow from the balance sheet to the income statement.
- A.
T
- B.
F
- 34.Unlike direct material and direct labor costs, overhead costs must be allocated to products
- A.
T
- B.
F
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