Business Exam

34 Questions | Total Attempts: 69

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Business Exam

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.


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Questions and Answers
  • 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