question

The correct order of the sections on a statement of cash flows is

answer

Operating, Investing, Financing.

question

Which of the following would appear on a statement of cash flows prepared using the direct method?

answer

Collections from customers

question

Which of the following sections from the statement of cash flows includes purchases and sales of long-term assets?

answer

Investing section

question

On the statement of cash flows, which of the following sections includes the issuance of stock and the payment of dividends?

answer

Financing section

question

All of the following are examples of cash outflows from an investing activity except

answer

Purchase of treasury stock.

question

Cash received from providing services would be considered a

answer

Cash inflow from operating activities.

question

Only the ________ section differs in a statement of cash flows using the direct method rather than the indirect method.

answer

operating activities

question

The purchase of inventory would be considered a

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cash outflow from operating activities.

question

On a cash flow statement prepared using the indirect method, which is not reported as an operating activity?

answer

Proceeds from the sale of equipment

question

An analysis of a financial statement that reveals the relationship of each statement item to a specific base defines

answer

vertical analysis

question

The study of percentage changes in comparative financial statements is an example of

answer

horizontal analysis

question

Preparing budgets is an example of the management function of

answer

planning

question

Which of the following groups are external users of financial information?

answer

All of the above

question

Which of the following is TRUE?

answer

Managerial accounting reports provide detailed internal information

question

The primary goal of financial accounting is to provide information for

answer

All of the above

question

Which of the following is an example of overhead in a factory?

answer

Wages of factory maintenance personnel

question

Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant?

answer

The salary is a fixed cost that is directly traceable to the cost of operating a specific restaurant.

question

When manufacturing products, which of the following is an example of an inventoriable product cost?

answer

Depreciation on factory equipment

question

Which of the following represents a sunk cost?

answer

A historical cost that is never relevant

question

When manufacturing products, direct labor and direct materials are classified as:

answer

product costs and expensed when the goods are sold

question

) A company has fixed costs of $75,000 per month. If sales double from 5,000 to 10,000 units during the month, fixed costs will

answer

remain the same

question

Rent on a factory building would be considered to be

answer

a product cost

question

Which of the following costs would appear on the income statements for both a merchandiser and manufacturer?

answer

cost of goods sold

question

Manufacturing overhead would include:

answer

all manufacturing costs except direct materials and direct labor.

question

Which of the following is most likely NOT to use process costing?

answer

Ashley Custom Furnishings

question

What type of product costing system would a manufacturer of plywood use?

answer

Process costing

question

If manufacturing overhead has been overallocated during the period, and most of the jobs produced have been sold, then:

answer

cost of goods sold should be decreased

question

Manufacturing overhead is underallocated if the amount

answer

allocated during the period is less than the actual amount incurred.

question

The requisition of direct and indirect materials into production:

answer

reduces raw materials inventory

question

Which of the following represents the flow of costs in a manufacturing firm?

answer

Raw materials inventory, work in process inventory, finished goods inventory

question

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is:

answer

activity-based costing

question

Which of the following describes how, in ABC, the activity allocation rate is computed?

answer

The total estimated activity cost pool is divided by the total estimated activity allocation base.

question

Which of the following statements is TRUE with respect to total variable costs?

answer

They will decrease as production decreases within the relevant range.

question

Which of the following equations represents the total mixed cost?

answer

y = vx + f

question

Using account analysis, what type of cost is the rental of a space at $2,000 per month?

answer

Fixed

question

Traditional income statements organize costs by:

answer

function.

question

The contribution margin is equal to:

answer

sales minus variable expenses.

question

Which of the following statements are FALSE?

answer

The high-low method only utilizes the data at the highest and lowest cost levels.

question

Which of the following would be considered a committed fixed cost

answer

Depreciation

question

To compute the unit contribution margin, __________ should be subtracted from the sales price per unit

answer

all variable costs

question

Managers can quickly forecast the total contribution margin by multiplying the projected:

answer

sales revenue by the contribution margin ratio.

question

Which of the following statements is TRUE if the fixed costs increase while the sales price per unit and variable costs per unit remain constant?

answer

The contribution margin stays the same and the breakeven point increases.

question

Which of the following will decrease the breakeven point in units assuming no other changes in the cost-volume-profit relationship?

answer

An increase in the sale price per unit

question

The higher the operating leverage factor, the:

answer

greater the impact of volume on operating income.

question

After break-even on a CVP graph, the difference between sales dollars and total costs is the representation of:

answer

operating income.

question

Which of the following describes a sunk cost?

answer

A historical cost that is always irrelevant

question

Which of the following pairs are characteristics of price-setters?

answer

Cost-plus pricing and less competition

question

When deciding whether to outsource a product or service, managers should consider which of the following?

answer

All of the above

question

Target total cost is defined as:

answer

revenue at market price less desired profit.

question

The benefit foregone by not choosing an alternative course of action is referred to as a(n):

answer

opportunity cost

question

A capital asset has which of the following characteristics?

answer

The item will be used for a long period of time. The item involves a significant sum of money.

question

Which capital budgeting method uses accrual accounting, rather than net cash flows, as a basis for calculations?

answer

ARR

question

How does depreciation affect the calculation of a project's accounting rate of return (ARR)?

answer

Depreciation is deducted from the annual cash inflows

question

If the discount rate is decreased from 9% to 7%, what will happen to the internal rate of return (IRR) of a project?

answer

The discount rate change will not affect IRR.

question

If the NPV is of an investment is greater than zero,

answer

the internal rate of return is greater than the discount rate.

question

The ____________ budget is a major part of the master budget and focuses on the income statement and its supporting schedules.

answer

operating

question

Which of following budgets is part of the financial budgets?

answer

Budgeted balance sheet

question

The Cost of Goods Sold, Inventory, and Purchases Budget would most likely be used by

answer

Toys R Us

question

Strategic planning involves:

answer

setting long-term goals that extend 5-10 years into the future.

question

A rolling budget is a budget that:

answer

is continuously updated, so that the next 12 months of operations are always budgeted.

question

Which of the following statements about budgeting is not true?

answer

The operating budget should be prepared by top management, rather than mid-management personnel, because they have the overall objectives of the company in mind.

question

Which of the following statements regarding static budgets is TRUE?

answer

They are prepared for one level of sales volume.

question

A flexible budget variance is the difference between:

answer

amounts in the flexible budget and the actual results.

question

The maintenance department at Continental Airlines is likely to be classified as a(n)

answer

cost center.

question

The regional sales department for Xerox copiers is most likely treated as a(n)

answer

revenue center

question

Which of the following is a disadvantage of decentralization?

answer

Unit managers may not understand the big picture of the company.

question

Management by ________ is the practice of directing executive attention to important deviations from budgeted amounts.

answer

exception

question

Which type of variance causes operating income to be lower than budgeted?

answer

Unfavorable variance

question

A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

answer

Materials price variance

question

An unfavorable direct labor price variance and a favorable direct labor efficiency variance might indicate which of the following?

answer

Skilled workers using less actual hours than standard, paid at a higher rate per hour than the standard rate.

question

If a worker drops the raw material during production and the raw material must be discarded, which variance is directly impacted?

answer

Materials efficiency variance

question

The type of standard that provides allowances for normal waste and inefficiency in the production process is referred to as a(n)

answer

practical standard

question

What standard(s) do(es) direct materials and direct labor have when calculating standard costs?

answer

Quantity/Efficiency standard and Price standard

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