Managerial Accounting Exam 1 Test Questions – Flashcards
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undercoated manufacturing overhead results when:
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actual overhead is greater than allocated overhead
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which of the following is not one of the primary responsibilities of management?
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adhering to GAAP
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Planning involves which of the following activities?
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setting goals and objectives for the company
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Which of the following is being fulfilled when management compares the budget to actual results?
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controlling
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budgets are a way for the managers to communicate their
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plans
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comparing actual results to budgets is an example of which of the following management functions?
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controlling
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overseeing the day-to-day operations of a company's is an example of which of the following
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directing
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evaluating results against the plan is an example of which of the following management functions?
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controlling
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how often should managerial accounting reports be prepared?
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as often as necessary
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which of the following statements is true regarding managerial accounting information?
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managerial accounting information emphasizes relevance
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which of the following statements is false about financial accounting?
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financial accounting provides sufficient information for managers to effectively plan and control operations
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which of the following statements is true and managerial accounting?
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managerial accounting reports provide detailed internal information
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which of the following are the internal decision makers of a company?
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managers
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__ are a company's decision makers
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managers
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management accountants rarely interact with employees from other business such as marketing and customer service
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false
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the treasurer and the controller report directly to the CFO
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true
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the internal audit department reports directly to the audit committee, a subcommittee of the board of directors
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true
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managerial accountants no longer perform routine mechanical accounting tasks in most companies
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true
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managerial accountants are now considered to be similar to internal consultants and business advisors
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true
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oral and written communications are considered amoung the skills that are critical to management accountants
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true
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what position is typically responsible for general financial accounting, managerial accounting, and tax and tax reporting
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controller
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the IMA issues which of the following certifications?
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CMA
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the standards in the IMA statement of ethical professional practice includes
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competence confidentiality integrity and credibility
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all of the following are overarching principles in the IMA statement of ethical professional practice except
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integrity
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the standards of the IMA statement of ethical professional practice include which of the following?
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integrity
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preparing financial statements in accordance with GAAP is an example of
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competence
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communicating information fairly and objectively is an example of which ethical standard
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credibility
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performing duties in accordance with relevant laws, regulations and technical standards comprise the IMA professional ethics standard
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competence
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inflating your expenses for a company-sponsored conference that discredits the profession is a violation of which ethical standard
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integrity
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what ethical standard is being violated when you tell a friend that the company you work for is going to report lower than expected earnings next week
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confidentiality
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what is the name of the professional association for managerial accountants?
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institute of management accountants
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over allocated manufacturing overhead results when:
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actual overhead is less than allocated overhead
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Determining how much manufacturing overhead is over allocated or underallocated:
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is done at the end of the period
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If manufacturing overhead has been over allocated during the period, then:
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the jobs produced during the period have been overcosted
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If manufacturing overhead has been underallocated during the period, then which of the following is true?
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The jobs produced during the period have been undercosted
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cost of goods sold account is debited and finished goods inventory is credited for:
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the sale of goods to a customer
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under which of the following situations is finished goods inventory debited and work-in-process inventory account credited?
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transfer of goods to the finished goods storeroom
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the cost of direct labor used in production is recorded as a:
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debit to work-in-process inventory account
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the cost of indirect labor used in the factory is recorded as a:
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debit to manufacturing overhead account
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How is the cost of direct materials used in production recorded?
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debit to work-in-process inventory account
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How is the cost of indirect materials used in the factory recorded?
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debit to manufacturing overhead account
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when job costing is used at a service firm, the bill to the client shows:
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the billing rate and hours spent on the job
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the _______ is the hourly price charged to clients for professional labor
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billing rate
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the journal entries needed for job costing at a service company:
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are simpler than those needed at a manufacturing company
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service firms develop a predetermined rate for some costs. This rate is called the:
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indirect cost allocation rate
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the first three steps to allocating manufacturing overhead are take before the year begins and include all of the following except:
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allocating some manufacturing overhead to each individual job
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what is the primary factor that causes a "cost" called?
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cost driver
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A(n) _______ is an estimated manufacturing overhead rate computed during the year:
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predetermined manufacturing overhead rate
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assigning manufacturing overhead costs and other indirect costs is called:
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cost allocation
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manufacturers follow four steps to implement a manufacturing overhead allocation system. The last step is:
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allocate some manufacturing overhead to each individual job
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manufacturing overhead is allocated on the basis of:
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Direct labor hours, direct labor costs, machine hours, or all of the above
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allocating manufacturing overhead costs is done:
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during the period
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when is the predetermined manufacturing overhead rate computed?
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before the period starts
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how do you calculate the predetermined manufacturing rate used to allocate manufacturing overhead costs?
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by dividing the total estimated manufacturing overhead costs by the total estimated amount of the allocation base
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which of the following would be an example of a typical manufacturing overhead cost?
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depreciation on factory equipment
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______ laws, or "take-back" laws, create future costs associated with the production of electronic devices and require manufacturers of electronic devices to take back their products at the end of the products' lives:
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Extended Producer Responsibility (EPR)
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if a job consists of a batch of identical units, how can managers find the unit cost?
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by dividing the total job cost by the number of units in the job
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management can use job cost information for each of the following except:
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all of the listed choices are possible uses of job information
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the difference between the sales price and the job cost is:
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gross profit
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how is the cost-plus price determined?
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cost + markup on cost
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Process costing is used by companies that produce large numbers of identical units of production in a continuous fashion:
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true
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job costing systems accumulate the costs for each individual job:
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true
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companies should always use job costing rather than process costing:
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false
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the end goal of process costing and job costing at a manufacturing company is the same: to find the cost of producing one unit of product:
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true
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a job costing system can be used by which types of companies?
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service, manufacturing, and merchandising businesses
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which product costing system would better account for a unique product?
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job costing system
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the two basic types of costing systems are:
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job costing and process costing
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which of the following industries would be most likely to use a job costing system?
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commercial building construction
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which of the rolling is an example of an industry that would use a process costing rather than a job costing system?
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coca-cola
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which of the following types of costing is used for many similar products?
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process costing
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which of these documents authorizes the purchase of specific raw materials from a specific supplier?
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purchase order
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a ______ is used to accumulate the costs of a job:
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job cost record
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the ________ substantiates the total of the raw materials inventory account shown on the company's balance sheet:
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raw materials records
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which of these documents informs the storeroom to send specific materials to the factory floor?
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materials requisition
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a _______ is a source document used to track employee hours:
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labor time record
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a _______ is used to accumulate all of the direct materials and direct labor used on the job, as well as the manufacturing overhead allocated to the job:
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job cost record
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in the basic flow of inventory through a manufacturing system, which of the following occurs first in a job costing system?
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raw materials inventory
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in the basic flow of inventory through a manufacturing system, which of the following occurs second in the job costing system?
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work in process inventory
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in the basic flow of inventory through a manufacturing system, which of the following occurs third in the job costing system?
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finished goods inventory
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in the basic flow of inventory through a manufacturing system, which of the following occurs last in the job costing system?
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cost of goods sold
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which of the following types of information differs between alternatives and can affect the future?
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relevant
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which of the following represents a sunk cost?
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a historical cost that is never relevant
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subtracting the costs of one alternative from the costs of the other alternative would be called the _______ cost.
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differential
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when deciding to buy a new computer, all of the following should be considered except for the:
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cost of the old computer
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when making a decision to buy a new computer, all of the following should be considered except:
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sunk costs
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a company is deciding whether to purchase production equipment that can produce units more quickly than the current equipment. which of the following costs would be relevant to its decision?
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the cost of the new equipment
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a company is deciding whether to purchase production equipment that can produce units more quickly than the current equipment. which of the following costs would be relevant to its decision?
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the additional labor required to run the new equipment
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a restaurant is facing a decision about whether it should bake its own apple pies or whether it should continue to purchase the pies from a local bakery. which of the following costs would be relevant to its decision?
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the purchase price of the apple pies purchased from the local bakery
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a company is deciding whether to purchase hybrid cars for its salespeople or gasoline - engine cars. all of the following costs would be relevant to its decision except:
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the book value of the current fleet of sales vehicles
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to forecast total costs at a given level of production, management would use which of the following calculations?
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total fixed costs + (variable cost per unit x total predicted)
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what is the cost of making one more unit called?
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marginal cost
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Plowin' supply plans to make 19,000 tractors at its plant. fixed costs are $570,000 and variable cost are $210 per tractor. what is the average cost per tractor?
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$240
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A(n) _________ cost is one whose total amount changes in direct proportion to a change in volume:
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variable
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an example of a fixed cost for a manufacturer would be which of the following?
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salary of plant manager
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which of the following describes the way in which total fixed costs behave?
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they will remain the same throughout production levels within the relevant range
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product costs and period costs receive similar treatment when presented in the financial statements:
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false
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the income statements of manufacturing companies are more complex than those of service or merchandising companies:
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true
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the financial statements of a merchandiser are more complex than those of a manufacturer:
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false
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service companies have the most complex accounting with regard to the income statement:
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false
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cost of goods sold is a major expense of service companies:
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false
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the schedule of cost of goods manufactured is prepared before the income statement for a manufacturing company:
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true
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which of the following items is not used when calculating the cost of goods manufactured?
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salesperson salaries
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before operating income can be determined for a manufacturer, which of the following is calculated?
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Cost of goods sold, cost of goods manufactured, cost of good available for sale, or all of the above
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the only difference in the balance sheets of various types of businesses (for example, manufacturing vs. service) is:
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current assets
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the balance sheet of a service company would include which of the following?
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accounts receivable
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the income statement of a retailer would include which of the following?
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cost of goods sold
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the income statements for both a merchandiser and manufacturer would include which of the following?
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operating expenses
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a merchandiser's purchases are equivalent to a manufacturer's:
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cost of goods manufactured
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Tuity Fruity Beverage company's operating activities for the year: Purchases - $140,300 Operating Expenses - $80,600 Beginning inventory - $12,000 Ending inventory - $19,000 Sales revenue - $300,500 What is the cost of goods available for sale?
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$152,300
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Tuity Fruity Beverage company's operating activities for the year: Purchases - $140,000 Operating Expenses - $80,900 Beginning inventory - $12,500 Ending inventory - $18,000 Sales revenue - $300,000 what is the cost of goods sold for the year?
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$134,500
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Tuity Fruity Beverage company's operating activities for the year: Purchases - $140,400 Operating Expenses - $80,400 Beginning inventory - $12,300 Ending inventory - $18,500 Sales revenue - $300,000 what is the gross profit for the year?
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$165,800
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if a company wants to determine a products cost, it must assign both direct and indirect costs:
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true
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direct costs can be traced to specific units:
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true
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indirect costs cannot be traced to the cost objects, so they are allocated
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true
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which of the following items could be an example of a cost object?
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a manufacturing plant, a international plant, the accounting department, or all of the above are example of potential cost objects
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which of the following is not an example of an indirect cost incurred in manufacturing automobiles?
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cost of the automobile engines
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a factory janitors wages would be classified as ________ when determining the cost of a manufactured product:
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an indirect cost
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a salespersons salary would be classified as ________ when determining the cost of a manufactured product:
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a period cost
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the cost of lighting the factor would be classified as _______ when determining the cost of a manufactured product:
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an indirect cost
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which of the following would not be considered a direct cost of a mattress?
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glue
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all of the following would be considered a direct material for a kitchen cabinet except:
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sand paper
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prime costs consist of:
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direct materials and direct labor
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conversion costs consist of:
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direct labor and manufacturing overhead
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an example of direct labor would be which of the following?
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wages of assembly line personnel
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which of the following is an example of direct labor?
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wages of a machine operator
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which of the following is an example of indirect labor in a manufacturing plant?
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plant managers
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which of the following is an example of overhead expense in a factory?
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wages of factory maintenance personnel
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indirect materials, indirect labor, and indirect manufacturing costs are what type of manufacturing cost?
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manufacturing overhead
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which of the following would not be considered a product cost of a manufacturer?
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freight out
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period costs are:
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always recorded as an expense
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inventorial product costs for a manufactured product include:
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the costs of direct materials, direct labor, and manufacturing overhead
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which of the following types of companies has raw materials, work in process and finished goods inventory?
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manufacturers
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which type of company makes up the largest sector of the US economy?
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service companies
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the balance sheet of a service company has:
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little or no inventory
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which type of company typically produces its own inventory?
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manufacturer
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what type of company resells tangible products it purchases ready - made from suppliers?
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wholesaler, retailer, merchandiser, or all of the above
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how would Chevrolet classify its partially completed vehicles?
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work in process inventory
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a _______ companys balance sheet reports just one inventory called "inventory"
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merchandising
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all of the following items would be found in raw materials inventory for a furniture manufacturer except:
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assembly worker wages
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all of the following are part of a companys value chain except:
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administration
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which element of the value chain would depreciation on a factory be classified as?
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production
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testing ways to increase the strength of your product would be classified as which element of the value chain?
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research and development
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which element of the value chain would a technical support hotline for customers be considered?
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customer service
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advertising expenses would be considered which element of the value chain?
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marketing
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the costs associated with reengineering machinery and its location within the factory to increase efficiency would be considered which element of the value chain?
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design
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the costs incurred to transport merchandise to a company's retail store would be considered to be what element of the value chain?
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production or purchases
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which type of system integrates ALL of the companys departments, worldwide functions, and data?
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ERP system
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according to the sarbanes-oxley act, who is responsible for establishing and maintaining internal controls over financial reporting?
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the CEO and CFO
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in recent years, there has been an increasing awareness and growing interest in __________ and social responsibility by both consumers and corporations
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sustainability
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the "triple bottom line" focuses on what three factors that influence a firms ability to survive and thrive in the long run?
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profit, people, planet
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under SOX, a CPA firm is permitted to perform which of the following services for an audit client with pre-approval from the clients audit committee?
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tax
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the SEC is considering the move to adopt IFRS for which types of companies?
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all US public traded companies
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IFRS
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international financial reporting standards
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XBRL
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extensible business reporting language
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in what year will XBRL be required for all publicity traded companies?
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2011
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XBRL can best be described as a:
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a standardized tagging system for financial statement data
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________ is the business philosophy and a strategy of manufacturing without waste:
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lean thinking
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companies may adopt which of the following in an attempt to increase their competitive edge?
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green initiatives, TQM, lean thinking, or all of the above
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the sarbanes-oxley act was enacted:
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to restore trust in publicly traded companies
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ISO 9001:2008 is a(n):
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certification that a company complies with international quality standards
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which of the following is a software system that integrates all of a company's departments?
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ERP