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ACCT 2102 - Test 1 Conceptual

Terms in this set (47)

CH 1 - Financial and Managerial accounting are similar in that both
A.
are regulated by outside regulatory agencies and commissions.
B.
are designed to meet the needs of managers.
C.
provide information primarily to external users.
D.
use information provided by the internal accounting system.
E.
primarily emphasize future operating results and goals.

Answer: D. use information provided by the internal accounting system
CH 1 - Which of the following lists all phases of the business cycle?
A.
decision-making, recording, comparing
B.
​planning, directing, controlling
C.
​service, merchandiser, manufacturer
D.
​beginning, middle, end
E.
​exposition, rising​ action, climax

Answer: B. planning, directing, controlling
CH 1 - Which of the following masters level accounting tracks at UGA consists of viewing the work of others to determine if the output is "free of material errors"?
A.
managerial
B.
audit
Your answer is correct.
C.
tax
D.
financial
E.
systems

Answer: B. Audit
CH 1 - Maria, a recent Masters of Accountancy graduate from​ UGA, accepted a staff position with a public accounting firm in​ Charleston, South Carolina. In her new​ position, Maria is tasked with reviewing transactions related to a merchandising​ client's inventory purchases. Her manager explains that the purpose behind the review is to determine if the​ client's merchandise inventory account is free of material errors. Based on this​ information, which accounting track did Maria most likely pursue in her graduate​ studies?
A. managerial
B.
tax
C.
audit
D.
advisory
E.
financial

Answer: C. audit
CH 1 - Which of the following best defines the planning phase of the business​ cycle?
A.
reviewing the work of others to determine if any errors exist
B.
interacting with​ employees, suppliers, and customers
C.
​budgeting, decision-making, and forecasting
D.
preparing tax returns and minimizing future tax liabilities
E.
comparing budgets to financial accounting records

Answer: C. budgeting, decision-making, and forecasting
CH 1 - Which of the following statements is​ CORRECT?
A.
Managerial accounting systems produce the four basic financial statements.
B.
The preparation of managerial accounting information is not bound by Generally Accepted Accounting Principles.
C.
Reports and other output provided by financial accounting systems focus on the future.
D.
Managerial accounting systems provide information primarily used by shareholders and other external users.
E.
Financial accounting relies on the knowledge of​ broad, multidisciplinary teams to properly record and report transactions.

Answer: B. The preparation of managerial accounting information is not bound by Generally Accepted Accounting Principles.
CH 2 - Which of the following equations best represents the formula for calculating​ profit?
A.
Assets​ - Liabilities
B.
Sales​ - Costs
C.
Cash In​ - Cash Out
D.
Revenue​ - Expenses

Answer: D. Revenue - Expenses
CH 2 - Before categorizing costs as either direct or​ indirect, a company must identify a cost object.
True/False

Answer: True
CH 2 - Which of the following would be considered a direct product cost for a computer​ manufacturer? (assume the​ company's cost object is a unit of​ product)
A.
Hard drive used in computers
B.
Commissions paid to sales staff
C.
Rent paid on the manufacturing facility
D.
Wages paid to factory supervisors

Answer: A. Hard drive used in computers
CH 2 - Both Merchandisers and Manufacturers hold inventory.
True/False

Answer: True
CH 2 - Only manufacturers have both product and period costs.
True/False

Answer: False
CH 2 - Which of the following represents the sequential series of inventory accounts that product costs pass through for a​ manufacturer?
A.
Sales​ Revenue, Cost of Good​ Sold, SG&A
B.
Research and​ Development, Design,​ Production, Marketing,​ Distribution, Customer Service
C.
Direct Material​ Inventory, Direct Labor​ Inventory, Manufacturing Overhead Inventory
D.
Raw Material​ Inventory, Work in Process​ Inventory, Finished Goods Inventory

Answer: D. Raw Material​ Inventory, Work in Process​ Inventory, Finished Goods Inventory
CH 2 - Which of the following statements concerning product costs is​ CORRECT?
A.
Period costs are only expensed when a related unit of product is sold.
B.
Product costs are initially inventoried on a​ company's Balance Sheet.
Your answer is correct.
C.
Product costs are sometimes referred to as​ SG&A expenses.
D.
All links in the value chain can be considered product costs.

Answer: B. Product costs are initially inventoried on a company's Balance Sheet
CH 2 - Which of the following statements is​ CORRECT?
A.
Period costs are relevant for purposes of calculating Gross Profit on the Income Statement for a both a merchandiser and a manufacturer.
B.
All links in the value chain applicable to a service company are considered period costs.
C.
Product costs for a merchandiser are categorized as either direct​ material, direct​ labor, or manufacturing overhead costs.
D.
Costs incurred in the production link in the value chain for a manufacturer are expensed when incurred.
E.
Product costs for a merchandiser are expensed as​ selling, general, and administrative expensed when the related unit is sold.

Answer: B. All links in the value chain applicable to a service company are considered period costs
CH 2 - If a net decrease is reported in the finished goods inventory account during the​ period, which of the following statements is always​ TRUE?
The cost assigned to units completed is greater than the total manufacturing costs added to production during the period.
B.
The cost of goods sold is greater than the cost of goods manufactured during the period.
C.
The cost assigned to units sold is greater than the total manufacturing costs added to production during the period.
D.
The sum of direct​ material, direct​ labor, and manufacturing overhead costs added during the period is greater than the cost of goods manufactured.
E.
Raw material used in production is less than raw material purchased during the period.

Answer: B. The cost of goods sold is greater than the cost of goods manufactured during the period.
CH 3 - When raw materials are used for a job, Work in Process Inventory decreases.
True/False

Answer: False
CH 3 - To calculate the direct labor costs​ incurred, the direct labor wage rate is multiplied by the direct labor hours logged for the job.
True/False

Answer: True
CH 3 - The ultimate goal of any product costing system for a manufacturer is to determine the cost of producing one unit of product.
True/False

Answer: True
CH 3 - Which of the following statements best explains why MOH is allocated rather than traced to​ jobs?
A.
MOH is not a real cost of production.
B.
MOH is sometimes considered a period cost.
C.
MOH is an indirect product cost.

Answer: C. MOH is an indirect product cost
CH 3 - Which of the following should NOT be used as allocation bases for MOH in a traditional costing​ system?
A.
direct labor hour
B.
units produced
C.
machine hours

Answer: B. units produced
CH 3 - What is the formula to calculate the predetermined manufacturing overhead​ rate?
A.
total estimated direct labor costs​ ÷ total estimated direct labor hours
B.
total estimated MOH​ ÷ total estimated activity level for the allocation base
C.
total actual MOH​ ÷ total actual activity level for the allocation base

Answer: B. total estimated MOH​ ÷ total estimated activity level for the allocation base
CH 3 - Which of the following statements is INCORRECT concerning Job​ Costing?
A.
Companies who produce their product in small batches would use Job Costing.
B.
Only manufacturers can use Job Costing.
C.
The initial cost object used in Job Costing is a job.
D.
It is possible for a job to consist of more than one unit of product.

Answer: B. Only manufacturers can use job costing.
CH 3 - If a balance exists in the temporary MOH account at the end of the​ period, it can be ignored for purposes of preparing the​ company's financial statements.
True/False

Answer: False
CH 3 - Which of the following product cost categories is impossible to trace to a​ job?
A.
Direct Labor
B.
Direct Material
C.
Manufacturing Overhead
D.
Operating Expenses

Answer: C. Manufacturing Overhead
CH 3 - Which of the following statements is​ CORRECT?
A.
​"Number of​ units" is typically an appropriate allocation base for MOH because the​ company's products consume equal overhead resources.
B.
If MOH is overallocated to a job that has been​ sold, and the company calculates sales price by marking up job​ costs, the job will likely be underpriced.
C.
The formula to arrive at the POHR is total actual manufacturing overhead divided by total estimated allocation base.
D.
To calculate the decrease to WIP for allocated MOH​ costs, the POHR is multiplied by the actual amount of the allocation based used by the cost object.
E.
If the​ over/underallocated MOH is fairly large and the majority of the units have not been​ sold, the balance in MOH should be prorated between​ WIP, FG, and COGS

Answer: E. If the​ over/underallocated MOH is fairly large and the majority of the units have not been​ sold, the balance in MOH should be prorated between​ WIP, FG, and COGS
CH 3 - Which of the following companies would be the LEAST likely to use a job order costing​ system?
A.
​Sweetwater, Inc., a manufacturer of​ mass-produced blueberry beverages.
B.
Before the​ Amplifier, Inc., a manufacturer of custom made acoustic guitars.
C.
The Black Bear​ Trail, LLC, a builder specializing in​ one-of-a-kind residential Pacific Northwest cabins.
D.
The Wright Flight​ Company, a manufacturer of custom built aircrafts.
E.
Rosie the Robot​ Company, a manufacturer of space age cleaning robots built to customer specifications.

Answer: A. ​Sweetwater, Inc., a manufacturer of​ mass-produced blueberry beverages.
CH 3 - Which of the following statements is CORRECT regarding job​ costing?
A.
The initial cost object under job costing is either a​ customer's order or a group of units.
B.
A manufacturer who produces in small batches should use job costing because each batch may require different product costs for completion.
C.
The​ "ending balance" calculated in the job cost record could be reported in either work in process​ inventory, finished goods​ inventory, or cost of goods sold depending on the ending status of the job.
D.
If all units in a job are​ identical, the unit cost is equal to the total job cost divided by the number of units in the job.
E.
All of the above statements are correct.

Answer: E. All of the above statements are correct
CH 3 - Why would a manufacturer who produces its product in small batches choose to use job costing to track its manufacturing​ costs?
A.
To minimize the risk of cost distortion related to overhead allocation.
B.
The direct material and direct labor costs are not easily identifiable for each batch.
C.
Each batch is typically completed in the period in which it is started.
D.
Each batch requires different product costs for completion.
Your answer is correct.
E.
The conversion process is identical for all batches worked on during the period.

Answer: D. Each batch requires different product
CH 4 - How many POHRs are calculated if a company uses a departmental costing system to allocate​ MOH? (assume the company has multiple production​ departments)
A.
more than one
B.
only one
C.
none

Answer: A. more than one
CH 4 - It is likely that a company implementing ABC would use only use volume based cost drivers.
True/False

Answer: False
CH 4 - In which of the following situations is a company MOST likely to benefit from implementing​ ABC?
A.
When the company has very few competitors.
B.
When the company operates in an environment where the risk of cost distortion is high.
C.
When the company produces and sells a single product.
D.
When the company already has the necessary accounting and technological expertise in place.

Answer: B. When the company operates in an environment where the risk of cost distortion is high.
CH 4 - Choose the option that best finishes the following​ statement:
If the MOH actually used by a cost object in production is different than the MOH allocated to the cost​ object, _________
A.
the​ company's customer base will decline.
B.
the POHR used by the costing system is incorrect.
C.
the company will report a loss on the sale of the cost object.
D.
the total cost of the cost object will be distorted.

Answer: D. the total cost of the cost object will be distorted
CH 4 - If an activity is performed on a group of​ units, it is said to be which type of ABC activity​ level?
A.
product
B.
batch
C.
facility
D.
unit

Answer: B. batch
CH 4 - A departmental costing system will typically use the same types of cost drivers as used with a traditional costing system.
True/False

Answer: True
CH 4 - Which of the following is NOT considered a refined costing system for purposes of allocating​ MOH?
A.
traditional
B.
activity based costing
C.
departmental

Answer: A. traditional
CH 4 - Which of the following statements concerning the activity based costing​ (ABC) template is​ CORRECT? (answers assume the two column approach taught in class is​ used)
A.
The numerator in the traditional POHR calculation is greater the sum of the numerators in the ABC POHR calculations.
B.
Direct material and direct labor for a specific cost object differ between the traditional and the ABC columns.
C.
If the cost object is being​ overcosted, the total cost calculated in the ABC column will be higher than the total cost calculated in the traditional column.
D.
If a company has only two cost​ objects, the total cost distortion for the two objects will always be​ "equal and​ offsetting."
E.
To determine cost​ distortion, you can compare the total direct product costs attributable to the cost object under traditional costing and ABC

Answer: D. If a company has only two cost objects, the total cost distortion for the two objects will always be " equal and offsetting"
CH 4 - Which of the following statements is INCORRECT with regard to Activity Based Costing​ (ABC)?
A.
If the consumption ratios using the traditional method are different from the consumption ratios using​ ABC, cost distortion will exist.
B.
The costs of implementing ABC are generally lower for companies that have established information technology systems.
C.
The choice to use ABC does not impact the calculation of direct product costs.
D.
ABC recognizes that not all manufacturing overhead activities should be categorized as unit level activities.
E.
ABC uses only volume based cost drivers in the calculation of predetermined manufacturing overhead rates.

Answer: E. ABC uses only volume based cost drivers in the calculation of predetermined manufacturing overhead rates.
CH 5 - Conversion costs include direct material and manufacturing overhead
True/False

Answer: False
CH 5 - Why is using a job costing system INEFFICIENT for a manufacturer who produces large batches of identical units of​ product?
A.
All units are completed in the period in which they are started.
B.
All of the units produced require the same inputs and conversion processes for completion.
C.
Direct material and direct labor costs cannot be easily identified.
D.
The ultimate goal of the costing system is not to determine the cost of a unit of product

Answer: B. All of the units produced require the same inputs and conversion processes for completion.
CH 5 - Which of the following statements is CORRECT regarding the inventory cost flow assumptions used in process​ costing?
A.
The weighted average method is more accurate than the​ first-in, first-out method when product costs vary drastically from period to period.
B.
The​ first-in, first-out method is easier to use than the weighted average method.
C.
The​ first-in, first-out method combines the physical flow and costs of units in beginning inventory and units started during the period.
D.
Companies who adopt the weighted average method typically use a production cost report to track units and costs

Answer: D. Companies who adopt the weighted average method typically use a production cost report to track units and costs
CH 5 - Choose the answer that best completes the following​ statement:
Equivalent units are used in a process costing system​ ______
A.
to help track the physical flow of units through the production process.
B.
to enable the fair assignment of costs to a completed unit and to a partially completed unit.
C.
to differentiate between units started during the period and units completed during the period.
D.
to accurately calculate gross profit for the period.

Answer: B. to enable the fair assignment of costs to a completed unit and to a partially completed unit
CH 5 - Units transferred in to department 2 from department 1 during the period and units in beginning inventory for department 2 for the same period are always equal.
True/False

Answer: False
CH 5 - Which of the following differs between job costing and process​ costing?
A.
The basic accounts used in the accounting system.
B.
The initial cost object.
C.
The product cost categories used.
D.
The ultimate cost object.

Answer: B. The initial cost object
CH 5 - What percentage of completion is used for the equivalent unit calculation as it relates to​ transferred-in units?
A.
​0%
B.
​100%
Your answer is correct.
C.
The same percentage as used for conversion costs in ending inventory.
D.
The same percentage as used for direct material costs in ending inventory.

Answer: B. 100%
CH 5 - Which of the following statements is INCORRECT with regard to the production cost report prepared in a​ company's first processing​ department?
.
Total costs to account for include product costs in the​ department's beginning work in process inventory and product costs added to its work in process during the period.
B.
The production cost report assigns costs to units in the​ department's ending work in process inventory and units completed and transferred out during the period.
C.
The cost per equivalent unit represents how much it costs to complete one unit in the department during the period.
D.
Equivalent units represent the number of units that were completed in each product cost category given the costs incurred.
E.
Total equivalent units for a product cost category could never exceed total physical units.

Answer: D. Equivalent units represent the number of units that were completed in each product cost category given the costs incurred.
CH 5 - Which of the following statements is INCORRECT with regard to process​ costing?
A.
When you reach the end of step 3 on the production cost report for the final department in the production​ process, given the sales​ price, the unit gross profit can be calculated.
B.
Nonuniform input occurs when production costs are added at different points in time in a production department.
C.
In sequential​ processing, manufacturing occurs​ "in order" of production departments.
D.
The percentage of completion for all units in a subsequent department with respect to transferred in costs from a previous department is​ 100%.
E.
Manufacturers who operate in a mass production environment choose between job costing and process costing to account for manufacturing overhead.

Answer: E. Manufacturers who operate in a mass production environment choose between job costing and process costing to account for manufacturing overhead.
CH 5 - The decision by a manufacturer to use process costing to track manufacturing costs affects
A.
the allocation of manufacturing overhead.
B.
the ultimate cost object.
C.
the categorization of product costs as either direct or indirect.
D.
the template used in calculations.
E.
the inventory accounts through which product costs flow.

Answer: D. The template used in calculations
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