20 MCQ's

1) The cost principle is the basis for preparing financial statements because it is __________.
A. the most accurate measure of purchasing power
B. an international accounting standard
C. relevant and objectively measured, and verifiable
D. a conservative value

2) Which list below best describes the major services performed by public accountants? A. Cost A. accounting, production scheduling, recruiting
B. Auditing, taxation, management consulting
C. Employee training, auditing, bookkeeping
D. Bookkeeping, mergers, budgets

3) A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools

4) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: Income Statement Balance Sheet Dr. Cr. Dr. Cr. Totals $58,000 $48,000 $34,000 $44,000 Closing entries are necessary for __________.
A. permanent or real accounts only
B. both permanent and temporary accounts
C. temporary accounts only
D. permanent accounts only

1) What exists when budgeted costs exceed actual results?
A. An excess profit
B. An unfavorable difference
C. A favorable difference
D. A budgeting error

2) Multinational corporations __________.
A. are U.S. companies that trade their securities on the exchanges in other countries
B. are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries
C. are U.S. companies that sell goods and services in other countries
D. are required to use international accounting standards

3) The major reporting standard for management accounts is __________.
A. generally accepted accounting principles
B. relevance to decisions
C. the Sarbanes-Oxley Act of 2002
D. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management

4) The primary purpose of the statement of cash flows is to __________.
A. facilitate banking relationships
B. provide information about the investing and financing activities during a period
C. prove that revenues exceed expenses if there is a net income
D. provide information about the cash receipts and cash payments during a period

1) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?
A. The western division’s vice president’s salary
B. Factory janitor
C. General corporate liability insurance
D. Cost of landscaping the corporate office
 
2) A well-designed activity-based costing system starts with __________.
A. analyzing the activities performed to manufacture a product
B. assigning manufacturing overhead costs for each activity cost pool to products
C. computing the activity-based overhead rate
D. identifying the activity-cost pools

3) What exists when budgeted costs exceed actual results?
A. An excess profit
B. An unfavorable difference
C. A favorable difference
D. A budgeting error

4) The standards and rules that are recognized as a general guide for financial reporting are called __________.
A. standards of financial reporting
B. generally accepted accounting principles
C. operating guidelines
D. generally accepted accounting standards

1. It is not true that current assets are assets that a company expects to
use up within one year.
acquire within one year.
realize in cash within one year.
sell within one year.

2. After closing entries are posted, the balance in the owner's capital account in the ledger will be equal to
the beginning owner's capital reported on the owner's equity statement.
 the amount of the owner's capital reported on the balance sheet.
 zero.
the net income for the period.

3. When using a worksheet, adjusting entries are journalized
before the adjustments are entered on to the worksheet.
after the worksheet is completed and after financial statements have been prepared.
before the adjusted trial balance is extended to the proper financial statement columns.
 
4. after the worksheet is completed and before financial statements are prepared.
Liabilities are generally classified on a balance sheet as
small liabilities and large liabilities.
tangible liabilities and intangible liabilities.
present liabilities and future liabilities.
current liabilities and long-term liabilities.

1. At the beginning of the year, Hinz Company had an inventory of $400,000. During the year, the company  purchased goods costing $1,600,000. If Hinz Company reported ending inventory of $600,000  and sales of $2,000,000, the company's cost of goods sold and gross profit rate must be
 $1,000,000 and 50%.
$1,400,000 and 70%.
$1,000,000 and 30%.
$1,400,000 and 30%.

2. The Merchandise Inventory account is used in each of the following except the entry to record

the return of goods purchased.
payment of freight on goods sold.
payment within the discount period.
goods purchased on account.

3. On a classified balance sheet, merchandise inventory is classified as
property, plant, and equipment.
an intangible asset.
a current asset.
a long-term investment.

4. The Sales Returns and Allowances account does not provide information to management about
errors in overbilling customers.
inefficiencies in filling orders.
possible inferior merchandise.
the percentage of credit sales versus cash sales.