ACC/561 ACC 561 Week 6 Final / (30 Questions all correct)

Question 1

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

·         Lower taxes

·         Most common form of organization

·         Reduced legal liability for investors

·         Harder to transfer ownership

Question 2

The group of users of accounting information charged with achieving the goals of the business is its

·         Managers

·         Creditors

·         Auditors

·         investors

Question 3

Which of the following financial statements is concerned with the company at a point in time?

·         Income statement.

·         Retained Earnings statement

·         Balance sheet

·         Statement of cash flows

Question 4

An income statement

·         presents the revenues and expenses for a specific period of time

·         summarizes the changes in retained earnings for a specific period of time

·         reports the changes in assets, liabilities, and stockholders’ equity over a period of time

·         reports the assets, liabilities, and stockholders’ equity at a specific date

Question 5 

The most important information needed to determine if companies can pay their current obligations is the

·         relationship between short-term and long-term liabilities

·         net income for this year

·         relationship between current assets and current liabilities

·         projected net income for next year

Question 6

A liquidity ratio measures the

·         ability of a company to survive over a long period of time

·         short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash

·         percentage of total financing provided by creditors

·         income or operating success of a company over a period of time

Question 7

The convention of consistency refers to consistent use of accounting principles

·         among accounting periods

·         among firms

·         within industries

·         throughout the accounting periods

Question 8

Horizontal analysis is also known as

·         linear analysis

·         vertical analysis

·         trend analysis

·         common size analysis

Question 9

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time

·         to determine which items are in error

·         to determine the amount and/or percentage increase or decrease that has taken place

·         that has been arranged from the highest number to the lowest number

·         that has been arranged from the lowest number to the highest number

Question 10 

Vertical analysis is a technique that expresses each item in a financial statement

·         in dollars and cents

·         starting with the highest value down to the lowest value

·         as a percent of the item in the previous year

·         as a percent of a base amount

Question 11

·         the production process is continuous

·         costs are to be assigned to specific jobs

·         production is aimed at filling a specific customer order

·         dissimilar products are involved

Question 12

An important feature of a job order cost system is that each job

·         must be similar to previous jobs completed

·         has its own distinguishing characteristics

·         must be completed before a new job is accepted

·         consists of one unit of output

Question 13

In a process cost system, product costs are summarized

·         after each unit is produced

·         on job cost sheets

·         when the products are sold

·         on production cost reports

Question 14

An activity that has a direct cause-effect relationship with the resources consumed is a(n)

·         cost pool

·         product activity

·         cost driver

·         overhead rate

Question 15

Activity-based costing

·         accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver

·         allocates overhead to multiple activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers

·         assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools

·         allocates overhead directly to products and services based on activity levels

Question 16

A cost which remains constant per unit at various levels of activity is a

·         mixed cost

·         manufacturing cost

·         variable cost

·         fixed cost

Question 17

The break-even point is where

·         total variable costs equal total fixed costs

·         total sales equal total fixed costs

·         total sales equal total variable costs

·         contribution margin equals total fixed costs

Question 18 

Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point?

·         1,500 units

·         $4,000,000

·         4,000 units

·         $1,500,000

Question 19

When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using

·         operations costing

·         product costing

·         variable costing

·         absorption costing

Question 20

If a division manager's compensation is based upon the division's net income, the manager may decide to meet the net income targets by increasing production when using

·         absorption costing, in order to increase net income

·         variable costing, in order to decrease net income

·         absorption costing, in order to decrease net income

·         variable costing, in order to increase net income

Question 21

An unrealistic budget is more likely to result when it

·         has been developed in a top down fashion

·         has been developed in a bottom up fashion

·         is developed with performance appraisal usages in mind

·         has been developed by all levels of management

 Question 22 

A major element in budgetary control is

·         the preparation of long-term plans

·         the comparison of actual results with planned objectives

·         the valuation of inventories

·         approval of the budget by the stockholders

Question 23 

The purpose of the sales budget report is to

·         control selling expenses

·         control sales commissions

·         determine whether income objectives are being met

·         determine whether sales goals are being met

Question 24

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

·         master budgeting

·         flexible accounting

·         responsibility accounting

·         static reporting

Question 25

Variance reports are

·         

Question 26

Internal reports that review the actual impact of decisions are prepared by

·         factory workers

·         the controller

·         management accountants

·         department heads

Question 27

The process of evaluating financial data that change under alternative courses of action is called

·        

Question 28

Seasons Manufacturing manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows

·         

Question 29

Carter, Inc. can make 100 units of a necessary component part with the following costs

If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?

·         

Question 30

A company has a process that results in 15,000 pounds of Product A that can be sold for $16 per pound. An alternative would be to process Product A further at a cost of $200,000 and then sell it for $28 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action?

·