Accounting Multiple Questions
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accounting_mq3.docThe entry to record the purchase of raw materials on account using a job costing system would include a:
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A. credit to work-in-process inventory. |
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B. debit to accounts payable. |
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C. debit to work-in-process inventory. |
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D. debit to raw materials inventory. |
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Question 2 of 20 |
5.0 Points |
Which of the following is a lean strategy?
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A. Group like machines together. |
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B. Produce in smaller batches than a traditional system. |
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C. Maintain a higher level of inventory than a traditional system. |
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D. Lengthen setup times relative to a traditional system. |
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Question 3 of 20 |
5.0 Points |
In job costing, the journal entry to record the use of direct materials on jobs is to debit work-in-process inventory and credit:
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A. raw materials inventory. |
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B. finished goods inventory. |
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C. manufacturing overhead. |
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D. wages payable. |
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Question 4 of 20 |
5.0 Points |
The benefits of using the ABC costing system are higher if the company:
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A. has high indirect costs. |
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B. produces many different products that use differing amounts of resources. |
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C. has high indirect costs and produces many different products that use differing amounts of resources. |
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D. produces only one product. |
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Question 5 of 20 |
5.0 Points |
The predetermined indirect cost allocation rate is computed as:
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A. total estimated indirect costs / total estimated amount of the allocation base. |
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B. total amount of the allocation base / total estimated indirect costs. |
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C. total estimated indirect costs + total estimated amount of the allocation base. |
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D. total amount of the allocation base - total estimated indirect costs. |
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Question 6 of 20 |
5.0 Points |
Here are selected data for Sunny Sky Corporation.
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Beginning raw materials inventory |
$37,000 |
Beginning work-in-process inventory |
$62,200 |
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Beginning finished goods inventory |
58,300 |
Cost of materials purchased |
151,000 |
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Cost of direct materials requisitioned |
91,300 |
Direct labor incurred |
135,000 |
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Actual manufacturing overhead |
160,000 |
Cost of goods manufactured |
287,000 |
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Cost of goods sold |
265,000 |
Manufacturing overhead rate (% of direct labor) |
125% |
What is the ending work-in-process inventory balance?
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A. $161,500 |
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B. $170,250 |
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C. $211,200 |
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D. $229,950 |
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Question 7 of 20 |
5.0 Points |
Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?
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A. Internal failure costs |
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B. Backflush costing |
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C. Just-in-time |
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D. External failure costs |
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Question 8 of 20 |
5.0 Points |
Venus Crates manufactures custom crates for a variety of uses. The following data have been recorded for Job 551, which was recently completed. Direct materials used cost $7,200. There were 82 machine hours used on this job. The predetermined overhead rate is $30 per machine hour used. There were 175 direct labor hours worked on this job at a direct labor wage rate of $24 per hour. What is the total manufacturing cost of Job 551?
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A. $13,860 |
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B. $4,200 |
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C. $2,460 |
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D. $7,457 |
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Question 9 of 20 |
5.0 Points |
Which of the following is a result of cost distortion?
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A. Over costing of all products |
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B. Under costing of all products |
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C. Accurate costing of all products |
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D. Over costing of some products and under costing of other products |
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Question 10 of 20 |
5.0 Points |
Which of these documents informs the storeroom to send specific materials to the factory floor?
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A. Receiving report |
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B. Bill of materials |
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C. Purchase order |
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D. Materials requisition |
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Question 11 of 20 |
5.0 Points |
A(n) ________ is an estimated manufacturing overhead rate computed before the year begins.
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A. cost allocation |
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B. cost driver |
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C. predetermined manufacturing overhead rate |
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D. actual manufacturing overhead rate |
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Question 12 of 20 |
5.0 Points |
Service firms develop a predetermined rate for some costs. This rate is called the:
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A. labor rate. |
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B. direct cost rate. |
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C. indirect cost allocation rate. |
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D. hourly cost rate. |
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Question 13 of 20 |
5.0 Points |
Which term listed below describes costs incurred when the company fails to detect poor quality goods or services before delivery to the customer?
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A. Internal failure costs |
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B. Value-added activity |
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C. External failure costs |
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D. Just-in-time production |
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Question 14 of 20 |
5.0 Points |
Watson's Computer Company uses ABC to account for its manufacturing process.
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Activities |
Indirect activity budget |
Allocation base (cost driver) |
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Materials handling |
$52,000 |
Based on number of parts |
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Machine setup |
30,000 |
Based on number of setups |
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Assembling |
9,750 |
Based on number of parts |
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Packaging |
15,300 |
Based on number of finished units |
Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for materials handling will be:
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A. $4. |
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B. $6.80. |
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C. $23.11. |
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D. $7.01. |
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Question 15 of 20 |
5.0 Points |
The first step in developing an ABC system is:
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A. calculate an activity cost allocation rate for each activity. |
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B. allocate the costs to the cost object using the activity cost allocation rates. |
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C. select an allocation base for each activity. |
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D. identify the primary activities and estimate a total cost pool for each. |
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Question 16 of 20 |
5.0 Points |
Showboat Corporation had actual manufacturing overhead costs for the most recent year of $29,500. Manufacturing overhead is allocated using a predetermined manufacturing overhead rate of $1.50 per direct labor hour. Direct labor cost is $19 per hour. At the end of the year, Cabaret Corporation found it had over allocated manufacturing overhead by $1,250. How much manufacturing overhead was allocated in total during the year?
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A. $28,250 |
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B. $29,500 |
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C. $30,750 |
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D. $1,250 |
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Question 17 of 20 |
5.0 Points |
The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?
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A. Prevention cost |
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B. Appraisal cost |
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C. External failure cost |
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D. Internal failure cost |
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Question 18 of 20 |
5.0 Points |
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:
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A. appraisal costs. |
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B. value engineering. |
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C. activity-based costing. |
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D. prevention costs. |
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Question 19 of 20 |
5.0 Points |
Kramer Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee table consists of 20 separate parts totaling $240 in direct materials, and each requires 5 hours of machine time to produce. Additional information follows.
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Activity |
Allocation Base |
Cost Allocation Rate |
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Materials handling |
Number of parts |
$2.00 per part |
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Machining |
Machine hours |
$2.75 per machine hour |
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Assembling |
Number of parts |
$1.00 per part |
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Packaging |
Number of finished units |
$3.00 per finished unit |
What is the cost of machining per coffee table?
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A. $15 |
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B. $21 |
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C. $13.75 |
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D. $55 |
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Question 20 of 20 |
5.0 Points |
If jobs have been under costed due to under allocation of manufacturing overhead, then cost of goods sold (COGS) is too low and which of the following corrections must be made?
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A. Decrease COGS for the amount of the under allocation |
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B. Increase COGS for double the amount of the under allocation |
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C. Decrease COGS for double the amount of the under allocation |
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D. Increase COGS for the amount of the under allocation |
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Which of the following does NOT appear on an income statement prepared using variable costing?
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A. Fixed production costs |
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B. Contribution margin |
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C. Gross margin |
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D. Variable production costs |
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Question 2 of 20 |
5.0 Points |
Which of the following is unique to a process costing system?
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A. Work is not started on a product until an order is received. |
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B. Direct materials, direct labor, and manufacturing overhead are assigned to the first department only. |
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C. Costs for each process stay with that process until the goods are moved to finished goods. |
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D. Each process has its own WIP account. |
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Question 3 of 20 |
5.0 Points |
In process costing, ________ is/are found by taking the number of partially completed physical units and multiplying it by the percentage of the process completed.
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A. cost of goods sold |
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Question 4 of 20 5.0 Points
A. gross profit.
B. contribution margin.
C. operating income.
D. operating expenses. B. equivalent units |
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C. fixed manufacturing overhead costs |
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D. conversion costs |
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Question 5 of 20 |
5.0 Points |
When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?
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A. Transported costs |
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B. Transmitted costs |
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C. Transferred costs |
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D. Conveyed costs |
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Question 6 of 20 |
5.0 Points |
Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.
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A. discretionary |
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B. committed |
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C. standard |
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D. past |
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Question 7 of 20 |
5.0 Points |
The contribution margin is equal to:
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A. sales minus cost of goods sold. |
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B. sales minus operating expenses. |
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C. sales minus fixed expenses. |
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D. sales minus variable expenses. |
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Question 8 of 20 |
5.0 Points |
Sugartown Corporation has total sales revenues of $930,000. If its total fixed costs are $182,000 and its total variable costs are $267,000, then the total contribution margin is:
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A. total revenue minus total fixed costs. |
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B. total revenue minus total variable costs. |
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C. total variable costs minus total fixed costs. |
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D. equal to operating income. |
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Question 9 of 20 |
5.0 Points |
The representation for fixed cost per unit of activity is:
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A. vx divided by v. |
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B. vx divided by y. |
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C. y divided by x. |
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D. f divided by x. |
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Question 10 of 20 |
5.0 Points |
At Hodgson Corporation, direct materials are added at the beginning of the process, and conversion costs are uniformly applied. Other details include the following.
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Beginning WIP direct materials |
$32,000 |
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Beginning WIP conversion costs |
$20,250 |
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Costs of materials added |
$384,100 |
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Costs of conversion added |
$271,125 |
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WIP beginning (50% for conversion) |
19,200 units |
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Units started |
119,500 units |
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Units completed and transferred out |
115,700 units |
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WIP ending (60% for conversion) |
23,000 units |
What are the total equivalent units for conversion costs?
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A. 127,200 |
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B. 125,300 |
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C. 129,500 |
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D. 138,700 |
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Question 11 of 20 |
5.0 Points |
Fun Stuff Manufacturing produces Frisbees using a three-step process that includes molding, coloring, and finishing. Which of the following accounts is debited for conversion costs?
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A. WIP inventory-finishing |
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B. Finished goods inventory |
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C. Raw materials inventory |
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D. Cost of goods sold |
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Question 12 of 20 |
5.0 Points |
When absorption costing is used and management bonuses are related to operating income, managers are more likely to:
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A. decrease inventory levels. |
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B. increase inventory levels. |
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C. keep inventory levels consistent. |
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D. steal from the company. |
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Question 13 of 20 |
5.0 Points |
Total fixed costs for Purple Figs Company are $52,000. Total costs, both fixed and variable, are $160,000 if 80,000 units are produced. The fixed cost per unit at 80,000 units would be:
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A. $1.35/unit. |
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B. $0.65/unit. |
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C. $2.00/unit. |
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D. $2.65/unit. |
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Question 14 of 20 |
5.0 Points |
The first step of the 5-step process costing procedure is.
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A. compute output in terms of equivalent units. |
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B. summarize total costs to account for. |
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C. compute the cost per equivalent unit. |
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D. summarize the flow of physical units. |
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Question 15 of 20 |
5.0 Points |
The following information is provided by Adametz Company.
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WIP inventory, January 1 |
0 units |
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Units started |
7,500 |
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Units completed and transferred out |
3,300 |
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WIP inventory, December 31 |
4,200 |
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Direct materials |
$15,500 |
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Direct labor |
$18,400 |
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Manufacturing overhead |
$9,000 |
The units in ending WIP inventory were 90% complete for materials and 50% complete for conversion costs. At the end of the year, what are the equivalent units for conversion costs?
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A. 3,750 |
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B. 3,300 |
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C. 5,400 |
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D. 2,100 |
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Question 16 of 20 |
5.0 Points |
The use of either absorption or variable costing will make little difference in companies:
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A. using just-in-time inventory methods. |
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B. with large inventories. |
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C. with high fixed costs. |
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D. with high variable costs. |
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Question 17 of 20 |
5.0 Points |
A company manufactures mirrors. Last month's costs were as follows.
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Direct materials |
$90,000 |
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Direct labor |
144,000 |
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Manufacturing overhead |
158,000 |
What were the conversion costs for the month?
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A. $302,000 |
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B. $392,000 |
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C. $234,000 |
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D. $90,000 |
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Question 18 of 20 |
5.0 Points |
Fun Stuff Manufacturing produces ping pong balls using a three-step sequential process that includes molding, coloring, and finishing. When the balls and associated costs are transferred from the coloring process to the finishing process, which account is credited?
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A. WIP inventory-coloring |
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B. WIP inventory-molding |
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C. Raw materials inventory |
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D. WIP inventory-finishing |
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Question 19 of 20 |
5.0 Points |
When predicting costs at other volumes using a cost equation derived from either the high-low method or regression analysis, managers should consider:
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A. outliers. |
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B. general inflation. |
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C. seasonality. |
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D. All of the above |
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Question 20 of 20 |
5.0 Points |
The Jones Corporation uses a process system. During the current period, 2,500 units were started and 1,100 units were completed and transferred out. Ending units were 60% complete for materials and 45% complete for conversion costs. Direct materials costs added were $35,405 and conversion costs added were $32,870. There was no beginning WIP inventory and conversion costs are added evenly throughout the process. At the end of the period, what are the total equivalent units for conversion costs?
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A. 1,940 |
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B. 1,400 |
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C. 1,100 |
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D. 1,730 |
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Question 1 of 20 |
5.0 Points |
Using a base year as 100% and expressing other years as a percentage of the base year is an example of:
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A. trend analysis. |
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B. vertical analysis. |
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C. horizontal analysis. |
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D. benchmarking. |
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Question 2 of 20 |
5.0 Points |
Which of the following would appear on a statement of cash flows prepared using the direct method?
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A. Cash payments for salaries would appear on the statement. |
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B. A loss of the sale of equipment would appear on the statement. |
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C. Amortization expenses would appear on the statement. |
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D. Depreciation expenses would appear on the statement. |
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Question 3 of 20 |
5.0 Points |
A ________ is a measure of the total emissions of carbon dioxide and other greenhouse gases.
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A. carbon footprint |
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B. waste footprint |
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C. carbon mark |
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D. water footprint |
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Question 4 of 20 |
5.0 Points |
Alexander Industries, in Chicago, plans to take advantage of the winds blowing in from Lake Michigan. Alexander is developing a project to install a wind turbine that would generate electricity and reduce energy costs. The turbine would have an initial cost of $500,000 and would provide a net cost savings of $57,000 per year. The turbine will have a life of 25 years. What is the payback period, in years, for the wind turbine?
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A. 8.77 years |
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B. 9.08 years |
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C. 25 years |
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D. 28.75 years |
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Question 5 of 20 |
5.0 Points |
The following data relate to Sorrentino Corporation for last year:
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Operating income |
$250,000 |
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Net increase in all current assets except cash |
$45,000 |
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Net decrease in current liabilities |
$30,000 |
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Gain on sale of investments |
$8,000 |
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Cash dividends paid on common stock |
$35,000 |
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Depreciation expense |
$10,000 |
What is the net cash provided by operating activities for last year on the statement of cash flows for Sorrentino Corporation?
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A. $130,000 |
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B. $142,000 |
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C. $173,000 |
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D. $177,000 |
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Question 6 of 20 |
5.0 Points |
Which of the following items represents monetary information in an environmental management accounting system?
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A. Kilowatt hours of electricity used |
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B. Cost of upgrading factory equipment to reduce emissions |
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C. Ratio of recycled trash to total trash |
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D. Cost of janitorial services in office |
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Question 7 of 20 |
5.0 Points |
Computing cash generated from operating activities is:
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A. the same for both the direct and indirect methods. |
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B. different in that the indirect method considers depreciation. |
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C. different in that the direct method considers depreciation. |
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D. none of the above. |
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Question 8 of 20 |
5.0 Points |
A payment of interest on a loan would be considered a:
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A. cash outflow from investing activities. |
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B. cash outflow from operating activities. |
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C. cash outflow from financing activities. |
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D. cash outflow from depreciation. |
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Question 9 of 20 |
5.0 Points |
The study of percentage changes in comparative financial statements is an example of:
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A. vertical analysis. |
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B. trend analysis. |
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C. benchmarking. |
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D. horizontal analysis. |
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Question 10 of 20 |
5.0 Points |
Which type of analysis includes the computation of the percentage change in total assets between two balance sheet dates?
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A. Profitability |
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B. Vertical |
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C. Horizontal |
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D. Capital |
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Question 11 of 20 |
5.0 Points |
A company's inventory account increased $26,500 and its accounts payable account decreased $18,250 during the year. The accounts payable relates only to the acquisition of inventory. Sales were $789,500 and cost of goods sold was $532,700. What was the amount of payments to suppliers of inventory?
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A. $550,950 |
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B. $577,450 |
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C. $540,950 |
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D. $834,250 |
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Question 12 of 20 |
5.0 Points |
There are several reasons an organization might pursue sustainable initiatives. "A legislative act requires retailers to take back old batteries and electronic devices for recycling or reuse." This situation is an example of which type of reason to implement sustainable initiatives?
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A. Cost reduction |
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B. Regulatory compliance |
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C. Stakeholder influence |
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D. Competitive strategy |
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Question 13 of 20 |
5.0 Points |
The following information relates to Woolf Unlimited for the past two years.
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Account |
Current year |
Prior year |
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Net sales (all credit) |
$237,250 |
$180,000 |
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Cost of goods sold |
$115,000 |
$110,000 |
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Gross profit |
$122,250 |
$ 70,000 |
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Income from operations |
$ 32,000 |
$ 30,000 |
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Interest expense |
$ 2,000 |
$ 7,000 |
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Net income |
$ 24,000 |
$ 18,000 |
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Cash |
$ 22,000 |
$ 14,000 |
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Accounts receivable, net |
$ 25,000 |
$ 31,000 |
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Inventory |
$ 56,000 |
$ 44,000 |
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Prepaid expenses |
$ 2,000 |
$ 1,000 |
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Total current assets |
$105,000 |
$ 90,000 |
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Total long-term assets |
$150,000 |
$175,000 |
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Total current liabilities |
$ 60,000 |
$ 90,000 |
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Total long-term liabilities |
$ 22,000 |
$ 78,000 |
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Common stock, no par, 2,500 shares, market value $96 per share |
$ 40,000 |
$ 40,000 |
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Retained earnings |
$133,000 |
$ 57,000 |
What is the inventory turnover for the current year?
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A. 2.30 times |
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B. 0.78 times |
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C. 13.00 times |
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D. 2.20 times |
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Question 14 of 20 |
5.0 Points |
The Nichols Corporation data for the current year:
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Account |
Current year |
Prior year |
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Current assets |
$75,600 |
$60,000 |
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A/R |
$59,400 |
$44,000 |
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Mdse. Inventory |
$51,200 |
$40,000 |
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Current liabilities |
$71,500 |
$55,000 |
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Long-term liabilities |
$36,000 |
$30,000 |
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Common stock (5,000 shares) |
$47,460 |
$42,000 |
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Retained earnings |
$31,240 |
$17,000 |
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Net sales revenue |
$607,700 |
$515,000 |
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COGS |
$469,700 |
$385,000 |
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Gross Profit |
$138,000 |
$130,000 |
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Selling/General expenses |
$49,080 |
$52,000 |
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Net income before taxes |
$88,920 |
$78,000 |
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Income tax expense |
$20,520 |
$18,000 |
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Net Income |
$68,400 |
$60,000 |
What would a horizontal analysis report with respect to long-term liabilities?
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A. Long-term liabilities increased by $6,000. |
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B. Long-term liabilities decreased by 5.92%. |
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C. Long-term liabilities increased by 6.21%. |
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D. Long-term liabilities decreased by $1,500. |
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Question 15 of 20 |
5.0 Points |
Environmental sustainability is the primary concern of which of the following types of organizations?
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A. Large domestic corporations |
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B. Global service firms |
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C. Manufacturing firms |
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D. All organizations regardless of size, location, or sector |
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Question 16 of 20 |
5.0 Points |
A company reported the following amounts of net income:
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Year 1 |
$120,960 |
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Year 2 |
$151,200 |
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Year 3 |
$187,488 |
Which of the following is the percentage change from Year 2 to Year 3?
|
|
|
A. 24.00% |
|
|
B. 55.00% |
|
|
C. 124.00% |
|
|
D. 25.00% |
|
|
Question 17 of 20 |
5.0 Points |
The following information relates to Woolf Unlimited for the past two years.
|
Account |
Current year |
Prior year |
|
Net sales (all credit) |
$237,250 |
$180,000 |
|
Cost of goods sold |
$115,000 |
$110,000 |
|
Gross profit |
$122,250 |
$ 70,000 |
|
Income from operations |
$ 32,000 |
$ 30,000 |
|
Interest expense |
$ 2,000 |
$ 7,000 |
|
Net income |
$ 24,000 |
$ 18,000 |
|
Cash |
$ 22,000 |
$ 14,000 |
|
Accounts receivable, net |
$ 25,000 |
$ 31,000 |
|
Inventory |
$ 56,000 |
$ 44,000 |
|
Prepaid expenses |
$ 2,000 |
$ 1,000 |
|
Total current assets |
$105,000 |
$ 90,000 |
|
Total long-term assets |
$150,000 |
$175,000 |
|
Total current liabilities |
$ 60,000 |
$ 90,000 |
|
Total long-term liabilities |
$ 22,000 |
$ 78,000 |
|
Common stock, no par, 2,500 shares, market value $96 per share |
$ 40,000 |
$ 40,000 |
|
Retained earnings |
$133,000 |
$ 57,000 |
What is the acid-test ratio for the current year?
|
|
|
A. 0.52 |
|
|
B. 0.75 |
|
|
C. 0.78 |
|
|
D. 2.30 |
|
|
Question 18 of 20 |
5.0 Points |
A company uses the indirect method to prepare the statement of cash flows. It presents the following amounts on its financial statements.
|
|
End of this year |
End of prior year |
|
Accounts receivable |
$105,000 |
$100,000 |
|
Cost of goods sold |
550,000 |
|
|
Sales revenue |
850,000 |
|
|
Accounts payable* |
75,000 |
65,000 |
|
Inventory |
85,000 |
106,000 |
|
Salary payable |
15,000 |
11,000 |
|
Salary expense |
50,000 |
42,000 |
*Relates solely to the acquisition of inventory. What will appear in the operating activities section related to inventory?
|
|
|
A. The decrease of $21,000 will be subtracted from net income. |
|
|
B. The decrease of $21,000 will be subtracted from cost of goods sold. |
|
|
C. The decrease of $21,000 will be added to net income. |
|
|
D. The decrease of $21,000 will be added to cost of goods sold. |
|
|
Question 19 of 20 |
5.0 Points |
Which of the following items is most likely to be found on an environmental management accounting report?
|
|
|
A. CEO's salary |
|
|
B. Public accounting firm's fee for doing financial accounting audit |
|
|
C. Ratio of recycled trash to total trash |
|
|
D. Regional sales revenue |
|
|
Question 20 of 20 |
5.0 Points |
A company reported the following amounts of net income:
|
Year 1 |
$15,000 |
|
Year 2 |
$21,000 |
|
Year 3 |
$31,500 |
Which of the following is the percentage change from Year 2 to Year 3?
|
|
|
A. 40.00% |
|
|
B. 50.00% |
|
|
C. 110.00% |
|
|
D. 150.00% |
|
