Acct 2101: Chapter 2

Which of the following is considered value added time? A) Order response time B) Processing time C) Queue time D) Shipping time

B) Processing time

A sporting-goods store sells a set of golf clubs to a customer for cash. This is an example of a(n): A) planning activity B) investing activity C) financing activity D) operating activity

D) operating activity

Customer response time

The amount of time from when a customer places an order until the order is received.

Appraisal cost

The cost incurred to detect mistakes as early in the process as possible.

Which of the following businesses would have the shortest customer response time? A) Dell Computers B) Ford Motor Company C) Construction Company D) Wheat Farmer

A) Dell Computers

Internal failure cost

A cost incurred to fix mistakes before the mistakes become known to the customer

Identify which of the following is not considered a cost to insure quality? A) Internal failure cost B) Appraisal cost C) Maintenance cost D) Prevention Cost

C) Maintenance cost

Prevention Cost

A cost incurred to prevent mistakes from occurring.

Which is not part of the operating process? A) purchase of a bulldozer by a construction company B) purchase of a computer by an electronics store for resale C) sale of stock by a stock broker D) sale of merchandise

A) purchase of a bulldozer by a construction company

Which of the following is not one of the four business processes? A) Performance Measurement and Management Process B) Capital Resources Process C) Internal Control Process D) Business organization and Strategy Process

C) Internal Control Process

Which of the following would not be part of the capital resources process? A) collection of a loan B) acquisition of equipment C) purchase and sale of inventory D) sale of stock in another company

C) purchase and sale of inventory

At July 31, Sonata Company had a general ledger cash balance of $5,900. Deposits in transit amounted to $1,200 and there was a service charge of $20. Outstanding checks totaled $1,500. What is the balance shown on the bank statement at the end of July? A) $5,580 B) $5,880 C) $6,180 D) unable to determine from the information given

C) $6,180

The balanced scorecard approach has four perspectives, which of the following is not one of those perspectives? A) Financial Perspective B) Learning and Growth Perspective C) Internal Control Perspective D) Customer Perspective

C) Internal Control Perspective

Which of the following bank reconciliation items would require the cash on the company's books to be reduced? A) Outstanding check B) Deposit in transit C) Non-sufficient funds check D) Bank error

C) Non-sufficient funds check

Identify the item below that is considered nonvalue added time? A)Time it takes for customer to order goods. B)Time it takes to process an order C)Time it takes to ship the order D)All of the above are nonvalue added time

D) All of the above are nonvalue added time

Which of the following businesses would have the longest customer response time? A) Dell Computers B) General Motors Company C) Furniture Manufacturer D) Apple Grower

D) Apple Grower

Which of the following measures the liquidity of a company? A) Return on Owners' Equity B) Gross Margin Ratio C) Return on Investment D) Quick Ratio

D) Quick Ratio

Value-added time

Time spent on activities that add worth to the company's products, services, or processes.

External failure cost

A cost incurred to fix mistakes after the mistakes become know by the customer.

At May 31, Allegro Company had a general ledger cash balance of $7,400. At the end of May, the bank statement had a balance of $7,500. Deposits in transit amounted to $1,000 and there was a service charge of $10. Outstanding checks totaled $1,110. What is the correct amount of cash? A) $7,390 B) $7,000 C) $6,390 D) $6,380

A) $7,390

Internal failure cost occurs when: A)A company repairs a product before it is sold to the customer. B)A company repairs a product after it is sold to the customer. C)A company hires someone to inspect material before production takes place. D)A company pays an engineer to insure the production line is free of faulty machines.

A) A company repairs a product before it is sold to the customer.

Activities involving obtaining necessary funds to purchase long-term assets, repay existing obligations, and provide a return for owners are referred to as: A) financing activities B) operating activities C) investing activities D) planning activities

A) financing activities

Which of the following would be part of the capital resources process? A) issuance of stock B) preparation of operating budget C) calculating financial ratios D) selling products on credit to customers

A) issuance of stock

Which of the following is not a factor in getting bank and book balances to reconcile? A) Outstanding checks B) Deposits for cash C) Deposits in transit D) Bank service charges

B) Deposits for cash

A bank reconciliation will identify all of the following except? A) Unrecorded bank service charges B) Double Payment of a bill C) Outstanding Check D) Deposits in Transit

B) Double Payment of a bill

The Capital Resources Process features which of the following pairs of activities? A) Operating and Investing Activities B) Financing and Investing Activities C) Reporting and Operating Activities D) Financing and Planning Activities

B) Financing and Investing Activities

When a company operates in an uncertain environment that has rapidly changing products it is more likely to have an A) Mechanistic organizational structure with an efficiency strategy B) Organic organizational structure with a flexible strategy C) Holistic organizational structure with an organic strategy D) Synthetic organizational structure with an decentralized strategy

B) Organic organizational structure with a flexible strategy

Which of the following is not considered a subprocess of the Operating Process? A) Conversion B) Performance C) Marketing/sales/collection/customer service D) Purchasing/human resources/payment

B) Performance

Which of the following reflects a weakness in the internal control for cash? A) Cash register generates receipt that documents the cash sale which is given to the customer. B) Two employees have access to the same cash register in order to reduce chance of theft. C) Person making out a check must get authorization before the check is sent. D) The person receiving cash in the mail can not make entries into the accounting records.

B) Two employees have access to the same cash register in order to reduce chance of theft.

Morland Corp purchased a building that will house its new manufacturing plant. This is part of Morland's A) operating activities B) investing Activities C) financing Activities D. planning Activities

B) investing Activities

Activities involving the purchase and sale of long-term assets as well as other major items used in a business's operation are referred to as: A) operating activities B) investing activities C) financing activities D) planning activities

B) investing activities

The profitability generated by the net assets (assets-liability) of a corporation would be best measured by the: A) Quick Ratio B) Return on Investment C) Return on Owners' Equity D) Gross Margin Ratio

C) Return on Owners' Equity

The Gross Margin Ratio measures which of the following? A) The profitability of the firm's debt. B) The liquidity of the firm's profit. C) The percent of each dollar of sales that can cover the firm's operating expenses. D) The percent of the assets that generate profit for the firm and that covers operating and financing expenses.

C) The percent of each dollar of sales that can cover the firm's operating expenses.

The profit making activities of an enterprise are referred to as: A) financing activities B) planning activities C) operating activities D) investing activities

C) operating activities

Which of the following is part of the operating process? A) sale of a warehouse B) purchase of machinery C) purchase of inventory D) sale of common stock of another firm

C) purchase of inventory

Which of the following will required the cash on the books of the company to be adjusted? A) Outstanding checks B) Deposits in transit C) Bank errors D) Bank Service Charges

D) Bank Service Charges

Which of the following is not part of an internal control system? A) Providing independent checks B) Separating incompatible duties C) Physically controlling assets D) Designing produce that meet the customers needs

D) Designing produce that meet the customers needs

When a company operates in a more certain environment it tends to focus inward and have a A) Flexible strategy B) Rigid strategy C) Loose strategy D) Efficiency strategy

D) Efficiency strategy

Customer response time is part of which of the following balanced scorecard perspectives? A) Financial Perspective B) Learning and Growth Perspective C) Customer Perspective D) Internal Perspective

D) Internal Perspective

Which of the following ratios measures the profitability of the money invested in the firm's assets? A) Quick Ratio B) Return on Owners' Equity C) Gross Margin Ratio D) Return on Investment

D) Return on Investment

Which is an example of an event that takes place in the operating process? A) purchase of a bulldozer by a construction company B) purchase of a computer by an accounting firm C) payment of dividends D) payment of wages

D) payment of wages

Which of the following is part of the conversion subprocess? A) purchase of merchandise for resale B) payment of wages to sales people C) purchase of building D) requisition of raw materials

D) requisition of raw materials