Accounting Exam #3 Questions... Ch. 18, 19, 20, 21

Materials purchased on account during the month totaled $190,000. Materials requisitioned and placed in production totaled $165,000. The journal entry for the materials purchased on account is a.Materials190,000 Cash190,000 b.Materials190,000 Accounts Payable190,000 c.Accounts Payable190,000 Materials190,000 d.Materials165,000 Accounts Payable165,000

b. Materials 190,000 Accounts Payable 190,000

Managerial accounting reports are a. prepared according to management needs b. prepared according to GAAP c. related to the entire business entity only d. prepared periodically only

a. prepared according to management needs

The cost system best suited to industries that manufacture a large number of products that are indistinguishable from each other using a continuous production process is the a. process cost system b. first-in, first-out cost system c. job order cost system d. departmental cost system

a. process cost system

In a job order cost system, when goods that have been ordered are received, the quantity received and the condition of the goods are entered on a a. receiving report b. sales invoice c. purchase requisition d. purchase order

a. receiving report

A plant manager's salary is a(n) a. direct cost and an indirect cost b. direct cost c. indirect cost d. period cost

c. indirect cost

If a company uses a process cost system to account for the costs in its five production departments, how many work in process accounts will it use? a. 5 b. 2 c. 4 d. 6

a. 5

Recording jobs shipped and customers billed would include a debit to a. Cost of Goods Sold b. Finished Goods c. Cash d. Accounts Payable

a. Cost of Goods Sold

Which of the following is an example of a factory overhead cost? a. factory heating and lighting cost b. repair and maintenance cost on an administrative building c. president's salary d. insurance premiums on salespersons' automobiles

a. factory heating and lighting cost

All of the following are characteristics of a process cost system except a. manufacturing costs are grouped by department rather than by job b. the system accumulates costs per job c. the system may use several work in process inventory accounts d. the cost flows are similar to the physical flow of materials through the production departments

b. the system accumulates costs per job

Recording jobs completed would include a debit to a. Work in Process b. Factory Overhead c. Cost of Goods Sold d. Finished Goods

d. Finished Goods

For which of the following businesses would a process cost system be appropriate? a. shampoo manufacturer b. boat repair service c. dressmaker d. custom furniture manufacturer

a. shampoo manufacturer

On which of the following would the labor costs for an individual job be recorded? a. time tickets b. clock cards c. in-and-out cards d. payroll register

a. time tickets

The recording of the application of factory overhead costs to jobs would include a credit to a. Work in Process b. Factory Overhead c. Wages Payable d. Cost of Goods Sold

b. Factory Overhead

Which of the following is not a characteristic of a process cost system? a. The system allocates costs between completed and partially completed units within a department. b. The system measures costs for each completed job. c. The system may use several work in process accounts. d. Manufacturing costs are grouped by departments.

b. The system measures costs for each completed job.

The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and a. accounting salaries expense b. factory overhead c. direct expenses d. selling expenses

b. factory overhead

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as a. product costs b. factory overhead costs c. period costs d. miscellaneous expenses

b. factory overhead costs

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory? a. replacement cost system b. job order cost system c. general cost system d. process cost system

b. job order cost system

Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process, are referred to as a. factory overhead costs b. period costs c. product costs d. conversion costs

b. period costs

Which of the following is true of preparing managerial accounting reports? a. Managerial accounting reports must contain objective data only. b. Managerial accounting reports are prepared according to GAAP. c. Managerial accounting reports are prepared for external users and company management. d. Managerial accounting reports may be prepared at fixed intervals or on an as-needed basis.

d. Managerial accounting reports may be prepared at fixed intervals or on an as-needed basis.

Process and job order cost systems are similar in all of the following ways except a. both classify product costs as direct materials, direct labor, and factory overhead b. both use job cost sheets c. both allocate factory overhead costs to products d. both use perpetual inventory system for materials, work in process, and finished goods

b. both use job cost sheets

Managerial accounting reports must be prepared according to generally accepted accounting principles. True False

False

Materials must have which two qualities in order to be classified as direct materials? a. They must be an integral part of the finished product, but can be an insignificant portion of the total product cost. b. They must be classified as both prime costs and conversion costs. c. They must be introduced into the process in both work in process inventories and finished goods inventories. d. They must be an integral part of the finished product and a significant portion of the total product cost.

d. They must be an integral part of the finished product and a significant portion of the total product cost.

Which of the following costs are not included in finished goods inventory? a. factory overhead b. direct labor c. direct materials d. chief financial officer's salary

d. chief financial officer's salary

In most business organizations, the chief management accountant is called the a. chairman of the board b. chief executive officer c. chief accounting officer d. controller

d. controller

In a job order cost accounting system, the journal entry for the flow of direct materials into production is to a. debit Factory Overhead, credit Materials b. debit Materials, credit Work in Process c. debit Work in Process, credit Supplies d. debit Work in Process, credit Materials

d. debit Work in Process, credit Materials

The cost of a manufactured product generally consists of which of the following costs? a. direct materials cost and direct labor cost only b. direct materials cost and factory overhead cost only c. direct labor cost and factory overhead cost only d. direct labor cost, direct materials cost, and factory overhead cost

d. direct labor cost, direct materials cost, and factory overhead cost

Which of the following is most associated with managerial accounting? a. must follow GAAP b. is prepared for users outside the organization c. always reports on the entire entity d. may rely on estimates and forecasts

d. may rely on estimates and forecasts

A job order cost accounting system provides for a separate record of the cost of each particular quantity of product that passes through the factory. True False

True

The primary goal of managerial accounting is to provide information to a. management b. investors c. creditors d. external auditors

a. management

Managerial accountants could prepare all of the following reports except a(n) a. annual report for external regulators such as the SEC b. sales report targeting monthly sales and potential bonuses c. performance report identifying amounts of scrap d. control report comparing direct material usage over time

a. annual report for external regulators such as the SEC

The journal entries for the cost and sale of a finished good on account would a. debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, and credit Sales b. debit Cost of Goods Sold and credit Finished Goods c. debit Work in Process, credit Finished Goods, debit Accounts Receivable, and credit Sales d. debit Sales Expense, credit Finished Goods, credit Cash, and credit Accounts Receivable

a. debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, and credit Sales

If the cost of a material is a small portion of total production cost, it may be classified as part of a. factory overhead cost b. direct labor cost c. miscellaneous costs d. selling and administrative costs

a. factory overhead cost

Each document in the cost ledger is called a a. job cost sheet b. stock record c. finished goods sheet d. materials requisition

a. job cost sheet

When a firm adopts lean manufacturing, a. machinery and equipment are moved into small autonomous production lines called manufacturing cells b. employees are retrained on different equipment but the plant layout generally stays unchanged c. new machinery and equipment must be purchased from franchised JIT dealers d. new, more efficient machinery and equipment must be purchased and installed in the original layout

a. machinery and equipment are moved into small autonomous production lines called manufacturing cells

Accounting designed to meet the needs of decision makers inside the business is a. managerial accounting b. financial accounting c. external accounting d. general accounting

a. managerial accounting

Which of the following is the correct flow of manufacturing costs? a. raw materials, work in process, finished goods, cost of goods sold b. cost of goods sold, raw materials, work in process, finished goods c. work in process, finished goods, raw materials, cost of goods sold d. raw materials, finished goods, cost of goods sold, work in process

a. raw materials, work in process, finished goods, cost of goods sold

Which of the following best describes the effect on direct labor when management adopts a lean production process? a. The environment becomes more labor intensive. b. Workers are often cross-trained to perform more than one function. c. Workers typically perform one function. d. Each employee runs a single machine.

b. Workers are often cross-trained to perform more than one function.

Lean manufacturing is a business philosophy that focuses on reducing time and cost and eliminating poor quality. This is accomplished in manufacturing and nonmanufacturing processes by a. moving a product from process to process as each function is completed b. combining processing functions into work centers and cross-training workers to perform more than one function c. having workers typically perform one function on a continuous basis d. having production supervisors attempt to enter enough materials into manufacturing to keep all manufacturing departments operating

b. combining processing functions into work centers and cross-training workers to perform more than one function

Job order costing and process costing are a. pricing systems b. cost accounting systems c. cost flow systems d. inventory tracking systems

b. cost accounting systems

A product cost is a. shown with operating expenses on the income statement b. expensed in the period the product is sold c. shown with current liabilities on the balance sheet d. expensed in the period in which it is manufactured

b. expensed in the period the product is sold

Another term for factory overhead is a. period cost b. factory burden c. supervisory cost d. surplus

b. factory burden

Which of the following are basic phases of the management process? a. organizing and directing b. planning and controlling c. decision making and supervising d. supervising and directing

b. planning and controlling

Goods that are partially completed by a manufacturer are a. merchandise inventory b. work in process inventory c. materials inventory d. finished goods inventory

b. work in process inventory

The recording of the factory labor incurred for general factory use would include a debit to a. Wages Expense b. Cost of Goods Sold c. Factory Overhead d. Wages Payable

c. Factory Overhead

Recording jobs completed would include a credit to a. Factory Overhead b. Finished Goods c. Work in Process d. Cost of Goods Sold

c. Work in Process

Materials purchased on account during the month amounted to $190,000. Materials requisitioned and placed in production totaled $156,000. The journal entry for the transaction for materials requisitioned by the production department is a.Work in Process190,000 Cash190,000 b.Work in Process190,000 Materials190,000 c.Work in Process156,000 Materials156,000 d.Materials156,000 Work in Process156,000

c. Work in Process 156,000 Materials 156,000

What term refers to the cost of changing direct materials into a finished manufactured product? a. period cost b. factory overhead cost c. conversion cost d. direct labor cost

c. conversion cost

A report prepared periodically for each processing department summarizing the product costs incurred by the department and the allocation of those costs between completed and partially completed units is termed a a. manufacturing cost report b. process cost report c. cost of production report d. factory overhead production report

c. cost of production report

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following journal entries? a. debit Work in Process—Dept. B; credit Finished Goods—Dept. A b. debit Work in Process—Dept. B; credit Cost of Goods Sold—Dept. A c. debit Work in Process—Dept. B; credit Work in Process—Dept. A d. debit Finished Goods—Dept. A; credit Work in Process—Dept. B

c. debit Work in Process—Dept. B; credit Work in Process—Dept. A

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a a. factory overhead cost b. miscellaneous cost c. direct labor cost d. direct materials cost

c. direct labor cost

Which of the following are the two main types of cost accounting systems for manufacturing operations? a. process cost and replacement cost systems b. process cost and general accounting systems c. job order cost and process cost systems d. job order and general accounting systems

c. job order cost and process cost systems

The document authorizing the issuance of materials from the storeroom is a a. receiving report b. purchase order c. materials requisition d. purchase requisition

c. materials requisition