REVISION PRACTICE TEST CORRECT ANSWERS FOR ACCOUNTING 7/26/23

Which of the following statements describes a fixed cost?

A cost that is constant in total regardless of the activity.

Which one of the following could be achieved through the use of the AutoFill feature?

Extend a sequential series of data because to use AutoFill, you first select the cells that contain what it is you wish to extend, for example a data series. Then, to extend the series, you drag the 'fill' handle to include the cells you wish to fill. The fill handle is the black square in the lower right-corner of the selected range.

What name is given to an automated set of commands saved for use in a spreadsheet.

Macro. The correct answer is: A macro. A macro is an automated set of commands that imitates keystrokes or mouse actions. A macro is typically used to automate repetitive actions.

Two statements relating to integrated and interlocking accounting systems are shown below: 1. An integrated system has one system of ledger accounts which is used for cost accounting and for financial accounting. 2. An interlocking system has three separate systems of ledger accounts used for cash accounting, cost accounting and financial accounting.

Statement 1 is true, Statement 2 is false because an integrated system has one set of ledger accounts used for both cost accounting and financial accounting. An interlocking system has two separate ledgers one used for cost accounting and one used for financial accounting.

Two statements about spreadsheets follow: 1. $A$4 is an absolute cell reference. 2. If a formula contains an absolute cell reference the formula is unable to be copied.

Statement 1 is true, Statement 2 is false. $A$4 is an absolute cell reference, as shown by the $ signs before the column reference 'A' and the row reference '4'. A formula that contains an absolute cell reference is able to be copied. When the formula is copied, an absolute cell reference does not change, the cell referred to remains the same.

what is the correct formula to add values in B12 and C13 and then multiply the result by the value in C25.

The correct answer is = (B12 + C13) * C25. The correct symbol for multiplication in a spreadsheet formula is '*' and the correct symbol for division is '/'. Brackets are required in this formula to instruct the spreadsheet to perform the addition operation before the multiplication operation.

Which one of the following members of staff is most likely to raise a materials requisition note?

The correct answer is: Production manager A materials requisition note is raised and completed when materials are required from inventory for production. Of the four individuals listed, the production manager, being involved in production, is most likely to raise a materials requisition note.

Which one of the following individuals is managing an investment centre?

The correct answer is: The Owner Manager of a coffee shop responsible for maximising sales, keeping expenses under control and the purchase of all non-current assets. The Owner Manager of the coffee shop is the only person described who has control over revenue, costs and capital expenditure. Therefore, this individual is the only investment centre manager. The Head of Marketing and the Head of Accounts Payable are both cost centre managers. They do not have control over revenue or capital expenditure. The Sales Director is managing a profit centre, being responsible for revenue and costs but not for capital expenditure.

Red Co has one manufacturing process. At the start of April 20X7 there was no work in progress. During the month, 1,000kg of raw materials which cost $33,000 were input into the process. Losses were 5% of input, conversion costs were $5,000 and there was no closing work in progress

$40. Input 1,000kg minus the loss of (5%) 50kg gives output of 950kg The cost of the inputs is $33,000 + $5,000 = $38,000 $38,000 / 950kg = $40 per kg If you chose an incorrect option compare your calculation against the correct calculation shown above.

he following information relates to raw material X. Date Units Unit price $ Value $ 1 Jan Balance b/f 100 4.00 400 4 Jan Receipt 50 5.00 250 6 Jan Receipt 50 6.00 300 7 Jan Issue 70 Under the LIFO method of inventory valuation, what is the value of the issue on 7 January?

(50 units @ $6) + (20 units @ $5) = $400. Under LIFO, the price(s) of the units of inventory held which were received most recently is / are used to value inventory issued to production

Two incomplete statements follow: 1. A trainee management accountant would prepare information intended mainly for internal use. 2. Financial statements are prepared mainly for external use.

1 internal, 2 external. Management accounts and management accounting reports are prepared mainly for internal use. Financial statements are prepared mainly for external use.

Hannah is working in a spreadsheet which contains the value of total sales for the year 20X7 in cell F70, by adding 7.5% to the 20X7 total sales figure.

= D70 * 1.075 because the formula =D70*1.075 will calculate a figure that adds 7.5% to the value in cell D70.

Which of the following statements correctly describes a direct cost?

A cost that can clearly be associated with specific activities or products because a cost that can be clearly associated with specific activities or products. A direct cost is a cost that can be clearly associated with specific activities or products, for example the wood (direct material) used to produce a table. A cost that cannot be clearly associated with specific activities or products is an indirect cost. A cost that is past and should not be taken into account for future decisions is referred to as a sunk cost. A cost that will change as a result of a decision under consideration is referred to as a relevant cost.

What name is given to an automated set of commands saved for use in a spreadsheet?

A macro A macro is an automated set of commands that imitates keystrokes or mouse actions. A macro is typically used to automate repetitive actions.

Accounting Equation

Assets = Capi

Which of the following is a benefit an organization is likely to experience from introducing a policies and procedures manual?

Consistency because a policies and procedures manual should result in staff using the same approach to work tasks. This increases consistency. A policies and procedures manual is likely to reduce flexibility and may hinder innovation as the manual requires staff to act in accordance with the published policies and procedures rather than using their initiative. The guidance provided by the manual may improve staff satisfaction, although the reduced opportunity to use initiative may reduce staff satisfaction. Therefore, consistency is the most appropriate answer.

The following costs and sales information is available for an organisation which makes and sells plastic buckets. $ Sales revenue 450,000 Direct labour 40,000 Direct materials 125,000 Production overhead 70,000 Other overhead costs 55,000 There was no opening or closing inventory in this period. What is the profit under absorption costing?

Explanation The correct answer is: $160,000. Justification: $ $ Sales revenue 450,000 Direct labour 40,000 Direct materials 125,000 Production overhead 70,000 (235,000) 215,000 Other overhead costs (55,000) Profit 160,000 If you selected an incorrect option please compare your calculation with the correct calculation shown above.

Which one of the following is NOT a cause of losses in a production process?

Explanation The correct answer is: Depreciation Waste, spoilage and evaporation can all cause losses in production processes. Depreciation is an expense that charges the cost of a non-current asset over its useful life.

The cost information below relates to Quick Accounting Co (QAC). Senior accountant salary cost per hour: $80 'Non-senior' accountant salary cost per hour: $60 Overhead absorption rate per salary hour: $10 The fee QAC charges clients for each job is calculated by taking the job cost and adding 30%. Job 577 took 15 senior accountant hours plus 30 non-senior accountant hours. What fee will QAC charge for Job 577?

Explanation The correct answer is: QAC will charge $4,485 for Job 577 $ Senior accountant hours: 15 * $80: 1,200 Non-senior accountant hours: 30 * $60: 1,800 Overhead: 45 * $10: 450 Job cost 3,450 Plus 30%: 30% * $3,450 1,035 Fee: 4,485 If you answered $3,900 you didn't include the overhead If you answered $3,450 you didn't add 30% to the job cost If you answered $2,415 you deducted the mark-up rather than adding it to the cost

Over a week, a truck delivered sand for construction purposes to two customers, Customer A and Customer B. The truck delivered 6 tonnes of sand to Customer A and 4 Tonnes of sand to customer B. Each customer delivery was carried out separately and the truck made no other deliveries in the week. The truck covered a total distance of 600 kilometers over the week and cost $30K to operate over the week.

Explanation: The correct answer is: $5. The cost of carrying one tonne of sand for one kilometer, or the 'cost per tonne-kilometer', is calculated by dividing the operating costs by the total number of tonne-kilometers. The total number of tonne-kilometers is calculated by multiplying the weight delivered by the distance covered. 6 tonnes + 4 tonnes = 10 tonnes, 10 tonnes x 600 km = 6,000 tonne-kilometers, $30,000 / 6,000 = $5 per tonne-kilometer If you chose an incorrect option, compare your calculation with the correct calculation shown above.

Joe is entering a product code, 10467, into a cell. Joe wants the spreadsheet to treat the code as text rather than as a value. When entering the code, what character should Joe precede the code with?

Explanation: The correct answer is: An apostrophe. ' If an apostrophe is entered as the first character in a cell, the cell content is treated as text. If the product code 10467 was entered without an apostrophe, it would be treated as a value and would by default be right aligned. If the product code 10467 was entered preceded by an apostrophe, it would be treated as text and would by default be left aligned.

Two statements about spreadsheets follow: 1. Spreadsheet software is an example of an accountancy software package. 2. Spreadsheet software is general purpose software suited to some management accountancy tasks.

Explanation: The correct answer is: Statement 1 is false, Statement 2 is true. Spreadsheet software is general purpose software able to be applied to a wide range of tasks. Some management accountancy tasks are suited to the use of spreadsheet software, for example producing a basic budget.Specialised accounting software packages are better suited to maintaining accounts and producing financial statements than spreadsheet software is. For example, accountancy software packages include rules that ensure correct double-entry is maintained.

Alex wishes to enter a cell comment in D17. Which one of the following sequence of commands will enable Alex to enter a cell comment in D17?

F5, D17, OK, Right click, Insert comment Explanation: The correct answer is: F5, D17, OK, Right click, Insert comment F5 brings up the GoTo box, entering D17 in the box and clicking OK activates cell D17. Then, right clicking while sitting in the cell brings up a menu that includes the Insert comment option.

Alex wishes to enter a cell comment in cell D17. Which one of the following of commands will enable Alex to enter a cell comment in cell D17.

F5, D17, OK, Right click, Insert comment. F5 brings up the GoTo box, entering D17 in the box and clicking OK activates cell D17. Then, right clicking while sitting in the cell brings up a menu that includes the Insert comment option.

Which branch of accounting includes the systematic recording of the transactions undertaken by an organization?

Financial Accounting because financial accounting is the systematic recording, reporting and analysis of the financial transactions of an organization. Financial reporting focuses on the production of the financial statements. Management accounting is responsible for providing information for internal use to help an organization to operate more effectively. Cost accounting focuses on the collection of costs and their allocation to products, services, inventory or other items.

Which of the following is NOT a main focus of management accounting?

Financial statements because planning, decision making and control are all important activities associated with management accounting. The financial statements are a main focus of financial accounting.

What type of cost is shown in the graph above?

Fixed because when graphing cost per unit, a fixed cost results in a cost per unit that falls initially and then falls rapidly as production increases before reducing at a lower rate. This is shown by a curve that first drops steeply, before flattening out. When graphing total cost, a fixed cost is constant and will be shown with a horizontal line. When graphing cost per unit, a variable cost is constant and will be shown with a horizontal line. When graphing total cost, a variable cost will increase with activity and be shown by a straight line sloping upwards to the right. Mixed or semi-variable costs include both a fixed element and a variable element. With a mixed cost, the total fixed element remains the same for all levels of activity and the fixed cost per unit will therefore decrease as the level of activity increases. The cost per unit of the variable element of a mixed cost remains constant. Therefore, the cost per unit of a mixed cost decreases as the level of activity increases. The rate of reduction in the cost per unit slows down as the level of activity increases, reflecting the reduction in the weighting of the fixed cost element. Stepped costs are fixed over certain ranges of activities. When graphing total cost with a stepped cost, the total remains constant until a certain point when the total cost line takes a vertical step up. When graphing cost per unit with a stepped cost, the cost per unit line drops initially as the level of activity increases, before jumping up at a certain point.

Ali is working on a large spreadsheet. Ali wants the titles entered in rows A to C to remain visible on screen when he scrolls down the worksheet. What spreadsheet feature would enable the titles to remain visible when users scroll down the worksheet?

Freeze Panes. Freeze Panes enables an area of a worksheet to remain visible while the user scrolls through other areas of the worksheet. The Freeze Panes feature is available within the View tab.

Which one of the following is an advantage of a decentralized administration function?

Local offices will have greater control over their own administration. The correct answer is: Local offices will have greater control over their own administration. Under a decentralised administration function, instead of administrative activities being carried out at a centralised head office they are carried out at local offices. This provides local offices with greater control over their own administration. However, a decentralised approach is less likely to provide consistency and will involve duplication of administrative tasks - and a higher overall administration cost. A higher cost is a disadvantage of a decentralised administration function, not an advantage.

Which branch of accounting is concerned with variance analysis.

Management accounting. The correct answer is: Management accounting Variance analysis is a management accounting task. Management accounting is responsible for providing information for internal use to help an organisation to operate more effectively. Financial accounting is the systematic recording, reporting and analysis of the financial transactions of an organisation. Financial reporting focuses on the production of the financial statements. Treasury is concerned with sources of finance and investment.

A data file contains 'standing' or reference data such as customer names and addresses.

Master file. A master file contains 'standing' or reference data, for example customer names and addresses and cumulative transaction data. A transaction file is a file containing records that relate to individual transactions, such as invoices. A spreadsheet file could contain standing data, but a spreadsheet file could also contain many other types of data. The term 'key file' is not widely used in computer systems. A similar term, 'key field' is used to describe the field in a record that contains a unique value or code, for example a customer code.

A publishing company pays an author a fee of $5,000 on delivery of a completed manuscript plus a royalty of $1.50 per book sold.

Mixed or semi-variable because the total cost includes a fixed element (the $5,000 fee) and a variable element (the $1.50 per book sold). Therefore, this is a mixed or semi-variable cost. With fixed costs, total cost remains constant regardless of the level of activity. Stepped costs are fixed over certain ranges of activity. With variable costs, total cost varies directly in proportion with activity.

A management accountant has produced a spreadsheet for use as a template for costing projects. The management accountant wishes to send the spreadsheet to budget holders for them to input the details of their projects. To prevent standard data being accidently changed by other staff, the management accountant wishes to lock cells A14, C14, C32 and D32. In order to lock these cells, the management accountant should first do which of the following?

Select the entire workbook.

Two statements about relative cell references in spreadsheets follow: 1.$D$9 is an example of a relative cell reference. 2. A relative cell reference in a formula changes when the formula is copied to another location.

Statement 1 is false, Statement 2 is true. A relative cell reference contains the column and the row, for example D9. $D$9 is an absolute cell reference. Therefore, statement 1 is false.

What does a cell displaying #########

The cell is not wide enough to display the contents. A series of hashes indicates that the cell is not wide enough to display contents.

Gemma's basic hours are 40 hours per week paid at $30 per hour. Last week Gemma worked 43 hours. The three additional hours worked were due to a specific request from a customer. Overtime is paid at 'time and a half'. What value of Gemma's wages should be treated as a direct cost?

The correct answer is $1,335 As the overtime was worked at the specific request of the customer, the overtime premium is treated as a direct cost. The overtime premium per hour = $30 x 0.5 = $15 per hour Direct wages Basic wages 40 hours @ $30 = $1,200 Basic wages for overtime 3 hours @ $30 = $90 Overtime premium 3 hours @ $15 = $45 Total direct wages $1,335 If you chose $1,200 the mistake you made was to exclude all of the payment for the three additional hours If you chose $1,245 the mistake you made was to exclude the basic pay paid for overtime If you chose $1,290 the mistake you made was to exclude the overtime premium. Overtime premium is classed as an indirect cost unless the overtime is worked at the request of the customer. When overtime is worked due to a specific customer request, it is treated as a direct cost.

Zing Co produces candles in the shape of company logos. A company has ordered 50 candles using the design of their company logo. Zing Co will produce these candles together, in a batch. Costs for the batch of 50 candles are: Direct materials: $60 Direct wages: $40 Overheads: Zing Co absorbs overheads at a rate of 20% of direct wages cost What was the cost per candle in this batch?

The correct answer is $2.16 First, calculate the cost of the batch. To the $100 combined costs of direct materials ($60) and direct wages ($40) we add the absorbed overhead of $8 ($40 * 0.2). This give a batch cost of $108. To find the unit cost (the cost per candle) we divide the batch cost of $108 by the number of candles in the batch, 50. $108 / 50 = $2.16. If you chose an incorrect option, please compare your calculation with the correct calculation shown above.

Yellow Co operates a job costing system and will incur the following costs on Job 322: Direct material: $850 Direct labour: $1,000 Other expenses: $250 Production overhead: $340 If Yellow Co charges $4,500 for Job 322, what is the profit for the job?

The correct answer is: $2,060 Total cost + Profit = Selling price Total cost = 850 + 1,000 + 250 + 340 = $2,440 $4,500 - $2,440 = $2,060 If you chose an incorrect option you failed to deduct one or more of the costs from the revenue of $4,500.

Purple Co has one finishing process. At the start of May 20X7 there was no work in progress. During May 20X7 600 units costing $14,250 were input into the process. Losses were 5% of input and there was no closing work in progress. What was the cost per unit? (to the nearest $)

The correct answer is: $25 Input 600 units, loss (5%) 30 units, output 570 units Total cost of the inputs: $14,250 Cost per unit: $14,250 / 570 = $25 If you chose an incorrect option, compare your calculation with the correct calculation shown above.

A company has over-absorbed fixed production overheads for the month of May 20X8 by $5,000. The fixed production overhead absorption rate for the month was $7 per unit. This rate was based on budgeted output of 5,000 units. Actual output for the month was 4,500 units. What amount of fixed production overheads did the company incur for April 20X8?

The correct answer is: $26,500 Fixed production overheads absorbed: 4,500 x $7 = $31,500 We were told that fixed production overheads were over absorbed by $5,000 Therefore, actual fixed production overheads equal $31,500 - $5,000 = $26,500 If you chose an incorrect option, please compare your calculation with the correct calculation shown above.

The following information relates to raw material X. Date Units Unit price $ Value $ 1 Jan Balance b/f 100 4.00 400 4 Jan Receipt 50 5.00 250 6 Jan Receipt 50 6.00 300 7 Jan Issue 70 Under the FIFO method of inventory valuation, what is the value of the issue on 7 January?

The correct answer is: $280 (70 units @ $4) = $280 Under FIFO, the price(s) of the units of inventory held for the longest period of time is / are used to value inventory issued to production.

The costs incurred by a business at two different levels of activity are shown below. Activity level (units) Total cost ($) 14,000 $400,000 18,000 $430,000

The correct answer is: $295,000 Proof of variable cost. Change in activity: 18,000 - 14,000 = 4,000 units Change in total cost: $430,000 - $400,000 = $30,000 Variable cost per unit: $30,000 / 4,000 = $7.50 Fixed costs = Total cost - Variable costs = $430,000 - (18,000 x $7.50) = $430,000 - $135,000 = $295,000 $30,000 represents the change in total cost between 14,000 units and 18,000 units, so represents the variable cost of 4,000 units $400,000 is the total cost at 14,000 units, so includes both fixed costs and variable costs $135,000 is the total variable cost at 18,000 units

The costs incurred by a business at two different levels of activity are shown below. Activity Level 1 units is 14,000. Activity Level 2 is 18,000 units. Total cost for Activity Level 1 units is $400K. The total cost for Activity Level 2 units is $430K. If the variable costs are identified as $7.50 per unit, what is the value of the fixed costs of the business?

The correct answer is: $295,000 because: Proof of variable cost. Change in activity: 18,000 - 14,000 = 4,000 units Change in total cost: $430,000 - $400,000 = $30,000 Variable cost per unit: $30,000 / 4,000 = $7.50 Fixed costs = Total cost - Variable costs = $430,000 - (18,000 x $7.50) = $430,000 - $135,000 = $295,000 $30,000 represents the change in total cost between 14,000 units and 18,000 units, so represents the variable cost of 4,000 units $400,000 is the total cost at 14,000 units, so includes both fixed costs and variable costs $135,000 is the total variable cost at 18,000 units

Zayd is paid under a piecework scheme. The unit rates applied to each item of good production per week are: Units 1 to 50 units, $2.50 per unit Units 51 to 100, $3.00 per unit Units 101 and above $3.50 per unit Last week, Zayd produced 110 good items. What was Zayd's gross pay for the week?

The correct answer is: $310 (50 x $2.50) + (50 x $3.00) + (10 x $3.50) = $310 If you answered $275, you applied the first rate of $2.50 to all items of production. If you answered $330, you applied the middle rate of $3.00 to all items of production. If you answered $385, you applied the 'top' rate of $3.50 to all items of production.

Budgeted production in a factory for next period is 480 units. Each unit requires 2 labour hours. Labour is paid $30 per hour. 10% of total labour time is idle time. What is the factory's budgeted labour cost for next period?

The correct answer is: $32,000 The cost of productive time: 480 units x 2 labour hours x $30 = $28,800 $28,800 represents 90% of the total labour time and cost, as 10% of labour time is idle Labour cost including idle time = $28,800 / 9 x 10 = $32,000 If you chose an incorrect option, please compare your calculation with the correct calculation shown above.

Red Co has one manufacturing process. At the start of April 20X7 there was no work in progress. During the month, 1,000kg of raw materials which cost $33,000 were input into the process. Losses were 5% of input, conversion costs were $5,000 and there was no closing work in progress. What is the cost per kg for April 20X7 (to the nearest $)?

The correct answer is: $40 Input 1,000kg minus the loss of (5%) 50kg gives output of 950kg The cost of the inputs is $33,000 + $5,000 = $38,000 $38,000 / 950kg = $40 per kg If you chose an incorrect option compare your calculation against the correct calculation shown above.

Red Co has one manufacturing process. At the start of April 20X7 there was no work in progress. During the month, 1,000 kg of raw materials which cost $33,000 were input to the process. Losses were 5% of input, conversion costs were $5,000 and there was no closing work in progress.

The correct answer is: $40. Input 1,000kg minus the loss of (5%) 50kg gives output of 950kg. The cost of the inputs is $33,000 + $5,000 = $38,000. $38,000 / 950kg = $40 per kg. If you chose an incorrect option compare your calculation against the correct calculation shown above.

Over a week, a truck delivered sand for construction purposes to two customers, Customer A and Customer B. The truck delivered 6 tonnes of sand to Customer A and 4 tonnes of sand to Customer B. Each customer delivery was carried out separately and the truck made no other deliveries in the week. The truck covered a total distance of 600 kilometres over the week and cost $30,000 to operate over the week. What was the cost of carrying one tonne of sand for one kilometre in the week?

The correct answer is: $5 The cost of carrying one tonne of sand for one kilometre, or the 'cost per tonne-kilometre', is calculated by dividing the operating costs by the total number of tonne-kilometres. The total number of tonne-kilometres is calculated by multiplying the weight delivered by the distance covered. 6 tonnes + 4 tonnes = 10 tonnes 10 tonnes x 600km = 6,000 tonne-kilometres $30,000 / 6,000 = $5 per tonne-kilometre If you chose an incorrect option, compare your calculation with the correct calculation shown above.

X Furniture (XF) manufactures items of furniture to specific customer orders. XF calculates the price to charge a customer for a particular job by taking the total of the job's prime cost plus overheads, and then adding 40%. The customer for job number XF772 paid $1,400. The job incurred overheads of $120. What was the prime cost of job XF772?

The correct answer is: $880 $ Customer paid: 1,400 Less profit margin: (1,400 / 140 * 40) 400 Total cost of job: 1,000 Less overhead: 120 Prime cost: 880 If you chose an incorrect option, compare your calculation with the correct calculation shown above.

A company has 200 kilograms of raw material in inventory. 120kg of this inventory has been allocated to a customer order. The company are waiting for delivery of 50kg of material which has been ordered but has not yet been received from the supplier. What is the free inventory?

The correct answer is: 130kg Free inventory is calculated as: Inventory in store + inventory on order - inventory scheduled for use 200kg + 50kg - 120kg = 130kg The option 30kg subtracts inventory on order, rather than adding. The option 250kg adds inventory on order but fails to subtract inventory scheduled for use. The option 270kg subtracts (instead of adds) inventory on order and adds (instead of subtracts) inventory scheduled for use

What is the correct formula to add the values in B12 and C13 and then multiply the result by the value in C25?

The correct answer is: =(B12+C13)*C25 The correct symbol for multiplication in a spreadsheet formula is '*' and the correct symbol for division is '/'. Brackets are required in this formula to instruct the spreadsheet to perform the addition operation before the multiplication operation.

Hannah is working in a spreadsheet which contains the value of total sales for the year 20X7 in cell D70. Hannah has been instructed to calculate the 20X8 forecast sales figure, in cell F70, by adding 7.5% to the 20X7 total sales figure. Which one of the following would calculate the correct figure

The correct answer is: =D70*1.075 The formula =D70*1.075 will calculate a figure that adds 7.5% to the value in cell D70.

Which one of the following statements describes a fixed cost?

The correct answer is: A cost that is constant in total regardless of the level of activity A fixed cost is not necessarily easy to control in the long-term. For example, factory rent is fixed for the period of the lease agreement, but when the agreement expires the building owner may attempt to increase the rent. The total cost of a fixed cost is constant regardless of the level of activity. A cost with a total cost that changes in proportion with the level of activity is a variable cost. A cost with a constant cost per unit at varying levels of activity is also a variable cost.

Joe is entering a product code, 10467, into a cell. Joe wants the spreadsheet to treat the code as text rather than as a value. When entering the code, what character should Joe precede the code with?

The correct answer is: An apostrophe ' If an apostrophe is entered as the first character in a cell, the cell content is treated as text. If the product code 10467 was entered without an apostrophe, it would be treated as a value and would by default be right aligned. If the product code 10467 was entered preceded by an apostrophe, it would be treated as text and would by default be left aligned.

Which one of the following individuals are most likely to be paid using a piecemeal rate?

The correct answer is: An individual operating a sewing machine producing jeans Piecemeal remuneration involves paying a worker per item produced. This approach is most appropriate when the work involved is the same for each item, and the process and the pace of work is largely able to be controlled by the individual. Of the options provided, this most closely matches the situation of an individual operating a sewing machine producing jeans.

Which one of the following departments would NOT be treated as a service centre in a factory producing tables?

The correct answer is: Assembly department In a factory, a service department would be part of the factory operations but would not be directly involved in the production process. In a factory producing tables, the assembly department would be directly involved in the production process. The other departments mentioned are part of the operation of the factory, but are not directly involved in production.

Two statements relating to inventory follow. An organisation which counts inventory on the same date each year is operating a perpetual inventory system. Information shown on an inventory bin card includes the monetary value of inventory held.

The correct answer is: Both statements are false A perpetual inventory system involves continuously updating the number of items held in inventory. A periodic inventory system involves counting inventory on a specific date, usually annually. An inventory bin card records the number of items held, but does not usually include the monetary value of inventory held.

Two statements relating to overheads follow. 1. The procedure under which overheads are spread fairly across different cost centres is known as absorption. 2. Over-absorbed overhead occurs when actual overhead is greater than absorbed overhead.

The correct answer is: Both statements are false The procedure under which overheads are spread fairly across different cost centres is known as apportionment. Over-absorbed overhead occurs when actual overhead is less than absorbed overhead. When this occurs, more overhead has been charged to production than should have been. The three stages of calculating the costs of overheads to be charged to manufactured output are allocation, apportionment and absorption. Allocation involves charging overheads directly to specific production and service departments. If overheads relate to more than one specific department, then they must then be shared or apportioned between these departments on a fair basis. The final step is to absorb overhead costs into products.

Which of the following is a benefit an organisation is likely to experience from introducing a policies and procedures manual?

The correct answer is: Consistency A policies and procedures manual should result in staff using the same approach to work tasks. This increases consistency. A policies and procedures manual is likely to reduce flexibility and may hinder innovation as the manual requires staff to act in accordance with the published policies and procedures rather than using their initiative. The guidance provided by the manual may improve staff satisfaction, although the reduced opportunity to use initiative may reduce staff satisfaction. Therefore, consistency is the most appropriate answer.

In an integrated accounting system what is the correct entry to record direct labour costs?

The correct answer is: Debit Work in progress, Credit Wages Direct labour costs represent the costs incurred by individuals working directly on the product. Direct labour cost is charged to the cost of the product by debiting work in progress. The credit side of the entry is to the wages control account. This credit entry will be 'cleared' from the wages control account when payment is made to workers - a debit to the wages control account and a credit to cash / bank.

Which one of the following could be achieved through the use of the Auto Fill feature?

The correct answer is: Extend a sequential series of data To use Auto Fill, you first select the cells that contain what it is you wish to extend, for example a data series. Then, to extend the series, you drag the 'fill handle' to include the cells you wish to fill. The fill handle is the little black square in the lower-right corner of the selected range.

Alex wishes to enter a cell comment in cell D17. Which one of the following sequence of commands will enable Alex to enter a cell comment in cell D17?

The correct answer is: F5, D17, OK, Right click, Insert comment F5 brings up the GoTo box, entering D17 in the box and clicking OK activates cell D17. Then, right clicking while sitting in the cell brings up a menu that includes the Insert comment option.

An organisation uses the following coding system. Activity 01 Preparation 02 Production 03 Inspection Cost A Direct materials B Direct labour Which type of coding system is this?

The correct answer is: Faceted A faceted code is broken down into facets (or groups), each of which represents a different characteristic. A hierarchical coding system is broken down into groups, with each classification representing a subset of the previous classification. The code grows in length as more detail is provided. Sequential (or progressive) coding systems allocate a standard numeric code to each item in a sequence. A mnemonic coding system uses an abbreviation or other memory trigger to help identify the meaning of the code. Of the options provided, faceted is the best answer. Note that this system could also be considered to be a block system, as similar items are grouped in blocks.

Ali is working on a large spreadsheet. Ali wants the titles entered in rows A to C to remain visible on screen when he scrolls down the worksheet. What spreadsheet feature would enable the titles to remain visible when users scroll down the worksheet?

The correct answer is: Freeze Panes Freeze Panes enables an area of a worksheet to remain visible while the user scrolls through other areas of the worksheet. The Freeze Panes feature is available within the View tab.

An organisation uses the following coding system. 8 = Table 81 = Four legged table 82 = Six legged table 811 = Four legged pine table 812 = Four legged oak table Which type of coding system is this?

The correct answer is: Hierarchical A hierarchical coding system is broken down into groups, with each classification representing a subset of the previous classification. The code grows in length as more detail is provided. Sequential (or progressive) coding systems allocate a standard numeric code to each item in a sequence. Block (or group classification) coding systems group similar items together in a block. A mnemonic coding system uses an abbreviation or other memory trigger to help identify the meaning of the code.

Which one of the following is an advantage of a decentralised administration function?

The correct answer is: Local offices will have greater control over their own administration. Under a decentralised administration function, instead of administrative activities being carried out at a centralised head office they are carried out at local offices. This provides local offices with greater control over their own administration. However, a decentralised approach is less likely to provide consistency and will involve duplication of administrative tasks - and a higher overall administration cost. A higher cost is a disadvantage of a decentralised administration function, not an advantage.

Which branch of accounting is concerned with variance analysis?

The correct answer is: Management accounting Variance analysis is a management accounting task. Management accounting is responsible for providing information for internal use to help an organisation to operate more effectively. Financial accounting is the systematic recording, reporting and analysis of the financial transactions of an organisation. Financial reporting focuses on the production of the financial statements. Treasury is concerned with sources of finance and investment.

A publishing company pays an author a fee of $5,000 on delivery of a completed manuscript plus a royalty of $1.50 per book sold. What type of cost does this expense represent?

The correct answer is: Mixed or semi-variable The total cost includes a fixed element (the $5,000 fee) and a variable element (the $1.50 per book sold). Therefore, this is a mixed or semi-variable cost. With fixed costs, total cost remains constant regardless of the level of activity. Stepped costs are fixed over certain ranges of activity. With variable costs, total cost varies directly in proportion with activity.

Which costing method is appropriate when it is not possible to identify separate units of production?

The correct answer is: Process Process costing appropriate when it is not possible to identify separate units of production. Process costing is used when a large volume of output is produced through a continuous process, for example, oil refining. The continuous flow of indistinguishable output means it is not practical to identify separate units of output. Job costing is an appropriate system for deriving the cost of unique or specific customer orders. Batch costing is similar to job costing, except that each batch is treated as a single cost unit and therefore consists of several items. Marginal costing is an approach which may be used with job, batch and process costing. The marginal cost of an item excludes fixed production overheads (which is how marginal costing differs from absorption costing, which may also be used with job, batch and process costing).

Which one of the following documents is NOT part of the materials control cycle?

The correct answer is: Remittance advice. The materials control cycle is concerned with the flow of materials through the organisation from when materials are requisitioned to when materials become part of finished goods. A remittance advice provides information relating to a payment made. This is outside the materials control cycle.

Two statement relating to organizational policies and procedures are shown below. Is each statement true or false?: 1. A documented procedure provides a guide to be followed in a given set of circumstances. 2. A documented procedure usually contains more detail than a documented policy.

The correct answer is: Statement 1 is false, Statement 2 is true. A documented procedure is a sequence of steps for completing a specific activity. It is a documented policy that provides a guide to be followed in a given set of circumstances. A documented procedure usually contains more detail than a documented policy, as the procedure incudes step-by-step instructions.

Two statements relating to organisational policies and procedures are shown below. A documented procedure provides a guide to be followed in a given set of circumstances. A documented procedure usually contains more detail than a documented policy. Is each statement true or false?

The correct answer is: Statement 1 is false, Statement 2 is true. A documented procedure is a sequence of steps for completing a specific activity. It is a documented policy that provides a guide to be followed in a given set of circumstances. A documented procedure usually contains more detail than a documented policy, as the procedure incudes step-by-step instructions.

Two statements about relative cell references in spreadsheets follow. $D$9 is an example of a relative cell reference. A relative cell reference in a formula changes when the formula is copied to another location. Is each statement true or false?

The correct answer is: Statement 1 is false, Statement 2 is true. A relative cell reference contains the column and the row, for example D9. $D$9 is an absolute cell reference. Therefore, statement 1 is false. A relative cell reference changes when a spreadsheet formula is copied from one cell to another. For example, if the formula =SUM(D6:D9) in cell D10 of a spreadsheet was copied to cell E10, the formula in cell E10 becomes =SUM(E6:E9). Therefore, statement 2 is true.

Two statements relevant to job costing and batch costing are shown below. Job costing is not suitable for use in service organisations. Batch costing is used when a number of identical products are manufactured together. Is each statement true or false?

The correct answer is: Statement 1 is false, Statement 2 is true. Job costing is used to cost jobs that relate to a specific order or contract. Work is performed in line with the client's or customer's instructions. The 'job' could involve a physical product or could involve delivery of a service. Batch costing is used in situations where the cost of making a product is calculated for multiple identical products by the batch or group, rather than by individual items.

Two statements about spreadsheets follow. Spreadsheet software is an example of an accountancy software package. Spreadsheet software is general purpose software suited to some management accountancy tasks. Is each statement true or false?

The correct answer is: Statement 1 is false, Statement 2 is true. Spreadsheet software is general purpose software able to be applied to a wide range of tasks. Some management accountancy tasks are suited to the use of spreadsheet software, for example producing a basic budget. Specialised accountancy software packages are better suited to maintaining accounts and producing financial statements than spreadsheet software is. For example, accountancy software packages include rules that ensure correct double-entry is maintained.

Two statements about spreadsheets follow. $A$4 is an absolute cell reference. If a formula contains an absolute cell reference the formula is unable to be copied. Is each statement true or false?

The correct answer is: Statement 1 is true, Statement 2 is false $A$4 is an absolute cell reference, as shown by the $ signs before the column reference 'A' and the row reference '4'. A formula that contains an absolute cell reference is able to be copied. When the formula is copied, an absolute cell reference does not change, the cell referred to remains the same.

Two statements relating to integrated and interlocking accounting systems are shown below. An integrated system has one system of ledger accounts which is used for cost accounting and for financial accounting. An interlocking system has three separate systems of ledger accounts used for cash accounting, cost accounting and financial accounting. Is each statement true or false?

The correct answer is: Statement 1 is true, Statement 2 is false. An integrated system has one set of ledger accounts used for both cost accounting and financial accounting. An interlocking system has two separate ledgers one used for cost accounting and one used for financial accounting.

Which of the following members of staff is most likely to raise a goods received note?

The correct answer is: Stores manager A goods received note is raised and completed when a delivery of goods or materials is made. Goods or materials are most likely to be received by a member of staff working in stores. Therefore, of the four individuals listed, the stores manager is most likely to raise a goods received note.

Which one of the following statements correctly defines the term 'overtime premium'?

The correct answer is: The amount of the additional payment received for working overtime generated by receiving a higher hourly rate. The overtime premium is the amount of the additional payment generated by receiving a higher hourly rate. For example, if overtime is worked but is paid at the standard hourly rate there is an overtime cost but the overtime premium is nil.

Which one of the following statements correctly defines the term 'equivalent units'?

The correct answer is: The number of whole completed units represented by incomplete work Equivalent units are the number of whole completed units represented by incomplete work. For example, 20 partially completed units of output that are 10% complete represent two equivalent units (20 x 10% = 2).

What is the main purpose of a Goods Received Note (GRN)?

The correct answer is: To confirm the quantity and condition of goods inwards. A goods received note is a document issued to confirm delivery and receipt of goods when they are received.

What is the main purpose of an organisation chart?

The correct answer is: To show authority and communication lines An organisation chart shows levels of authority, communication flows and reporting channels within an organisation.

A publishing company pays an author a royalty of $3 per book sold. What type of cost does this royalty expense represent?

The correct answer is: Variable The total cost or royalty payment changes in the same proportion as activity (activity being the number of books sold). Therefore, this is a variable cost. Mixed or semi-variable costs include both a fixed element and a variable element. With fixed costs, total cost remains constant regardless of the level of activity. Stepped costs are fixed over certain ranges of activities.

Activity in units: 1,000 4,000 7,000 10,000 50,000 Cost per unit: $10 $10 $10 $10 $10 What type of cost do the figures above represent?

The correct answer is: Variable. With variable costs, the cost per unit remains constant as the level of activity increases. Therefore, the figures in this question show a variable cost. With variable costs it is total cost that increases as the level of activity increases. With fixed costs, the cost per unit decreases as the level of activity increases (and total cost remains constant). Mixed or semi-variable costs include both a fixed element and a variable element. With a mixed cost, the total fixed element remains the same for all levels of activity and the fixed cost per unit will therefore decrease as the level of activity increases. The cost per unit of the variable element of a mixed cost remains constant. Therefore, the cost per unit of a mixed cost decreases as the level of activity increases. The rate of reduction in the cost per unit slows down as the level of activity increases, reflecting the reduction in the weighting of the fixed cost element. Stepped costs are fixed over certain ranges of activities. The total cost remains constant across a range of activity, until a point is reached when the total cost jumps up a step. The cost per unit drops initially as the level of activity increases, before jumping up at a certain point.

The sales manager has requested a visual representation of the company's total revenue over the past five years, including actual and budget figures. The sales manager wishes to be able to identify the overall trend. Which of the following would best meet the sales manager's requirements?

The overall trend would be most apparent with a line graph.

What is the main purpose of an organization chart?

To show the authority and communication lines because an organization chart shows levels of authority, communication flows and reporting channels within an organization.

A publishing company pays an author a royalty of $3 per book sold. What type of cost does this royalty expense represent?

Variable because the total cost or royalty payment changes in the same proportion as activity (activity being the number of books sold). Therefore, this is a variable cost. Mixed or semi-variable costs include both a fixed element and a variable element. With fixed costs, total cost remains constant regardless of the level of activity. Stepped costs are fixed over certain ranges of activities.

Activity in units to Cost per unit: 1,000 units = $10 per unit, 4000 units = $10 per unit, 7,000 units = $10 per unit, 50,000 units = $10 per unit. What type of cost do the figures above represent?

Variable because with variable costs, the cost per unit remains constant as the level of activity increases. Therefore, the figures in this question show a variable cost. With variable costs it is total cost that increases as the level of activity increases. With fixed costs, the cost per unit decreases as the level of activity increases (and total cost remains constant). Mixed or semi-variable costs include both a fixed element and a variable element. With a mixed cost, the total fixed element remains the same for all levels of activity and the fixed cost per unit will therefore decrease as the level of activity increases. The cost per unit of the variable element of a mixed cost remains constant. Therefore, the cost per unit of a mixed cost decreases as the level of activity increases. The rate of reduction in the cost per unit slows down as the level of activity increases, reflecting the reduction in the weighting of the fixed cost element. Stepped costs are fixed over certain ranges of activities. The total cost remains constant across a range of activity, until a point is reached when the total cost jumps up a step. The cost per unit drops initially as the level of activity increases, before jumping up at a certain point.