ACC 222 Exam 1

A ________________ is used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is also known as overhead rate. A. Absorption rate B. Normal cost rate C. Cost driver rate D. Application rate

A

A cost centre is A. an area for which costs are accumulated B. the part of the business where all costs are paid to suppliers C. a production department where all production costs are aggregated D. an area of the business accountable for both costs and revenues

A

According to __________ balance sheet layout, in the standard layout, assets are presented starting with noncurrent followed by current, and equity is presented first, followed by noncurrent liabilities and current liabilities. It is more common in the UK. A. from least liquid to most liquid B. from most liquid to least liquid

A

In the cash flow statement, ________ include acquiring and selling securities that are not cash equivalents, productive assets that are expected to benefit the firm for long periods of time and lending money and collecting on loans A. investing B. operating C. financing D. none

A

It is a method of allocating costs to homogeneous products by averaging costs over large numbers of nearly identical products. Chemical, oil, plastics, mining, cement, food processing, and glass industries use A. Process costing B. Normal costing C. Job Order costing D. Hybrid costing

A

Prime cost can be defined as: A. the total direct costs of manufacturing a product B. the cost of the first stage of the manufacture of a product C. the total costs of manufacturing a product D. the total costs of operating the production department where the product is made

A

The salary paid to the president of a company would be classified on the income statement as a(n): A. administrative expense B. direct labor cost C. manufacturing overhead cost D. selling expense

A

Which one of the following items is relatively unimportant in decision making? A. accruals and prepayments B. net cash flow C. relevant costs D. opportunity costs

A

__________ is a document that shows the quantity of each type of direct material required to make a product. A. bill of materials B. job cost sheet C. time ticket

A

According to _________ balance sheet layout, assets are presented starting with current followed by non-current. Liabilities start with current and non-current, then followed by equity. It is more common in the USA. A. from least liquid to most liquid B. from most liquid to least liquid

B

Contribution margin is: A. sales less cost of goods sold B. sales less variable production, variable selling, and variable administrative expenses C. sales less variable production expense D. sales less all variable and fixed expense

B

In the cash flow statement, ________ include delivering or producing goods for sale and providing services and the cash effects of transactions and other events that enter into the determination of net income A. investing B. operating C. financing D. none

B

Under-recovery (underapplied) of overheads occurs when: A. the basis of apportioning overheads has changed during the period B. the overhead charged to production is lower than the actual overhead incurred C. the actual overhead incurred is less than the overhead that has been charged to production D. actual overheads have fallen in relation to what they were expected to be

B

Which costs may normally be ignored when determining whether to close a factory for a short period? A. total costs B. fixed costs C. variable costs D. opportunity csots

B

Which is true for the balance sheet? A. it reports the income and expenses of the company during a particular period of time, generally a year or a quarter B. it reports the financial position of the company at a given point of time, such as of December 31, 20XX. Therefore, it is also called as the 'snapshot' of the company in a specific time

B

Which of the following is true of an Activity-Based Costing (ABC) system? A. will be less detailed than an absorption costing system B. will provide a more accurate apportionment of overheads to products than absorption costing C. is easier to administer than an absorption costing system D. will cost less to administer than an absorption costing system

B

Which of the following is true? A. Absorption rates will change continuously to reflect changes in output and costs B. Overhead absorption rates will normally be based on estimates of what costs are expected to be C. Once set, overhead absorption rates will not change from one year to the next D. Overhead absorption rates will only be calculated when all actual costs are known

B

Which of the following would most likely not be included as manufacturing overhead in a furniture factory? A. the cost of the glue in a chair B. the amount paid to the individual who stains a chair C. the workman's compensation insurance of the supervisor who oversees production D. the factory utilities of the department in which production takes place

B

__________ is a form that records the direct materials, direct labor, and manufacturing overhead cost charged to a job. A. time ticket B. job cost sheet C. bill of materials

B

A ___________ is a ___________ in which each financial statement account is expressed as a percentage. A. comparative financial statement, horizontal analysis B. common-size financial statement, horizontal analysis C. common-size financial statement, vertical analysis D. comparative financial statement, vertical analysis

C

An example of a production overhead would be" A. direct materials B. corporate headquarter rent C. factory manager's supervisory costs D. direct labor costs

C

In contrast to traditional costing, _______________ is allocating the overhead cost by creating overhead rates based on activities that company performs A. Absorption costing B. Normal costing C. ABC (Activity Based Costing) D. Service Costing

C

In the cash flow statement, _________ include borrowing from creditors and repaying the principal of debt and obtaining resources from owners and providing them with a return on investment. A. investing B. operating C. financing D. none

C

It is a common type of absorption costing system and it is a method of allocating costs to heterogeneous products are are readily identified by individual units, batches, etc. Construction, furniture, aircraft, and service industries commonly use A. Process costing B. Normal costing C. Job costing D. Activity-Based costing

C

Manufacturing overhead includes: A. all direct material, direct labor, and administrative costs B. all manufacturing costs except direct labor C. all manufacturing costs except direct labor and direct materials D. all selling and administrative costs

C

Overhead absorption exercises will be most useful where: A. a departmental manager will be held responsible for the costs that are apportioned to them B. the market determines the selling price of a product (target costing or market-based pricing) C. selling prices can be based on costs (cost plus pricing or full cost pricing) D. the total direct cost of a department is needed

C

Product costs that have become expenses can be found in: A. period costs B. selling expenses C. cost of goods sold D. administrative expenses

C

What does a management accountant mean by control? A. the ability to ensure budgetary targets are met B. the ability to discipline staff for inefficiency C. the ability to implement policies in order to gain economic benefits D. the ability to ensure an entity does what a management accountant recommends

C

Which changes in the balance sheet accounts do indicate cash inflow? A. increase in asset account, increase in liability account, increase in equity B. increase asset, decrease liability, decrease equity C. decrease asset, increase liability, increase equity D. decrease asset, increase liability, decrease equity

C

Which of the follow is not true? A. Management accounting analyses incorporate forecasted data B. Management accounting information is primarily prepared for internal use C. Management accounting practices are laid down by the Accounting Standards Board D. Qualitative data are an important element of a management accounting exercise

C

Which of the following best describes total fixed cost? A. has a direct relationship with output B. represents a fixed proportion of total costs C. remains constant irrespective of the level of activity D. increases proportionately with output

C

Which one of the following items is NOT a management accounting function? A. Financial management B. Internal auditing C. Purchasing D. Decision-making

C

________ is a document that is used to record the amount of time an employee spends on various activities A. bill of materials B. job cost sheet C. time ticket

C

A strategic plan may best be described as A. a detailed short term plan B. a detailed long term plan C. a broad short term plan D. a broad long term plan

D

Absorption costing is closely related to which of the following cost elements? A. direct labour B. direct material C. prime costs D. overheads

D

As a company's management accountant you would be primarily concerned with: A. providing information to shareholders on how the management is doing B. The annual reporting of financial performance C. the reporting of past data D. preparing plans and forecasts for the future activities of the business

D

Common cost is a type of ________ A. prime cost B. direct material cost C. direct labour cost D. indirect cost

D

In ______________ system, all manufacturing costs - direct material, direct labor, and fixed and variable manufacturing overhead - are assigned to units of products. A. job order costing B. activity-based costing C. process costing D. absorption costing

D

The Balance Sheet is also called ___________. A. asset and liability statement B. asset, liability, and equity statement C. retained earnings statement D. statement of financial position

D

The __________ is a summary of the cash receipts and payments over the period concerned. The statement is basically an analysis of the business's cash (and cash equivalents) movements for the period A. statement of the financial position B. profit or loss statement C. statement of retained earnings D. statement of cash flows

D

Which of the following cost classification categories is almost identical to a relevant cost? A. sunk cost B. opportunity cost C. committed cost D. avoidable cost

D

Which one of the following behavior patterns is inappropriate for a management accountant? A. Prepared to listen B. Diplomatic C. Helpful D. Condescending

D

__________ are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes of value. They are held for the purpose to meeting short-term cash commitments rather than for investment or other purposes. A. trade receivable B. account receivable C. marketable securities D. cash equivalents

D

True or false: In determining whether a company's financial condition is improving or deteriorating over time, vertical analysis of financial statement data would be more useful than horizontal analysis.

False

True or false: the direct method of the statement of cash flows is more popular than the indirect method. Many businesses adopt the direct method.

False

True or False: The cost driver is a factor, such as a machine hour, labor house, beds occupied, etc., that causes overhead costs

True

True or false: Vertical analysis of financial statements is accomplished by preparing common-size statements

True

True or false: is the income statement also called profit and loss statement?

True