Final Exam

If a company uses a process costing system to account for the costs in its five production departments, how many work in process accounts will it use?

5

Compute the yield as a percentage rounded to two digits after the decimal, assuming 110 pounds of tea entered the Packaging Department and 103 pounds of tea were packaged.

93.64%

A job order cost system can be used by managers for

All of these are correct. cost evaluation control decision making

All of the following are ways in which cost-volume-profit analysis may be used except when

All of these may be used. analyzing the effects of changes in costs on profits analyzing the effects of changes in volume on profits analyzing the effects of changes in selling prices on profits

Under the indirect method of cash flow, depreciation expense is deducted from the net income.

False

The journal entry to recognize depreciation on machinery would include a

debit to Factory Overhead.

If the unit selling price increases, then the break-even point

decreases

Under the indirect method, increases in noncash current operating assets are

deducted from net income

The two categories of cost comprising conversion costs are

direct labor and factory overhead

The cost of a manufactured product generally consists of which of the following costs?

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

Which of the following is a product cost?

drill bits for a drill press used in the plant assembly area

Boston Consulting Group (BGG) believes that the use of advanced robotics in manufacturing will

drive a 10 to 30 percent increase in manufacturing.

The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of

equivalent units

Contribution margin is the

excess of sales over variable costs

The quantity of the material output divided by the quantity of the material input gives you the

yield

In addition to the financial statements and the accompanying notes, corporate annual reports normally include which of the following sections?

All of these are correct. Management Discussion and Analysis Report on Internal Control Report on Fairness of the Financial Statements

Which of the following is a primary assumption in a cost-volume-profit analysis?

All of these are correct. Total sales and total costs can be represented by straight lines. There is no change in the inventory quantities during the period. Costs can be divided into fixed and variable components.

Process and job order cost systems are similar in that each system

All of these choices are correct. records and summarizes product costs. classifies product costs as direct materials, direct labor, and factory overhead. allocates factory overhead costs to products.

What is the primary criterion for the preparation of managerial accounting reports?

manager needs

In lean manufacturing, processing functions are combined into work centers, sometimes called

manufacturing cell

The document authorizing the issuance of materials from the storeroom is a

materials requisition

The order of presentation of activities on the statement of cash flows is

operating, investing, and financing

Which of the following are basic phases of the management process?

planning and controlling

Managerial accounting reports are

prepared according to management needs

Which of the following is most associated with financial accounting?

prepared in accordance with GAAP

The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is

process

The two main types of cost accounting systems for manufacturing businesses are the __________ cost system and the __________ cost system.

process; job order

In process cost accounting, the costs of direct materials and direct labor are charged directly to

processing departments

Which of the following is the correct flow of manufacturing costs?

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

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a

receiving report

Which of the following is a period cost?

salary of telephone receptionist in the sales office

In a common-sized income statement, 100% is the

sales

In a vertical analysis, the base for cost of goods sold is

sales

For which of the following businesses would a process cost system be appropriate?

shampoo manufacturer

The ability of a business to pay its debts as they come due and to earn a reasonable net income is

solvency and profitability

Which of the following is not one of the four basic financial statements?

statement of changes in financial position

In the statement of cash flows prepared by the indirect method, the sum of net cash flows used for operating activities, investing activities, and financing activities is equal to

the net increase or decrease of cash

All of the following are characteristics of a process cost system except

the system accumulates costs per job

Which of the following would record the labor costs to an individual job?

time tickets

On a common-sized balance sheet, 100% is

total assets

The cost per equivalent unit is determined by dividing the __________ by the

total production costs; total equivalent units of production

Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are

useful analytical measures

Which type of chart plots only a profit line rather than sales and cost lines?

Profit-volume chart

The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and

factory overhead

Cash flows from (used for) _____ activities are the cash flows received from or used for transactions that affect the debt and equity of the company.

financing

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

financing activities

Costs that remain the same in total dollar amount as the activity base changes are called

fixed costs

Costs that have characteristics of both a variable cost and a fixed cost are called

mixed costs

Users typically evaluate financial statement information along all of the following dimensions except _____.

objectivity

Which of the following most likely uses a process cost system?

Oil refinery

Which of the following is not true in regards to direct materials for a bakery?

Paper cupcake liners, that become part of the product, must be accounted for as direct materials.

Which of the following statements is false?

There is no overlap between financial and managerial accounting.

The difference between contribution margin and income from operations is

fixed costs

For which of the following businesses would the job order cost system be appropriate?

hospital

When the fixed cost increases, the break-even point

increases

Cash flows from (used for) _____ activities are the cash flows received from or used for transactions that affect investments in the noncurrent assets of the company.

investing

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

issuance of long-term debt

Financing activities include

issuing debt

A __________ cost system provides product costs for each quantity of product that is manufactured.

job order

Which of the following are the two main types of cost accounting systems for manufacturing operations?

job order cost and process cost systems

A job order cost accounting system accumulates and records product costs by

jobs

A management approach that focuses on reducing time and cost and eliminating poor quality is known as

just-in-time processing

A company's ability to convert assets into cash is called _____.

liquidity

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

make a better comparison of two companies of different sizes in the same industry

The primary goal of managerial accounting is to provide information to

management

Typical items included in the MD&A include all the following except

management's assessment of the effectiveness of internal controls over financial reporting.

Which of the following is most associated with managerial accounting?

may rely on estimates and forecasts

Cash flows from (used for) _____ activities are the cash flows from transactions that affect the net income of a company.

operating

Costs that vary in proportion to changes in the activity base are called

variable costs

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

vertical analysis

Under the __________ method, all production costs (materials and conversion costs) are combined together for determining equivalent units and cost per equivalent unit.

weighted average cost

What will be required of the workforce to use robotics?

To learn new skills.

Service businesses such as hotels, taxi services, and newspapers cannot practically apply a job order cost accounting system.

True

Russell Corporation had the following activities: Recorded depreciation of $5,000. Purchased $10,000 of equipment with cash. Paid $4,000 in interest payments. Received $8,000 cash for the sale of an asset. What is the amount of net cash flows from (used for) investing activities?

$(2,000)

Russell Corporation had the following activities: Recorded depreciation of $5,000. Received cash from the sale of common stock, $20,000. Purchased $10,000 of equipment with cash. Paid $4,000 income tax. Received $8,000 cash for the sale of an asset. Paid cash dividends, $10,000. What is the amount of net cash flows from (used for) financing activities?

$10,000

In the statement of cash flows prepared by the indirect method, Alpha Inc. reports a net increase in cash of $35,000. If the beginning cash balance is $4,500, the ending cash balance is equal to

$39,500

The sales mix is the relative distribution of sales among the products sold by a company.

True

Which of the following analytical methods expresses all financial statement items as percentages, with no dollar amounts shown?

Common-sized statements

What must Twitter do to keep expanding?

Continue to make significant investments.

In a process cost system, the amount of work in process inventory is valued by

allocating departmental costs between completed and partially completed units

Which of the following measures a company's ability to pay its current liabilities?

current ratio

In order to be useful to managers, managerial accounting reports should possess all of the following characteristics except

be prepared in accordance with generally accepted accounting principles

Process and job order cost systems are similar in all of the following ways except

both use job order cost cards

The statement of cash flows is not useful for

calculating the net worth of a company

Horizontal analysis of comparative financial statements includes

calculation of dollar amount changes and percentage changes from the previous to the current year

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports

cash at the end of the year

​Which of the following would not be on the statement of cash flows?

cash flows from contingent activities

Which of the following can be found on the statement of cash flows?

cash flows from operating activities

On the statement of cash flows, the cash flows from operating activities section would include

cash receipts from sales activities

A balance sheet that displays only component percentages is a

common-sized balance sheet

A company's operating leverage is computed as

contribution margin divided by income from operations

The journal entry to apply overhead for the month would include a

credit to Factory Overhead

The journal entry to record the direct materials used for the month would include a

credit to Materials

The journal entry to record the transfer from work in process to finished goods would include a debit to

Finished Goods.

Break-even sales in units is computed as

Fixed Costs ÷ Unit Contribution Margin

Which of the following analytical methods involve the analysis of increases and decreases in the amount and percentage of comparative financial statement items?

Horizontal analysis

Which of the following is not a characteristic of a job order costing system?

It accumulates cost for each department within the factory.

The journal entry to record the direct labor costs for the month would include a debit to

Work in Process

What was the first year that Twitter showed a positive net change for the year?

Year 2

Which of the following would most likely use a job order costing system?

a swimming pool installer