EXTRA
Which of the following would be most likely to use process costing? a. lawn fertilizer manufacturer b. auto body repair shop c. custom furniture manufacturer d. law firm
A
prime costs
Direct Materials + Direct Labor
Which of the following costs are not included in finished goods inventory? a. chief financial officer's salary b. factory overhead c. direct materials d. direct labor
a
Dividends per share measures
a. the extent to which earnings are being distributed to common shareholders.
Which of the following is an example of direct materials cost for an automobile manufacturer?
cost of interior upholstery
return on total assets
*** income + interest expense / avg total assets 27.8%
In addition to the financial statements and the accompanying notes, corporate annual reports normally include which of the following sections?
- Management Discussion and Analysis - Report on Internal Control - Report on Fairness of the Financial Statements
basic phases of the management process
- planning - directing - controlling - improving - decision making
period costs
- selling expenses (marketing) and delivery - admin: managing the company
Compute conversion costs given the following data: direct materials, $360,000; direct labor, $198,900; factory overhead, $220,400 and selling expenses, $42,800.
419,300 conversion cost = direct labor and factory overhead costs
number of days' sales in inventory
57.8 avg inventory / avg daily cost of goods sold
Managerial accountants could prepare all of the following reports except a(n) a. annual report for external regulators such as the SEC b. control report comparing direct material usage over time c. sales report targeting monthly sales and potential bonuses d. performance report identifying amounts of scrap
A
Which of the following is not a reason a service firm would use a job order costing system? a. to determine department costs within the firm b. to determine profit c. to help control costs d. to determine client billing
A
Which of the following is not true in regard to direct materials for a bakery? a. Paper cupcake liners, that become part of the product, must be accounted for as direct materials. b. Flour and sugar would probably be direct materials. c. Eggs would probably be a direct material. d. Oil to lubricate factory machines would not be a direct material.
A
Management Discussion and Analysis (MD & A)
An annual report disclosure that provides management's analysis of the results of operations and financial condition.
number of days' sales in receivables
Average Accounts Receivable / Average Daily Sales
Return on Stockholders' Equity
Net Income / Average Stockholders' Equity
Which two reports on internal control are sometimes combined into a single report on internal control?
One report by management and one report by a public accounting firm regarding the adequacy of internal controls
Which of the following accounts will never be included in the inventory accounts on the balance sheet for a baking company?
President's salary
Materials must have which two qualities in order to be classified as direct materials?
They must be an integral part of the finished product and a significant portion of the total product cost.
Managers use managerial information for all of the following except to a. determine the cost of manufacturing a product b. analyze the performance of a company's operations c. evaluate the company's stock performance d. support long-term planning decisions
c. evaluate the company's stock performance
Horizontal analysis of comparative financial statements includes
calculation of dollar amount changes and percentage changes from the previous to the current year
A balance sheet that displays only component percentages is a
common-sized balance sheet
Which of the following is the most useful in analyzing companies of different sizes?
common-sized financial statemetns
Which of the following analytical methods expresses all financial statement items as percentages, with no dollar amounts shown?
common-sized statements
_____ is the philosophy of continually improving employees, business processes, and products.
continuous process improvement
A job order costing system can be used to
control costs
The managerial process that monitors operations and compares actual results to expected results is the __________ phase.
controlling
What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?
controlling
The total cost of making products that are available for sale during the period is called ________.
costs of goods manufactured
If the applied overhead is more than the actual overhead incurred, the factory overhead account will have a _______ balance.
credit overapplied factory overhead or overabsorbed factory overhead.
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
ratio between liabilities and stockholder's equity?
current + long term L / common stock + retained earnings
working capital
current assets - current liabilities Patton Corporation = 725,000 assets: cash, temp investments, accounts rec, inventory, prepaid expenses liability: accounts payable
current ratio
current assets / current liabilities
Which of the following measures a company's ability to pay its current liabilities?
current ratio
If the applied overhead is less than the actual overhead incurred, the factory overhead account will have a ____ balance.
debit - underapplied factory overhead or underabsorbed factory overhead.
Based on this data, if Washington Company were to conduct a vertical analysis, it would find that current assets __________ by _____ from Year 1 to Year 2.
decreased by 2.6
Which of the following would be classified as a factory overhead cost by a baking company?
depreciation of factory equipment
The primary costs for a service business includes ________.
direct labor
The process by which managers run day-to-day operations is called _____.
directing
dividend yield
dividends per share of common stock /market price per share of common stock
Predetermined factory Overhead Rate
estimated total factory overhead cost/estimated activity base
Which of the following accounts are NOT likely appear in a job order cost system of a service business? Finished Goods Work in Process Factory Overhead None of these choices are correct.
finished goods
Which of the following products would be manufactured using a job order costing system? a. highlighter pen b. cell phone c. recliner d. graduation invitation
graduation invitation
Managerial accounting information uses
historical and estimated data
The percentage analysis of increases and decreases in individual items in comparative financial statements is called
horizontal
Which of the following analytical methods involves the analysis of increases and decreases in the amount and percentage of comparative financial statement items?
horizontal analysis
For which of the following businesses would the job order cost system be appropriate? a. lumber mill b. hospital c. oil refinery d. canned soup processor
hospital
times interest earned
income before income tax _ interest expense / interest expense
Return on Operating Assets
income from operations / average operating assets
An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to
increase
Which of the following is not included in the computation of the quick ratio?
inventory
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
Short-term creditors are typically most interested in analyzing a company's
liquidity
ability to convert assets into cash
liquidity
The primary goal of managerial accounting is to provide information to
management
Accounting designed to meet the needs of decision makers inside the business is
managerial accounting
Who are the individuals charged with the responsibility for directing the day-to-day operations of a business?
managers
calculate costs of goods manufactured
manufacturing costs + beginning - ending
Price/Earnings (P/E) Ratio
market price per share of common stock /earnings per share on common stock
Which of the following is not a characteristic evaluated in ratio analysis? - profitability - liquidity - solvency - marketability
marketability
The three inventory ledger accounts are
materials, work in process, and finished goods
The purpose of a cost accounting system is to
measure, record, and report product costs
earnings per share on common stock
net income - preferred dividends / shares of common stock outstanding
Users typically evaluate financial statement information along all of the following dimensions EXCEPT objectivity. solvency. profitability. liquidity.
objectively
For which of the following businesses would the process cost system be appropriate? a. catering firm b. landscaper c. custom cabinet maker d. paper mill
paper mill
_____ consist of selling and administrative costs.
period costs
What term is used to describe the process of developing the organization's objectives and translating those into courses of action?
planning
Which of the following are basic phases of the management process?
planning and controlling
prime versus conversion
prime = direct materials & labor conversion = direct labor & FO
Job cost sheets can be used to determine
product costs
quick ratio
quick assets / current liabilities quick assets: cash, temp investments, receivables, marketable securities NOT prepaid or inventory
Which of the following would be classified as an indirect cost by a baking company?
salaries of product supervisors who oversee the baking process
In a vertical analysis, the base for cost of goods sold is
sales
The numerator in calculating the accounts receivable turnover is
sales
accounts receivable turnover
sales / average accounts receivable = 13.3333
asset turnover
sales / average total assets
A service organization using a job order cost system will typically charge supplies and materials to
the department using the supplies and include them in overhead costs.
Which of the following would record the labor costs for an individual job? a. payroll register b. clock cards c. in-and-out cards d. time tickets
time tickets
Which of the following is the principal reason for preparing managerial accounting reports?
usefulness to management
An analysis in which all the components of an income statement are expressed as a percentage of sales is a
vertical
The percent of fixed assets to total assets is an example of
vertical
In service companies, _________ is supported by a cost ledger with a job cost sheet for each client.
work in process
he journal entry to record the direct labor costs for the month would include a debit to
work in process
Which one of the following is the correct formula for determining cost of goods manufactured?
Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory
The job order cost system for a service business includes all of the following except a. cost of services. b. overhead. c. materials inventory. d. work in process.
C
Which of the following is not a characteristic of a job order costing system? a. It uses only one work in process account. b. It is best suited for industries that manufacture custom goods. c. It accumulates cost for each department within the factory. d. It provides a separate record for the cost of each quantity of product that passes through the factory.
C
Typical items included in the MD&A include all the following EXCEPT A) management's analysis and explanations of any significant changes between the current and prior years' financial statements. B) important accounting principles or policies that could affect interpretation of the financial statements, including the effect of changes in accounting principles or the adoption of new accounting principles. C) management's assessment of the company's liquidity and the availability of capital to the company. D) management's assessment of the effectiveness of internal controls over financial reporting.
D
The cost of a manufactured product generally consists of which of the following costs? (product costs)
DL, DM, FO
dividends per share
Dividends on Common Stock / Shares of Common Stock Outstanding
work in process
During the period, Work in Process is increased (debited) for the following: Direct materials cost Direct labor cost Applied factory overhead cost
Eco-efficiency measures are a form of managerial accounting information that helps managers evaluate the expenses incurred while using fewer natural resources in a company's operation.
FALSE - savings not expenses
Which of the following is not a characteristic of useful managerial accounting reports?
adhere to GAAP
In horizontal analysis, each item is expressed as a percentage of the
base year
Solvency analysis evaluates a company's ability to
both repay the face amount of debt at maturity and make periodic interest payments.