Accounting II Final Exam Review
a place where the results of events affecting that item are recorded
account
the time period between financial statements
accounting cycle
a trial balance done after adjusting entries have been made and posted
adjusted trial balance
an internal entry made to adjust the accounts for internal events prior to preparing financial statements
adjusting entry
costs that vary with the number of batches regardless of how many units are in each batch, such as setup costs and ordering costs
batch related costs
the point where the total cost line intersects with the total revenue line
break even point
an event that management wants to plan and evaluatee
business event
an organizational scheme used to classify accounts as assets, liabilities, or owners' equity
chart of accounts
an entry made to close out a temporary account, transfer the balance to retained earnings, and determine net income
closing entry
payment for services rendered based on a percentage of revenue generated
commission pay
Model Bakers have developed a snack cake that it wants to compete with Hostess Twinkies and has set their introductory price 10 cents below the price of a Twinkie. This is an example of which of the following?
competitive cycle pricing
an account with an opposite balance to the normal balance of its associated account
contra account
total sales less total variable costs at a given level of activity
contribution margin
the difference between selling price per unit and variable cost per unit
contribution margin per unit
the contribution margin per unit divided by the selling price per unit
contribution margin ratio
the study of how costs, revenues, and profits change in response to changes in the volume of goods or services provided to customers
cost-volume-profit (CVP) analysis
the right side of an account
credit
The four primary influences on selling price are:
customers, competition, legal and social issues, and costs
the amount of inventory needed each business day
daily demand
the left side of an account
debit
the cost for the time period
depreciation
Which of the following is not a factor when using "Target Pricing"?
determine the target cost and see if product can be produced for that amount
the cost of employees who manufacture the product
direct labor
the cost of materials that are directly traceable to the product and are costly enough to warrant tracing them
direct materials
an inventory account used in a manufacturing company to record the direct materials on hand
direct materials inventory
an account used under the net price method to record discounts lost
discount lost
selling products below cost in a foreign market
dumping
an adjusting entry that occurs when expenses are incurred in one accounting period and payment is made in a later period
expense accrual
an adjusting entry that occurs when a company uses previously purchased assets in an attempt to generate revenue in future periods
expense deferral
costs incurred to maintain the company's capacity to operate, such as rent or insurance
facility sustaining costs
Which of the following is not withheld from the employee's check?
federal unemployment tax
the journal used to record both the account(s) to be debited and the account(s) to be credited
general journal
a collection of specific asset, liability, and owner's equity accounts
general ledger
a method used to record inventory purchases at the full price
gross price method
payment for services rendered based on the number of house worked
hourly pay
the additional cost associated with an alternative
incremental cost
the difference between the additional revenue expected from an alternative and the additional cost associated with an alternative
incremental profit
the additional revenue expected from an alternative
incremental revenue
the cost of production employees who do not physically manufacture the product
indirect labor
production materials that can't be traced to the product or are not costly enough to warrant tracing
indirect materials
a complete list of items such as property, goods in stock, or the contents of a building
inventory
the recorded effect of an accounting event
journal entry
the process of recording a journal entry
journalizing
a pull system that uses cards to visually signal the need for inventory
kanban system
the number of days elapsed from the time an order is place until the order is received
lead time
When the iPhone was introduced its price was set by which of the following?
life-cycle pricing
a pricing strategy where the company attempts to set at selling price for the life of the product based on its total life-cycling costs
life-cycle pricing
a temporary account used to report losses of inventory
loss on inventory
all costs incurred to manufacture products other than direct materials and direct labor; includes indirect materials, labor, and other costs used to manufacture products
manufacturing overhead
an additional amount over cost that is added to determine selling price
markup
a ledger in a computer-based transaction system
master file
an inventory account used by a merchandising company
merchandise inventory
a representation of reality; used for short-term operating decisions to help organize information for decisions
model
an environment in which there are many companies whose products/services are similar but not identical
monopolistic competition
a company that has exclusive control over a product, service, or geographic market
monopoly
a method used to record inventory purchases at the discounted price
net price method
costs related to obtaining or manufacturing the product
non-product costs
the balance of an account on the side (debit or credit) on which it increases
normal balance
Which of the following business are considered part of an oligopoly?
oil companies
an environment where a few firms control the types of products and services and their distribution
oligopoly
the benefit forgone when choosing one alternative over another; accepting one alternative means rejecting others
opportunity cost
a system used by companies that need to determine the balance in inventory and the cost of goods sold only at specific points in time
periodic inventory system
an asset, liability, or owner's equity account whose balance is carried over from year to year
permanent account
a system used by companies that want to keep a running balance of the cost of inventory available for sale and the cost of goods sold during the period
perpetual inventory system
payments for services rendered based on the number of items completed
piece-rate pay
a trial balance prepared after the closing entries have been posted
post-closing trial balance
the process of recording the appropriate part of a journal entry to the affected account
posting
Which of the following business are considered part of monopolistic competition?
power company
a pricing strategy where a company sets its initial selling price low in an attempt to gain a share of the market from its competitors
predatory pricing
the practice of selling products below cost in an attempt to drive out competition, control the market, and then raise prices
predatory pricing
when a group of companies agree to limit supply and charge identical prices
price fixing
the practice of setting excessively high prices for short-term benefit
price gouging
costs related to selling the products and services or administering the company
product costs
costs that vary with the number of product lines, like advertising or research and development
product sustaining costs
a temporary account used to record purchase discounts taken
purchase discounts
a temporary account used to record purchase returns and purchase allowances
purchase returns and allowances
a temporary account used to record purchases of inventory
purchases
an environment where a large number of sellers produce and distribute virtually identical products and services
pure competition
a reduced purchase price due to the amount purchased
quantity discount
a cost of revenue that will occur in the future and that differs among the alternatives considered
relevant variable
the inventory level that, when reached, indicated the need to place an order for additional inventory
reorder point
an adjusting entry that occurs when revenues are earned in one accounting period and payment is received in a later period
revenue accrual
an adjusting entry that occurs when a company has been paid in advance for services to be performed in a future period
revenue deferral
a small amount of inventory kept on hand to avoid stockouts
safety stock
the relative proportions of units sold
sales mix
selling price less cost
selling margin
the process of changing key variables, but not assumptions, in CVP analysis to determine how sensitive the CVP relationships are to changes in these variables
sensitivity analysis
a pricing strategy in which the company sets its initial selling price high in an attempt to appeal to those individuals who want to be the first to have the product and who are not concerned about price
skimming pricing
Which of the following is withheld from an employee's pay and also paid by the employer?
social security
used for transactions that occur frequently and in the same manner
special journal
the opportunity cost of not having inventory on hand when needed
stockout costs
used to record details for specific general ledger accounts
subsidiary ledger
a past cost and never relevant in a short-term operating decision
sunk cost
an informal representation of a general ledger account
t-account
a pricing strategy where the company first determines the selling price of the products and then decides whether to enter the market
target pricing
a journal in a computer-based transaction system
transaction files
a listing of all general ledger accounts and their respective balances to ensure that debits equals credits
trial balance
costs that vary with the number of units, such as direct materials and shipping
unit related costs
In general, which of the following is not true about the pricing of products?
when demand decreases prices increase