MC Accounting

Which of the following statements is a difference between financial accounting and managerial accounting? a.Financial accounting focuses on providing information for internal use, whereas managerial accounting focuses on providing information for external use. b.Under financial accounting, reports are prepared as and when management needs them, whereas under managerial accounting, reports are prepared on a monthly basis. c.Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP. d.Financial accounting has a subjective approach, whereas managerial accounting has an objective approach.

Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP.

Which of the following is true about the changes in fixed cost? a.An increase in production will result in an increase in per unit fixed cost. b.A decrease in fixed cost will result in an increase in variable cost. c.An increase in production will result in a decrease in per unit fixed cost. d.A decrease in production will result in an increase in total fixed cost.

An increase in production will result in a decrease in per unit fixed cost.

Which of the following costs is an example of a fixed cost? a.Insurance cost b.Commission paid c.Capital stock d.Direct labor cost

Insurance cost

Which of the following is true of a direct materials cost? a.It is the cost of any material that is an integral part of the finished product. b.It is not a significant portion of the total product cost. c.It is sometimes called factory burden. d.A direct materials cost is included in factory overhead.

It is the cost of any material that is an integral part of the finished product.

Which of the following processes is involved in budgeting? a.Assessing the utilization rate of assets b.Dismissing all managers who fail to achieve operational goals specified in the budget c.Identifying the industry standards of stock returns d.Periodically comparing actual results with the goals

Periodically comparing actual results with the goals

Which of the following is an example of direct materials cost for an automobile manufacturer? a.Cost of interior upholstery b.Cost of oil lubricants for factory machinery c.Cost of wages of assembly worker d.Varnish for coating

a.Cost of interior upholstery

Which of the following is an example of a mixed cost? a.Maintenance expense b.Depreciation on factory machinery c.Property tax d.Direct material cost

a.Maintenance expense

Profitability refers to the ability of the business to _____. a.provide owners with dividends b.manage its accounts receivable and inventory c.earn a reasonable amount of income d.pay its current and noncurrent liabilities

c.earn a reasonable amount of income

A cost that has been incurred in the past and is irrelevant is termed a(n) _____. a.opportunity cost b.variable cost c.sunk cost d.differential cost

c.sunk cost

Which of the following is an example of a mixed cost? a.Depreciation on factory machinery b.Property tax c.Direct material cost d.Maintenance expense

d.Maintenance expense

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed _____. a.manufacturing margin b.deferred revenue c.differential margin d.differential revenue

differential revenue

If the cost of direct materials is not a significant portion of the total product cost, it may be classified as _____. a.selling and administrative costs b.direct labor costs c.miscellaneous costs d.factory overhead costs

factory overhead costs

For the purpose of analysis, mixed costs are generally _____. a.classified as variable costs b.separated into their variable and fixed cost components c.classified as period costs d.classified as fixed costs

separated into their variable and fixed cost components

A _____ shows the expected results of a responsibility center for only one activity level. a.break-even budget b.static budget c.budgetary slack d.standard costing system

static budget

Which of the following graphs illustrates the behavior of a total fixed cost within the specified relevant range? a.Graph 2 b.Graph 4 c.Graph 3 d.Graph 1

straight one vertical

Which of the following is an example of direct materials cost for an automobile manufacturer? a.Cost of wages of assembly worker b.Cost of interior upholstery c.Varnish for coating d.Cost of oil lubricants for factory machinery Feedback

Cost of interior upholstery

Which of the following is an example of a cost that varies in proportion to changes in the activity base? a.Packaging cost b.Depreciation on machinery c.Factory rent d.Insurance cost

a.Packaging cost

Which of the following processes is involved in budgeting? a.Periodically comparing actual results with the goals b.Dismissing all managers who fail to achieve operational goals specified in the budget c.Identifying the industry standards of stock returns d.Assessing the utilization rate of assets

a.Periodically comparing actual results with the goals

The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as _____. a.solvency and profitability b.solvency and liquidity c.solvency and leverage d.solvency and equity

a.solvency and profitability

Which of the following is the formula to calculate current ratio? a.Quick assets/Current liabilities b.Current assets/Current liabilities c.Sales/Average accounts receivable d.Cost of goods sold/Average inventory

b.Current assets/Current liabilities

Which of the following is an example of a factory overhead cost? a.Repair and maintenance cost on the administrative building b.Factory heating and lighting cost c.Insurance premiums on salespersons' automobiles d.President's salary

b.Factory heating and lighting cost

The amount of increase or decrease in cost that is expected from a particular course of action as compared to an alternative is termed _____. a.product cost b.differential cost c.period cost d.discretionary cost

b.differential cost

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called _____. a.solvency analysis b.vertical analysis c.liquidity analysis d.horizontal analysis

b.vertical analysis

Which of the following is considered a part of factory overhead cost? a.Sales commissions b.Depreciation of office equipment c.Depreciation of factory buildings d.Direct materials used

c.Depreciation of factory buildings

Which of the following is an example of direct labor cost for an airplane manufacturer? a.Cost of wages of janitors b.Salary of the chairman c.Salary of plant supervisor d.Cost of wages of assembly workers

d.Cost of wages of assembly workers

Which of the following is considered a part of factory overhead cost? a.Sales commissions b.Depreciation of office equipment c.Direct materials used d.Depreciation of factory buildings

d.Depreciation of factory buildings

A practical approach that is frequently used by managers when setting normal selling price is the _____. a.economic theory approach b.price graph approach c.market price approach d.cost-plus approach

d.cost-plus approach

The _____ budget shows the expected results of a responsibility center for several activity levels. a.break-even b.standard c.static d.flexible

d.flexible

The percentage analysis of increases and decreases in related items in comparative financial statements is called _____. a.vertical analysis b.solvency analysis c.profitability analysis d.horizontal analysis

d.horizontal analysis

The percentage change in long-term liabilities between two balance sheet dates is an example of _____. a.profitability analysis b.solvency analysis c.horizontal analysis d.vertical analysis

d.horizontal analysis

The cost of wages paid to employees directly involved in the manufacturing process of converting materials into finished product is classified as _____. a.factory overhead cost b.direct labor cost c.wages expense d.direct materials cost

direct labor cost