Accounting Final Exam
Using an electronic spreadsheet software like excel is generally less time consuming and more flexible than manually preparing cash flow projections. Benefits of electronic spreadsheets include all of the following except? A) Electronic spreadsheets are more accurate than manual spreadsheets B) Electronic spreadsheets allow the preparer to immediately see how changes to input parameters affect cash flow C) Electronic spreadsheets allow easy use of "what if" scenarios D) Electronic spreadsheets allow easy performance of sensitivity analysis
A) Electronic spreadsheets are more accurate than manual spreadsheets
If total assets are 200, total earned revenue is 100 and total expenses are 60 for a given period, what are total profits? A) 40 B) 140 C) 160 D) Cannot be determined
A) 40
What best describes the BOM for a project? A) A document that lists all the material needed for a project B) Basic ordering manual C) Building ordering manual D) Building organization manual
A) A document that lists all the material needed for a project
Depreciation of equipment would have what financial impact? A) An increase in expenses is recorded B) A decrease in revenue is recorded C) An increase in assets is recorded D) An increase in liabilities is recorded
A) An increase in expenses is recorded
An invoice for $100 was received from a supplier for construction materials on your project. How would receipt of the invoice be recorded? A) An increase in payables B) A decrease in payables C) An increase in revenue D) A decrease in assets
A) An increase in payables
For any given transaction, if an asset increases then? A) Another asset may decrease B) A liability may decrease C) An expense may increase D) Equity may decrease
A) Another asset may decrease
How is retention recorded on the financial statements of the contractor? A) Asset B) Liability C) Equity D) Expense
A) Asset
What is general overhead? A) Costs that can not be specifically identified to a construction project B) General project costs like project management C) Project overhead costs like payroll taxes for crew labor D) General costs such as site supervision
A) Costs that can not be specifically identified to a construction project
When recording accounting transactions, which of the following is true? A) Debits always equal credits B) Revenues always equal expenses C) Assets always equal liabilities D) Increases always equal decreases
A) Debits always equal credits
Which of the following costs would typically not be part of the general overhead? A) Equipment B) Accounting C) Human recourses D) Marketing
A) Equipment
If equipment is purchased by borrowing money instead of purchasing with cash, how is cash flow affected? A) Immediate cash flow is improved but cash flow in later periods will be reduced B) There is no difference in cash flow between the two methods C) Depreciation expense on the equipment will reduce cash flow D) Borrowing money will always improve cash flow due to the time value of money
A) Immediate cash flow is improved but cash flow in later periods will be reduced
Which of the following is a benefit of estimating a labor burden rate? A) It can aid in estimating projected labor costs on a new project B) It can aid in determining the time required to complete a project C) If the burden rate is negative then a project is probably behind schedule D) A positive burden rate indicates labor costs were accurately projected
A) It can aid in estimating projected labor costs on a new project
The terms debit and credit mean what in terms of accounting language? A) Left and right B) Up and down C) Positive and negative D) Horizontal and vertical
A) Left and right
Allocation of general office overhead requires the determination of a? A) Pool and base B) High and low cost estimate C) High and low revenue estimate D) Total cost and total hours
A) Pool and base
Which of the items listed below does not improve cash flow for the contractor? A) Reducing the retention rate for subcontractors B) Increasing the retention rate for subcontractors C) Reducing the retention rate between the owner and contractor
A) Reducing the retention rate for subcontractors
What is the relationship between contribution margin and net cash flow? A) The higher the CM, the higher the net cash flow B) The lower the CM, the higher the net cash flow C) The higher the CM, the lower the net cash flow D) There is no absolute relationship between CM and net cash flow
A) The higher the CM, the higher the net cash flow
Which of the following is a fundamental concept of learning curve theory? A) The improvement in the time required to perform a task decreases as the task is repeated B) The improvement in the time required to perform a task is constant as the task is repeated C) The time required for a repetitive task decreases at a constant rate D) Learning curve theory is rarely applied to long construction projects
A) The improvement in the time required to perform a task decreases as the task is repeated
If you are the PM on a project and your corporate management decides to increase the corporate overhead rate applied to your project, how will the net cash flow on your project be affected? A) There will be no impact on net cash flow B) Net cash flow will decrease C) Net cash flow will increase D) Unable to determine
A) There will be no impact on net cash flow
Liabilities can be described as? A) Things you owe B) Things you own C) Committed costs D) Worth
A) Things you owe
What adjective best differentiates cost control from cost reporting? A) Timely B) Accurate C) Fair D) Reliable
A) Timely
The cost performance index (CPI) is used to measure what? A) Whether a project is under or over the $ budget B) Whether a project is ahead or behind the time schedule C) Performance relative to critical path D) Performance relative to non-critical path tasks
A) Whether a project is under or over the $ budget
Variable costs... A) are fixed per unit and vary in total as activity levels change B) are fixed in total as activity levels change C) decrease per unit as activity volume increases D) vary per unit of output as activity levels change
A) are fixed per unit and vary in total as activity levels change
If total assets equal $16 and total liabilities equal $6, what is the total equity? A) $16 B) $10 C) $4 D) $22
B) $10
What is the general overhead rate if general overhead costs are $100,000, total direct construction costs on all projects are $400,000 and total revenues from all projects are $600,000 assuming revenues are the designated activity? A) 10% B) 17% C) 25% D)33%
B) 17%
How would payment of the invoice be recorded? A) An increase in payables B) A decrease in payables C) An increase in revenue D) A decrease in assets
B) A decrease in payables
All other things being equal, the maximum amount of cash invested in a project would be higher for? A) A project with progress payments B) A project paid in full at completion C) Both types of projects have the same cash flow D) I have no idea
B) A project paid in full at completion
The primary purpose of cost codes is to? A) Ensure that total project costs are accurate B) Allocate costs among multiple tasks or project components C) provide financial manager with cash flow info D) Ensure that general company costs are properly allocated to individual projects
B) Allocate costs among multiple tasks or project components
A favorable direct labor efficiency variance might indicate that? A) Higher skilled workers were used that performed the task slower than expected B) Higher skilled workers were used that performed the task faster than expected C) Lower skilled workers were paid a higher wage than expected D) Lower skilled workers were paid a lower wage than expected
B) Higher skilled workers were used that performed the task faster than expected
The cost of labor for the employer would include all the following except? A) Social security tax B) Income tax C) State unemployment tax D) Medicare tax
B) Income tax
If a company has five ongoing projects and one of them is terminated, what will happen to the general overhead rate applied to the remaining four projects? A) No impact B) Increase C) Decrease D) Unable to determine
B) Increase
Common job cost include all the following except? A) Materials B) Liabilities C) Subcontractors D) Labor
B) Liabilities
What is "retention" in the context of construction contracts? A) The amount owed by construction companies suppliers B) Money withheld by the owner until project completion C) Retention of labor cost until work is completed D) Retaining walls built for project safety
B) Money withheld by the owner until project completion
The contribution margin is computed as follows A) Revenue minus construction costs minus O/H B) Revenue minus variable costs C) Revenue minus construction costs D) Revenue minus all variable costs and all construction costs
B) Revenue minus variable costs
Capital can be obtained in numerous ways. These ways include all the following except? A) Issuing stock B) Selling Bonds C) Earning profits D) Selling equipment at an amount in excess of book value
B) Selling Bonds
A cost loaded schedule typically contains all the following information except? A) The estimated cost of each task B) The person performing the task C) The time frame the task will be performed D) The task completion date
B) The person performing the task
If the BCWP is less than the BCWS, what can be inferred about the progress of a particular project? A) The project is ahead of schedule B) The project is behind schedule C) The project is over budget D) The project is under budget
B) The project is behind schedule
What is the primary purpose of estimating the general overhead rate? A) To document all costs incurred on a project B) To allocate general overhead costs among projects C) To document the amount of profit that should be earned on a project D) To determine overhead rate variances after project completion
B) To allocate general overhead costs among projects
When managing cash flow for individual projects, which of the following is the construction company's ownership best able to control if their is immediate need for cash. A) When labor cost are paid B) When suppliers are paid C) When corporate overhead costs are paid D) When equipment depreciation is paid
B) When suppliers are paid
The schedule performance index (SPI) is used to measure what? A) Whether a project is under or over the $ budget B) Whether a project is ahead or behind the time schedule C) Performance relative to critical path D) Performance relative to non-critical path tasks
B) Whether a project is ahead or behind the time schedule
Job type is a common way to determine how resources can be allocated in the most profitable manner. Which of the following is not a typical measure of job profitability? A.) Gross profit margin B.) Net cash provided from projects C.) Return on cash invested in the project D.) Average profit generated by project manager
B.) Net cash provided from projects
If assets increase $10, liabilities increase $6, and expenses incurred are $8, what should be the change in revenue? A) $(4) B) $4 C) $12 D) $(8)
C) $12
Sierra Mist Inc. has a new project to design and build a waste water treatment plant. The price of the project is $1,000,000 and no money will be received until project completion. Budgeted construction costs are $200,000 per year to be evenly incurred over a 4 year period. What is the anticipated profit of this project? A) $1,000,000 B) $800,000 C) $200,000 D) $100,000
C) $200,000
Construction in progress is what type of account? A) Revenue B) Expense C) Asset D) Liability
C) Asset
Which is not a purpose of a project close-out audit? A) Control costs B) Project data validation C) Demobilization D) Finding and fixing problems
C) Demobilization
Which type of expense does not reduce cash flow? A) Equipment maintenance expense B) Labor expense C) Deprecation expense D) Retention expense
C) Deprecation expense
Construction companies make frequent use of ledgers . Which of the following ledger types is not often used? A) Job cost B) Equipment C) Inventory D) Job site labor
C) Inventory
There are four general steps a construction manager should follow when preparing a cash flow analysis for a construction project. Which of the following is typically not one of those steps? A) Determine when payments will be received from the owner B) Determine when payments will be made for construction costs C) Prepare an equipment use schedule D) Prepare a cost loaded schedule
C) Prepare an equipment use schedule
Construction often differs from common manufacturing oriented companies in the following ways except? A) One-of-a-kind projects B) Heavy reliance on subcontractors C) Profit margin D) Decentralized project management
C) Profit margin
Purchase orders should be primarily approved by? A) Crew foreman B) Owner C) Project manager D) Job accountant
C) Project manager
If you owned a construction company, which of the following would have a positive impact on your cash flow in the short term? A) Adding to your materials inventory B) Investing in new surveying equipment C) Selling your bulldozer you purchased 5 years ago for less than you paid for it D) Paying rent on a construction trailer
C) Selling your bulldozer you purchased 5 years ago for less than you paid for it
An employee would have all of the following deducted from gross pay except? A) Social security tax B) Income tax C) State unemployment tax D) Medicare tax
C) State unemployment tax
A favorable direct materials quantity variance likely indicates which of the following? A) The actual cost of materials was less than the standard cost of materials B) The standard quantity of materials planned for a project was less than the actual quantity used C) The actual quantity of materials used on a project was less than the planned/standard quantity D) The actual cost of material was greater than the standard cost of materials
C) The actual quantity of materials used on a project was less than the planned/standard quantity
If the ACWP is greater than the BCWP, what can be inferred about the progress of a particular project? A) The project is ahead of schedule B) The project is behind schedule C) The project is over budget D) The project is under budget
C) The project is over budget
Which of the following describes the way in which total fixed costs behave? A) They will decrease as production increases B) They will decrease as production increases C) They will remain the same throughout production levels within the relevant range D) They will increase as production decreases
C) They will remain the same throughout production levels within the relevant range
The purpose of maintaining an equipment ledger is to? A) Ensure equipment is properly maintained B) Ensure equipment is fully depreciated C) Track costs of each piece of equipment used on a project D) Compute the gain or loss on the sale of equipment
C) Track costs of each piece of equipment used on a project
The gross margin is computed as follows A.) Revenue minus construction cost minus O/H B.) Revenue minus variable costs C.) Revenue minus construction costs D.) Revenue minus all variable costs and all construction costs
C.) Revenue minus construction costs
The price of the project is $1,000,000 and no money will be received until project completion. Budgeted construction costs are $200,000 per year to be evenly incurred over a 4 year period. Assuming a discount rate of 8%, what is the net present value of the project? A) $147,000 B) $79,400 C) $241,545 D) $72,600
D) $72,600
The present value of an investment is affected by which of the following A) The interest rate B) The number of time periods (length of investment) C) The type of investment (annuity vs. lump sum) D) All the above
D) All the above
The project clos-out audit consists of? A) Project data validation B) Management reviewing better than expected performance C) Management reviewing areas where problems were encountered D) All the above
D) All the above
What best describes a cost loaded schedule? A) The total cost it took to complete a project B) Periodic (weekly, monthly, or annually) cost estimates to complete C) The final costs and time it took to complete a task D) An estimated schedule that shows time and cost for work to be completed
D) An estimated schedule that shows time and cost for work to be completed
A company buys equipment specifically for your project. What is the financial impact of this purchase? A) An increase in expenses is recorded B) An increase in revenue is recorded C) A decrease in revenue is recorded D) Both an increase and decrease in assets are recorded
D) Both an increase and decrease in assets are recorded
When monitoring job profitability it is common to calculate and track all of the following costs except? A) Actual cost incurred B) Estimated cost to complete C) Estimated cost at completion D) Contingent costs
D) Contingent costs
The account balances of which type of accounts become part equity at the end of each accounting period? A) Assets B) Liabilities C) Accounts Receivable D) Expenses
D) Expenses
Understanding cost behavior is very important in predicting future costs. Costs are often categorized as variable, fixed, or mixed. Which of the following is the best example of a fixed project cost? A) Direct labor of the plumbing crew B) Project site maintenance C) Utility costs for the construction trailer D) Monthly rent for the construction trailer
D) Monthly rent for the construction trailer
Which of the following statements are true? A) The dollar amount of retention may not exceed the total anticipated profit on a project B) The retention rate with subcontractors must equal the retention rate with owners C) Retention rates have little impact on cash flow D) The dollar amount of retention is directly related to amounts billed to owners
D) The dollar amount of retention is directly related to amounts billed to owners
The Eichleay method is used to estimate what? A) General project overhead costs B) Allocation of overhead to projects C) The amount of delay time (non-concurrent) measured in days D) The overhead cost attributable to project delay
D) The overhead cost attributable to project delay
Who is most likely to blame for an unfavorable materials price variance? A) The project estimator B) The project manager who approved the materials delivery to the site C) The project supervisor who is responsible for using the materials D) The purchasing manager at headquarters
D) The purchasing manager at headquarters
Equity can be described as? A) Things you owe B) Things you own C) An obligation D) Worth
D) Worth
Your company's excavation crew completed their work at a cost of $125,000. The budget for this work was $130,000. What was the profit that resulted from your supervisors good management of the crew? A.) Unable to determine without price of the entire project. B.) Unable to determine without knowing the general O/H of the project. C.) Unable to determine without knowing the efficiency variance for labor. D.) $5,000
D.) $5,000
Revenue is recorded when....
Earned and realizable
