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