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.