Final Exam
If a company uses a process costing system to account for the costs in its five production departments, how many work in process accounts will it use?
5
Compute the yield as a percentage rounded to two digits after the decimal, assuming 110 pounds of tea entered the Packaging Department and 103 pounds of tea were packaged.
93.64%
A job order cost system can be used by managers for
All of these are correct. cost evaluation control decision making
All of the following are ways in which cost-volume-profit analysis may be used except when
All of these may be used. analyzing the effects of changes in costs on profits analyzing the effects of changes in volume on profits analyzing the effects of changes in selling prices on profits
Under the indirect method of cash flow, depreciation expense is deducted from the net income.
False
The journal entry to recognize depreciation on machinery would include a
debit to Factory Overhead.
If the unit selling price increases, then the break-even point
decreases
Under the indirect method, increases in noncash current operating assets are
deducted from net income
The two categories of cost comprising conversion costs are
direct labor and factory overhead
The cost of a manufactured product generally consists of which of the following costs?
direct labor cost, direct materials cost, and factory overhead cost
Which of the following is a product cost?
drill bits for a drill press used in the plant assembly area
Boston Consulting Group (BGG) believes that the use of advanced robotics in manufacturing will
drive a 10 to 30 percent increase in manufacturing.
The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of
equivalent units
Contribution margin is the
excess of sales over variable costs
The quantity of the material output divided by the quantity of the material input gives you the
yield
In addition to the financial statements and the accompanying notes, corporate annual reports normally include which of the following sections?
All of these are correct. Management Discussion and Analysis Report on Internal Control Report on Fairness of the Financial Statements
Which of the following is a primary assumption in a cost-volume-profit analysis?
All of these are correct. Total sales and total costs can be represented by straight lines. There is no change in the inventory quantities during the period. Costs can be divided into fixed and variable components.
Process and job order cost systems are similar in that each system
All of these choices are correct. records and summarizes product costs. classifies product costs as direct materials, direct labor, and factory overhead. allocates factory overhead costs to products.
What is the primary criterion for the preparation of managerial accounting reports?
manager needs
In lean manufacturing, processing functions are combined into work centers, sometimes called
manufacturing cell
The document authorizing the issuance of materials from the storeroom is a
materials requisition
The order of presentation of activities on the statement of cash flows is
operating, investing, and financing
Which of the following are basic phases of the management process?
planning and controlling
Managerial accounting reports are
prepared according to management needs
Which of the following is most associated with financial accounting?
prepared in accordance with GAAP
The cost system best suited to industries that manufacture a large number of identical units of commodities on a continuous basis is
process
The two main types of cost accounting systems for manufacturing businesses are the __________ cost system and the __________ cost system.
process; job order
In process cost accounting, the costs of direct materials and direct labor are charged directly to
processing departments
Which of the following is the correct flow of manufacturing costs?
raw materials, work in process, finished goods, cost of goods sold
In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a
receiving report
Which of the following is a period cost?
salary of telephone receptionist in the sales office
In a common-sized income statement, 100% is the
sales
In a vertical analysis, the base for cost of goods sold is
sales
For which of the following businesses would a process cost system be appropriate?
shampoo manufacturer
The ability of a business to pay its debts as they come due and to earn a reasonable net income is
solvency and profitability
Which of the following is not one of the four basic financial statements?
statement of changes in financial position
In the statement of cash flows prepared by the indirect method, the sum of net cash flows used for operating activities, investing activities, and financing activities is equal to
the net increase or decrease of cash
All of the following are characteristics of a process cost system except
the system accumulates costs per job
Which of the following would record the labor costs to an individual job?
time tickets
On a common-sized balance sheet, 100% is
total assets
The cost per equivalent unit is determined by dividing the __________ by the
total production costs; total equivalent units of production
Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are
useful analytical measures
Which type of chart plots only a profit line rather than sales and cost lines?
Profit-volume chart
The three categories of manufacturing costs comprising the total cost of work in process are direct labor, direct materials, and
factory overhead
Cash flows from (used for) _____ activities are the cash flows received from or used for transactions that affect the debt and equity of the company.
financing
Cash paid for preferred stock dividends should be shown on the statement of cash flows under
financing activities
Costs that remain the same in total dollar amount as the activity base changes are called
fixed costs
Costs that have characteristics of both a variable cost and a fixed cost are called
mixed costs
Users typically evaluate financial statement information along all of the following dimensions except _____.
objectivity
Which of the following most likely uses a process cost system?
Oil refinery
Which of the following is not true in regards to direct materials for a bakery?
Paper cupcake liners, that become part of the product, must be accounted for as direct materials.
Which of the following statements is false?
There is no overlap between financial and managerial accounting.
The difference between contribution margin and income from operations is
fixed costs
For which of the following businesses would the job order cost system be appropriate?
hospital
When the fixed cost increases, the break-even point
increases
Cash flows from (used for) _____ activities are the cash flows received from or used for transactions that affect investments in the noncurrent assets of the company.
investing
Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?
issuance of long-term debt
Financing activities include
issuing debt
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
A job order cost accounting system accumulates and records product costs by
jobs
A management approach that focuses on reducing time and cost and eliminating poor quality is known as
just-in-time processing
A company's ability to convert assets into cash is called _____.
liquidity
One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to
make a better comparison of two companies of different sizes in the same industry
The primary goal of managerial accounting is to provide information to
management
Typical items included in the MD&A include all the following except
management's assessment of the effectiveness of internal controls over financial reporting.
Which of the following is most associated with managerial accounting?
may rely on estimates and forecasts
Cash flows from (used for) _____ activities are the cash flows from transactions that affect the net income of a company.
operating
Costs that vary in proportion to changes in the activity base are called
variable costs
An analysis in which all the components of an income statement are expressed as a percentage of sales is a
vertical analysis
Under the __________ method, all production costs (materials and conversion costs) are combined together for determining equivalent units and cost per equivalent unit.
weighted average cost
What will be required of the workforce to use robotics?
To learn new skills.
Service businesses such as hotels, taxi services, and newspapers cannot practically apply a job order cost accounting system.
True
Russell Corporation had the following activities: Recorded depreciation of $5,000. Purchased $10,000 of equipment with cash. Paid $4,000 in interest payments. Received $8,000 cash for the sale of an asset. What is the amount of net cash flows from (used for) investing activities?
$(2,000)
Russell Corporation had the following activities: Recorded depreciation of $5,000. Received cash from the sale of common stock, $20,000. Purchased $10,000 of equipment with cash. Paid $4,000 income tax. Received $8,000 cash for the sale of an asset. Paid cash dividends, $10,000. What is the amount of net cash flows from (used for) financing activities?
$10,000
In the statement of cash flows prepared by the indirect method, Alpha Inc. reports a net increase in cash of $35,000. If the beginning cash balance is $4,500, the ending cash balance is equal to
$39,500
The sales mix is the relative distribution of sales among the products sold by a company.
True
Which of the following analytical methods expresses all financial statement items as percentages, with no dollar amounts shown?
Common-sized statements
What must Twitter do to keep expanding?
Continue to make significant investments.
In a process cost system, the amount of work in process inventory is valued by
allocating departmental costs between completed and partially completed units
Which of the following measures a company's ability to pay its current liabilities?
current ratio
In order to be useful to managers, managerial accounting reports should possess all of the following characteristics except
be prepared in accordance with generally accepted accounting principles
Process and job order cost systems are similar in all of the following ways except
both use job order cost cards
The statement of cash flows is not useful for
calculating the net worth of a company
Horizontal analysis of comparative financial statements includes
calculation of dollar amount changes and percentage changes from the previous to the current year
The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports
cash at the end of the year
Which of the following would not be on the statement of cash flows?
cash flows from contingent activities
Which of the following can be found on the statement of cash flows?
cash flows from operating activities
On the statement of cash flows, the cash flows from operating activities section would include
cash receipts from sales activities
A balance sheet that displays only component percentages is a
common-sized balance sheet
A company's operating leverage is computed as
contribution margin divided by income from operations
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
The journal entry to record the transfer from work in process to finished goods would include a debit to
Finished Goods.
Break-even sales in units is computed as
Fixed Costs ÷ Unit Contribution Margin
Which of the following analytical methods involve the analysis of increases and decreases in the amount and percentage of comparative financial statement items?
Horizontal analysis
Which of the following is not a characteristic of a job order costing system?
It accumulates cost for each department within the factory.
The journal entry to record the direct labor costs for the month would include a debit to
Work in Process
What was the first year that Twitter showed a positive net change for the year?
Year 2
Which of the following would most likely use a job order costing system?
a swimming pool installer