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Which of the following would produce a materials price variance?
 
shipping materials to the plant by air freight rather than by truck.
   
What factor is the cause of the difference between net income as computed under absorption costing and net income as computed under variable costing?
 
Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories, and variable costing considers all fixed manufacturing costs as period costs.
   
The standard price per unit of materials is used in the calculation of which of the following variances?
 
Materials price variance:               yes
Materials Quantity variance:       yes
   
An allocation portion of fixed manufacturing overhead is included in product costs under:
 
Absorption costing:         Yes
Variable costing:               No
   
The budgeting process serves which of the following purpose(S)
 
It helps motivate employees and helps to effectively communicate with them
It communicates expectations.
It helps coordinate activities toward common goals.
It helps in evaluating results and management performance.
   
Which of the following is true with respect to long-term budgets?
 
Most companies prepare long-term strategic plans that span five to ten years.
   
Which of the following is true regarding budgeting and human behavior?
 
The budget can be used to create a positive effect on employees' attitudes, or it can also create a negative effect if not properly applied
   
Which is not true regarding the possibilities of the budget committee?
 
The budget committee prepares and develops department budgets.
   
Standard costs contain which of the following characteristics?
 
They are preset costs for delivering a product or service under normal conditions.
They are established by personnel, engineering, and accounting studies based on past experience and other data
Management can use these costs to assess the reasonableness of actual costs incurred.
They are useful for management
 
Which of the following per unit cost does not change when the activity base fluctuates are known as:
 
Variable costs
   
A company’s telephone bill consisting of a $200 monthly base amount, plus long distance charges, would be classified as a:
Mixed cost
   
Which of the following is true with respect to master budgets?
 
A master budget is a formal written and comprehensive plan for a company's future. It contains individual budgets that are linked with
each other to form a coordinated plan.
A master budget should include a series of operating budgets, as well as a capital expenditures budget, and financial budgets.
The analysis for a master budget begins with projecting annual sales volume and prices.
   
Lizzie's Riverside Grill compares monthly operating results with a static budget prepared at the beginning of the year.
When actual sales are less than budget, the restaurant would usually report favorable variances on:
 
variable food costs but not fixed supervisory salaries.
  Which of the following factors would cause the break-even point to change?
 
Fixed costs increased due to addition of physical plant.
   
The "standard quantity allowed" is computed by multiplying the:
 
actual output in units by the standard input allowed.
   
The major weakness of static budget is that:
 
they are geared only to a single level of activity
they cannot be used to assess whether variable costs are under control.
they force the manager to compare actual costs at one level of activity to budgeted costs at a different level of activity.
   
If the actual cost incurred is greater than what the cost should have been as set forth in the flexible budget, the variance is:
 
labeled as unfavorable.
   
In preparing a cash budget, the budgeted Level of cash payments would take into account all of the following except:
 
Experience in collecting receivables.
   
Which of the following steps in the preparation of a master budget would logically be performed last?
 
Prepare a budgeted balance sheet.
   
Which of the following is not true regarding the setting of cost standards:
 
Cost standards should correspond to management's expectations under ideal conditions.
   
Which of the following is a limitation of using variable costing?
 
The matching principle requires that you use absorption costing and therefore variable costing is not acceptable under GAAP.
For income tax purposes, the IRS requires that only absorption costing be used for filings with the IRS.
Absorption costing is the only acceptable basis for both external and tax reporting.
   
Which of the following is one of the steps in effective management of variance analysis?
 
Identifying questions and their explanations
Preparing standard cost performance reports
Taking corrective and strategic actions
Computing and analyzing variances
   
Standard costs contain which of the following characteristics?
 
They are preset costs for delivering a product or service under normal conditions.
They are established by personnel, engineering, and accounting studies based on past experience and other data.
Management can use these cots to assess the reasonableness of actual costs incurred.
They are useful for management.
   
A method of assigning overhead costs to a product using a single overhead rate is:
 
Plantwide overhead rate method.
   
Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?
 
Departmental overhead rate method and activity based costing.
   
Which of the following would not be considered a product cost?
 
A. Direct labor costs.
B. Factory supervisor's salary.
C. Factory line worker's salary.
D. Cost accountant's salary.
E. Manufacturing overhead costs
   
Overhead costs:
 
Cannot be traced to units of product in the same way that direct labor can.
   
The cost object of the plantwide overhead rate method is:
 
The unit of product.
   
The cost object of the departmental overhead rate method is:
 
The production departments in the first stage and the unit of product in the second stage
   
The cost object(s) of the activity-based costing method is(are) The production activities in the
 
first stage and the unit of product in the second stage.
   
From an ABC perspective, what causes costs to be incurred?
 
Activities
   
What is the reason for pooling costs?
 
Determining a pool rate for all costs incurred by the same activity reduces the number of cost assignments required.
   
Which of the following are advantages of using the plantwide overhead rate method?
 
The necessary information is readily available.
   
Which of the following is a disadvantage of the departmental overhead rate method?
 
The departmental overhead rate method assigns overhead on the basis of volume-related measures
   
A cost that remains the same in total even when volume of activity varies is a:
 
Fixed cost.
   
A cost that changes in total proportionately to changes in volume of activity is a(n):
 
Variable cost.
   
A cost that changes with volume, but not at a constant rate, is called a:
 
Curvilinear cost.
   
A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases
beyond a maximum amount, is a(n):
 
Step-wise cost.
   
A cost that can be separated into fixed and variable components is called a:
 
Mixed cost.
   
An important tool in predicting the volume of activity, the costs to be incurred, the sales to be earned, and the profit to be received is
 
Cost-volume-profit analysis.
   
The margin of safety is the excess of:
 
Expected sales over breakeven sales.
   
The excess of expected sales over the sales level at the break-even point is known as the:
 
Margin of safety.
   
A graph used to analyze past cost behaviors by displaying costs and volume levels for each period as points on the diagram is called a:
 
Scatter diagram.
   
A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume levels on a scatter diagram
with a straight line is called the:
 
High-low method.
   
The sales level at which a company neither earns a profit nor incurs a loss is the:
 
Break-even point.
   
The difference between sales price per unit and variable cost per unit is the:
 
Contribution margin per unit.
   
The contribution margin per unit expressed as a percentage of the product's selling price is the:
 
Contribution margin ratio.
   
Which of the following is not a product cost?
 
A. Direct labor.
B. Indirect manufacturing costs.
C. Direct materials.
D. Manufacturing overhead.
E. Advertising costs
   
Using a traditional costing approach, which of the following manufacturing costs are assigned to products?
Variable manufacturing overhead, direct materials, direct labor and fixed manufacturing overhead.
   
When evaluating a special order, management should:
Only accept the order if the incremental revenue exceeds total variable product costs.
   
Accounting is the information system that:
 
Measures business activities, communicates the results to the decision makers, and processes information into reports
   
Which of the following is not an external user of a business's financial information?
 
Employee
   
Generally Accepted Accounting Principles (GAAP) are currently formulated by the
 
Financial Accounting Standards Board (FASB)
   
Which type of business organization is owned by only one owner?
 
Sole proprietorship
   
Which of the following characteristics best describes a corporation?
 
Stockholders not personally liable for entities debts
   
Which of the following requires accounting information to be complete, neutral, and free from material error?
 
Faithful representation concept
   
At the end of a recent year, Global Cleaning Services, a full service house and office cleaning service,
had total assets of $3,630 and equity of $2,280. How much were Global Cleaning Services Liabilities?
 
1,350
 
3,630 - 2,280 = 1,350
   
Consider the overall effects on Global Cleaning Service from selling and preforming services on account for $6,400 and
paying expenses totaling $2,500. What is Global Cleaning Services net income or net loss?
 
3,900
 
Net Income/Net Loss = Revenues - Expenses
6,400 - 2,500 = 3,900
   
Assume that Global Cleaning Service preformed cleaning services for a department store on account for $180.
How would this transaction affect Global Cleaning Services accounting equation?
 
Increase both assets and equity by $180
   
The balance sheet reports the
 
Financial position on a specific date
   
Assume Global Cleaning Service had a net income of $570 for the year, Global Cleaning Service's beginning
and ending total assets were $4,520 and $4,180, respectively. Calculate Global Cleaning Service's return on assets (ROA).
 
13.1%
 
ROA = Net Income / Average Assets x 100
570 / (4,520 + 4180 / 2) x 100
570 / 4350 x 100
0.13103 x 100 = 13.1%
   
The detailed record of the changes in a particular asset, liabilities, or stockholders equity is called
 
An account
   
Which of the following accounts is a liability?
 
Unearned Revenue
   
The left side of an account is used to record which of the following?
 
Debits (the right side is for credits)
   
Which of the following statements is correct?
 
Accounts Payable is increased with a credit
   
Your business purchased office supplies of $2,500 on account. The journal entry to record this transaction is as follows:
 
Office Supplies                2,500
Accounts Payable                            2,500
   
Sedlor Properties purchased office supplies on account for $800. Which journal entry records the payment of those office supplies?
 
Accounts Payable            800
Cash                                                      800
   
Pixel Copies recorded a cash collection on account by debiting Cash and crediting Accounts Payable.
What will the trial balance show for this error?
 
Liabilities are overstated
   
Which sequence correctly summarizes the accounting process?
 
Journalize transactions, post to the accounts, prepare a trial balance
   
Nathville Laundry reported assets of $800 and equity of $480. What is Nathville's debt ration?
 
0.4 OR 40%
 
Total Liabilities / Total Assets
320 / 800 = 0.4 or 40%
   
Which of the following is true of accrual basis accounting and cash basis accounting?
 
Accrual accounting records revenue only when its earned
   
Gee Fit Now gains a client who prepays $540 for a package of six physical training sessions.  Get Fit Now collects the $540
in advance and will provide the training later.  After four training sessions, what should Get Fit Now report on its income
statement assuming it uses the accrual basis accounting method.
 
Service revenue of $360
   
The revenue recognition principle requires
 
Revenue to be recorded only after the business has earned it
   
Adjusting the accounts is the process of
 
Updating the accounts at the end of a period
   
Which of the following is an example of a prepaid adjusting entry?
 
Recording usage of office supplies during the period
   
Assume that the weekly payroll of In the Woods Camping Supplies is $300.
December 31, end of the year, falls on a Tuesday, and In the Woods will pay its employees on Friday for the week.
What adjusting entry will In the Woods make on Tuesday, December 31?
 
Salaries Expense 120
Salaries Payable 120
   
The adjusted trail balance shows
 
Account balance after adjustments
   
A & D Window leaning preformed $450 of services but has not yet billed customers for the month.
If A & D fails to record the adjusting entry, what is the impact on the financial statements?
 
Balance sheet: assets understated, equity understated income statement, revenues understated
   
A worksheet
 
Is an internal document that helps summarize data for the preparation of financial statements
   
On February 1, Clovis Wilson Law Firm contracted to provide $3,000 of legal services for the next three months and
received $3,000 cash from the client. Assuming Wilson records unearned revenues using the alternative treatment,
what would be the adjusting entry recorded on February 28?
 
Service Revenue              2,000
Unearned Revenue         2,000
   
Assets and liabilities are listed on the balance sheet in the order of their
 
Liquidity
   
Which of the following accounts would be included in the plant assets category of the classified balance sheet?
 
Accumulated Depreciation
   
Which situation indicates a net loss within the Income Statement section of the worksheet?
 
Total debits exceed total credits
   
Which of the following accounts is not closed?
 
Accumulated Depreciation
   
What do closing entries accomplish?
 
Zero out the revenues, expenses, and dividends
transfer revenues expenses, and dividends to the Retained Earning account
bring the Retained Earnings account to its correct ending balance
   
Which of the following accounts may appear on a post closing trial balance?
 
Cash, Salaries Payable, and Retained Earnings
   
Which of the following steps of the accounting cycle is not completed at the end of the period?
 
Journalize transactions as they occur
   
Clean Water Softener Systems has Cash of $600, Accounts Receivable of $900, and Office Supplies of $400.
Clean owes $500 on Accounts Payable and Salaries Payable of $200. Cleans current ratio is
 
2.71
 
1,900 / 700 = 2.71
   
Which of the following statements concerning reversing entries is true?
 
Revising entries are most often used with accrual-type adjustments

Homework  1.1 1.2  2.1 2.2  3.1 3.2  4.1 4.2 5.1 5.2  6.1 6.2  7.1  7.2  8.1  8.2  9.1   9.2  10.1  10.2  11.1  11.2  12.1 12.2  13.1  13.2  14.1  14.2  15.1   15.2
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