Question 1

If an expense is traceable to a department, it would be considered a(n):

Accepted Answer

A)  direct expense. 
B)  indirect expense. 
C)  profit center issue. 
D)  advertising expense. 
A)  direct expense. 
B)  indirect expense. 
C)  profit center issue. 
D)  advertising expense.

Question 2

Departmental accounting requires:

Accepted Answer

A)  measuring departmental gross profit. 
B)  allocating direct costs to departments. 
C)  allocating indirect costs to departments. 
D)  Both A and C are correct. 
A)  measuring departmental gross profit. 
B)  allocating direct costs to departments. 
C)  allocating indirect costs to departments. 
D)  Both A and C are correct.

Question 3

Below is a list of departments; you are to identify each as either [1] a profit center or [2] a cost center.
-The maintenance office of a mall. ________

Accepted Answer

The answer of Below is a list of departments; you...

Question 4

The availability of suppliers and a firm's potential capacity is a consideration before a department is added.

Accepted Answer

A) True 
 B)False

Question 5

If the music department in a department store is 10,000 square feet and the total square feet is 80,000, how much of the total building cost of $50,000 will be allocated to music?

Accepted Answer

A)  $25,000 
B)  $400,000 
C)  $50,000 
D)  $6,250 
A)  $25,000 
B)  $400,000 
C)  $50,000 
D)  $6,250

Question 6

The photography department in a department store experienced the following revenue and expenses during October:   The photography departmental gross profit is:

Accepted Answer

A)  $3,500. 
B)  $7,500. 
C)  $4,000. 
D)  $6,000. 
A)  $3,500. 
B)  $7,500. 
C)  $4,000. 
D)  $6,000.

Question 7

A department should not be eliminated just because it becomes unprofitable.

Accepted Answer

A) True 
 B)False

Question 8

In departmental accounting, it is necessary to break down revenue and expenses by departments.

Accepted Answer

A) True 
 B)False

Question 9

To determine how each profit center is performing, management would analyze the:

Accepted Answer

A)  current forecast. 
B)  indirect expenses. 
C)  gross profit for each profit center. 
D)  other expenses. 
A)  current forecast. 
B)  indirect expenses. 
C)  gross profit for each profit center. 
D)  other expenses.

Question 10

Indirect expenses are normally:

Accepted Answer

A)  subjective and approximate. 
B)  assigned by arbitrary methods. 
C)  assigned precisely by accepted methods. 
D)  assigned to the accounting department. 
A)  subjective and approximate. 
B)  assigned by arbitrary methods. 
C)  assigned precisely by accepted methods. 
D)  assigned to the accounting department.

Question 11

Which of the following statements is false as it relates to direct and indirect expenses?

Accepted Answer

A)  Building expense is an indirect expense. 
B)  Indirect expenses cannot be assigned to different departments based on an allocation such as square feet. 
C)  If an expense is traceable to a particular department, it is a direct expense. 
D)  Advertising expense can be both a direct and an indirect expense. 
A)  Building expense is an indirect expense. 
B)  Indirect expenses cannot be assigned to different departments based on an allocation such as square feet. 
C)  If an expense is traceable to a particular department, it is a direct expense. 
D)  Advertising expense can be both a direct and an indirect expense.

Question 12

Indirect expenses are the same across departments and industries.

Accepted Answer

A) True 
 B)False

Question 13

The accountant must always consider cost of goods sold when determining gross profit for a department.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would NOT be considered a direct expense for a shoe department in a department store?

Accepted Answer

A)  Building expenses 
B)  Advertising expense 
C)  Administrative expense 
D)  All of the above 
A)  Building expenses 
B)  Advertising expense 
C)  Administrative expense 
D)  All of the above

Question 15

If the cosmetic department in the store measures 20,000 square feet and the total building cost is $90,000 for a 40,000 square foot building, the cost that would be allocated to the cosmetic department would be:

Accepted Answer

A)  $45,000. 
B)  $8,889. 
C)  $180,000. 
D)  $90,000. 
A)  $45,000. 
B)  $8,889. 
C)  $180,000. 
D)  $90,000.

Question 16

Departmental income statements are prepared to indicate how well each department is performing.

Accepted Answer

A) True 
 B)False

Question 17

The administrative department of a mall is a(n):

Accepted Answer

A)  cost center. 
B)  profit center. 
C)  internal center. 
D)  revenue center. 
A)  cost center. 
B)  profit center. 
C)  internal center. 
D)  revenue center.

Question 18

On a departmental income statement, sales less cost of goods sold and direct expenses equals:

Accepted Answer

A)  gross margin. 
B)  income before taxes. 
C)  indirect expenses. 
D)  departmental contribution margin. 
A)  gross margin. 
B)  income before taxes. 
C)  indirect expenses. 
D)  departmental contribution margin.

Question 19

A net income would occur if the contribution margin is greater than indirect expenses.

Accepted Answer

A) True 
 B)False

Question 20

Most companies that prepare departmental income statements typically don't prepare departmental balance sheets.

Accepted Answer

A) True 
 B)False

Exam 24: Departmental Accounting

If an expense is traceable to a department, it would be considered a(n):

Departmental accounting requires:

Below is a list of departments; you are to identify each as either [1] a profit center or [2] a cost center. -The maintenance office of a mall. ________

The availability of suppliers and a firm's potential capacity is a consideration before a department is added.

If the music department in a department store is 10,000 square feet and the total square feet is 80,000, how much of the total building cost of $50,000 will be allocated to music?

The photography department in a department store experienced the following revenue and expenses during October: The photography departmental gross profit is:

A department should not be eliminated just because it becomes unprofitable.

In departmental accounting, it is necessary to break down revenue and expenses by departments.

To determine how each profit center is performing, management would analyze the:

Indirect expenses are normally:

Which of the following statements is false as it relates to direct and indirect expenses?

Indirect expenses are the same across departments and industries.

The accountant must always consider cost of goods sold when determining gross profit for a department.

Which of the following would NOT be considered a direct expense for a shoe department in a department store?

If the cosmetic department in the store measures 20,000 square feet and the total building cost is $90,000 for a 40,000 square foot building, the cost that would be allocated to the cosmetic department would be:

Departmental income statements are prepared to indicate how well each department is performing.

The administrative department of a mall is a(n):

On a departmental income statement, sales less cost of goods sold and direct expenses equals:

A net income would occur if the contribution margin is greater than indirect expenses.

Most companies that prepare departmental income statements typically don't prepare departmental balance sheets.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Manufacturing Accounting

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