Question 1

Partial income statements of Company A and Company B are provided below:   Which of the following statements is true?

Accepted Answer

A) Company A is a merchandising company. 
B) Company B is a manufacturing company. 
C) Company A is a manufacturing company. 
D) Company A is a service company. 
A) Company A is a merchandising company. 
B) Company B is a manufacturing company. 
C) Company A is a manufacturing company. 
D) Company A is a service company.

Question 2

The following information has been provided by Nugget Company:   Calculate the beginning balance of the Work-in-Process Inventory account.

Accepted Answer

A) $5,000 
B) $10,500 
C) $6,500 
D) $16,500 
A) $5,000 
B) $10,500 
C) $6,500 
D) $16,500

Question 3

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

Accepted Answer

A) Direct Labor 
B) Cost of Goods Manufactured 
C) Direct Materials 
D) Cost of Goods Sold 
A) Direct Labor 
B) Cost of Goods Manufactured 
C) Direct Materials 
D) Cost of Goods Sold

Question 4

Product costs are expensed:

Accepted Answer

A) when the products are consumed or sold. 
B) at the end of the accounting period they are incurred in. 
C) when the products are transferred to Work-in-Process Inventory account. 
D) when the market value of products goes above the recorded value. 
A) when the products are consumed or sold. 
B) at the end of the accounting period they are incurred in. 
C) when the products are transferred to Work-in-Process Inventory account. 
D) when the market value of products goes above the recorded value.

Question 5

Which of the following is true of just-in-time (JIT)inventory management?

Accepted Answer

A) It results in more storage and insurance cost. 
B) It is a system in which the company produces product only after receiving an order. 
C) It promotes surplus inventory to prevent production shut-down in case of supply interruptions. 
D) It requires a surplus inventory of finished goods to ensure timely, or just-in-time, delivery to customers. 
A) It results in more storage and insurance cost. 
B) It is a system in which the company produces product only after receiving an order. 
C) It promotes surplus inventory to prevent production shut-down in case of supply interruptions. 
D) It requires a surplus inventory of finished goods to ensure timely, or just-in-time, delivery to customers.

Question 6

Selling and administrative expenses are subtracted from the cost of goods sold to obtain operating profit.

Accepted Answer

A) True 
 B)False

Question 7

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?

Accepted Answer

A) comparing actual performance to previously budgeted amounts 
B) creating detailed budgets 
C) implementing operational plans 
D) evaluating results of operations 
A) comparing actual performance to previously budgeted amounts 
B) creating detailed budgets 
C) implementing operational plans 
D) evaluating results of operations

Question 8

Selected data for Lemon Grass Company for 2015 is provided below:   What is the total factory overhead?

Accepted Answer

A) $450,000 
B) $612,000 
C) $77,400 
D) $62,400 
A) $450,000 
B) $612,000 
C) $77,400 
D) $62,400

Question 9

Which of the following would be classified as a prime cost?

Accepted Answer

A) Cost of raw materials 
B) Depreciation on factory equipment 
C) Salary of sales personnel 
D) Depreciation on office furniture 
A) Cost of raw materials 
B) Depreciation on factory equipment 
C) Salary of sales personnel 
D) Depreciation on office furniture

Question 10

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 11

The following information has been provided by Squash Corporation:   The beginning balance of Work-in-Process Inventory account was:

Accepted Answer

A) $2,400. 
B) $2,140. 
C) $18,860. 
D) $9,560. 
A) $2,400. 
B) $2,140. 
C) $18,860. 
D) $9,560.

Question 12

For a manufacturing business, which of the following would be considered a product cost?

Accepted Answer

A) Salary of the sales manager 
B) Salary of the CEO 
C) Salaries of the accounting staff 
D) Salary of the production manager 
A) Salary of the sales manager 
B) Salary of the CEO 
C) Salaries of the accounting staff 
D) Salary of the production manager

Question 13

Barricades Corporation provided the following information for the year 2015:   What was the amount of the cost of goods manufactured for the year 2015?

Accepted Answer

A) $1,414,000 
B) $1,214,000 
C) $1,182,000 
D) $1,246,000 
A) $1,414,000 
B) $1,214,000 
C) $1,182,000 
D) $1,246,000

Question 14

Which of the following is an example of direct labor cost in a factory?

Accepted Answer

A) Wages of assembly line personnel 
B) Salary of vice president of production 
C) Wages of factory security guard 
D) Salary of production manager 
A) Wages of assembly line personnel 
B) Salary of vice president of production 
C) Wages of factory security guard 
D) Salary of production manager

Question 15

Which of the following will be included in manufacturing overhead costs?

Accepted Answer

A) Indirect labor and indirect materials 
B) Salaries of salesmen 
C) Direct materials and direct labor 
D) Delivery costs to ship goods to customers 
A) Indirect labor and indirect materials 
B) Salaries of salesmen 
C) Direct materials and direct labor 
D) Delivery costs to ship goods to customers

Question 16

Which of the following statements is true of the flow of product and period costs for a manufacturer?

Accepted Answer

A) When the manufacturing process is completed, the costs are transferred to the Work-in-Process Inventory account. 
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement. 
C) Period costs remain in inventory accounts on the balance sheet until the product is sold. 
D) All product costs that have been paid are expensed and shown on the income statement at the end of the accounting period. 
A) When the manufacturing process is completed, the costs are transferred to the Work-in-Process Inventory account. 
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement. 
C) Period costs remain in inventory accounts on the balance sheet until the product is sold. 
D) All product costs that have been paid are expensed and shown on the income statement at the end of the accounting period.

Question 17

Unlike merchandising companies, income statements of service companies include cost of goods sold as a line item.

Accepted Answer

A) True 
 B)False

Question 18

The following information relates to Webster Inc.:   How much was Webster's manufacturing overhead?

Accepted Answer

A) $21,060 
B) $21,970 
C) $24,050 
D) $141,897 
A) $21,060 
B) $21,970 
C) $24,050 
D) $141,897

Question 19

In manufacturing, the cost objects are often units of product.

Accepted Answer

A) True 
 B)False

Question 20

Crystal Inc. is a merchandiser of stone ornaments. It sold 15,000 units in 2015. The company has provided the following information:   How much is the gross profit for 2015?

Accepted Answer

A) $183,700 
B) $304,300 
C) $252,700 
D) $257,000 
A) $183,700 
B) $304,300 
C) $252,700 
D) $257,000

Exam 18: Introduction to Managerial Accounting

Partial income statements of Company A and Company B are provided below: Which of the following statements is true?

The following information has been provided by Nugget Company: Calculate the beginning balance of the Work-in-Process Inventory account.

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

Product costs are expensed:

Which of the following is true of just-in-time (JIT)inventory management?

Selling and administrative expenses are subtracted from the cost of goods sold to obtain operating profit.

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?

Selected data for Lemon Grass Company for 2015 is provided below: What is the total factory overhead?

Which of the following would be classified as a prime cost?

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

The following information has been provided by Squash Corporation: The beginning balance of Work-in-Process Inventory account was:

For a manufacturing business, which of the following would be considered a product cost?

Barricades Corporation provided the following information for the year 2015: What was the amount of the cost of goods manufactured for the year 2015?

Which of the following is an example of direct labor cost in a factory?

Which of the following will be included in manufacturing overhead costs?

Which of the following statements is true of the flow of product and period costs for a manufacturer?

Unlike merchandising companies, income statements of service companies include cost of goods sold as a line item.

The following information relates to Webster Inc.: How much was Webster's manufacturing overhead?

In manufacturing, the cost objects are often units of product.

Crystal Inc. is a merchandiser of stone ornaments. It sold 15,000 units in 2015. The company has provided the following information: How much is the gross profit for 2015?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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