Question 1

A cost center is evaluated on the volume of revenues generated.

Accepted Answer

A) True 
 B)False

Question 2

Indirect expenses are those expenses that:

Accepted Answer

A) may be incurred outside the control of a department manager. 
B) cannot be identified with a specific department. 
C) are incurred for the general benefit of a company. 
D) All of these answers are correct. 
A) may be incurred outside the control of a department manager. 
B) cannot be identified with a specific department. 
C) are incurred for the general benefit of a company. 
D) All of these answers are correct.

Question 3

To calculate gross profit, subtract cost of goods sold from net sales.

Accepted Answer

A) True 
 B)False

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

A profit center is a unit in which the manager:

Accepted Answer

A) has the responsibility for controlling costs, but not for directly generating revenue. 
B) is not responsible for controlling costs, but is responsible for generating revenue. 
C) is responsible for controlling costs and generating revenue. 
D) None of these answers are correct. 
A) has the responsibility for controlling costs, but not for directly generating revenue. 
B) is not responsible for controlling costs, but is responsible for generating revenue. 
C) is responsible for controlling costs and generating revenue. 
D) None of these answers are correct.

Question 6

Carla's building expenses, which are indirect, are based on each department's square footage. Department A occupies 35,000 square feet. Department B occupies 55,000 square feet, and Department C occupies 10,000 square feet. If the building expenses total $250,000, how much is allocated to Department B?

Accepted Answer

A) $83,333 
B) $137,500 
C) $87,500 
D) $25,000 
A) $83,333 
B) $137,500 
C) $87,500 
D) $25,000

Question 7

What is the purpose for determining contribution margin?

Accepted Answer

A) To show the contribution by department toward covering indirect costs 
B) To help determine whether or not to eliminate a department 
C) To show the effect on net income each department 
D) All of these answers are correct. 
A) To show the contribution by department toward covering indirect costs 
B) To help determine whether or not to eliminate a department 
C) To show the effect on net income each department 
D) All of these answers are correct.

Question 8

Administrative expenses are:

Accepted Answer

A) indirect expenses. 
B) direct expenses. 
C) not broken down by department. 
D) All of these answers are correct. 
A) indirect expenses. 
B) direct expenses. 
C) not broken down by department. 
D) All of these answers are correct.

Question 9

The sales department of a construction firm is a(n):

Accepted Answer

A) profit center. 
B) cost center. 
C) investment center. 
D) allocation center. 
A) profit center. 
B) cost center. 
C) investment center. 
D) allocation center.

Question 10

The cosmetic department experienced the following revenue and expenses during December:   The cosmetic department's contribution margin is:

Accepted Answer

A) $57,000. 
B) $50,000. 
C) $53,000. 
D) $47,000. 
A) $57,000. 
B) $50,000. 
C) $53,000. 
D) $47,000.

Question 11

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

Accepted Answer

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

Question 12

Which of the following statements is incorrect?

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 13

In departmental accounting, it is necessary to break down revenue, but not expenses by departments.

Accepted Answer

A) True 
 B)False

Question 14

When a company tracks gross profit by department, the sales journal has separate columns for Accounts Receivable for each department.

Accepted Answer

A) True 
 B)False

Question 15

A human resource department would be a profit center.

Accepted Answer

A) True 
 B)False

Question 16

Indirect expenses may be allocated to departments based on the cost of goods sold in each department.

Accepted Answer

A) True 
 B)False

Question 17

Of two departments, the men's department has 8,000 square feet and the women's department has 22,000 square feet. Depreciation is divided by square footage. If total depreciation is $50,000, the total amount allocated to the men's department would be approximately $13,333.

Accepted Answer

A) True 
 B)False

Question 18

Indirect expenses are allocated to departments based on:

Accepted Answer

A) decisions of the stockholders. 
B) directives from the board of directors. 
C) some reasonable basis, such as square footage. 
D) generally accepted accounting principles. 
A) decisions of the stockholders. 
B) directives from the board of directors. 
C) some reasonable basis, such as square footage. 
D) generally accepted accounting principles.

Question 19

Direct expenses are those expenses that:

Accepted Answer

A) can be identified with a specific department. 
B) cannot be identified with a specific department. 
C) can be identified with more than one department. 
D) None of these answers are correct. 
A) can be identified with a specific department. 
B) cannot be identified with a specific department. 
C) can be identified with more than one department. 
D) None of these answers are correct.

Question 20

When a company tracks gross profit by department, the sales journal will:

Accepted Answer

A) not differ from a company that does not track gross profit by department. 
B) have a separate column for accounts receivable for each department. 
C) have a separate column for sales for each department. 
D) have a column for purchases for each department. 
A) not differ from a company that does not track gross profit by department. 
B) have a separate column for accounts receivable for each department. 
C) have a separate column for sales for each department. 
D) have a column for purchases for each department.

Exam 24: Departmental Accounting

A cost center is evaluated on the volume of revenues generated.

Indirect expenses are those expenses that:

To calculate gross profit, subtract cost of goods sold from net sales.

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

A profit center is a unit in which the manager:

What is the purpose for determining contribution margin?

Administrative expenses are:

The sales department of a construction firm is a(n):

The cosmetic department experienced the following revenue and expenses during December: The cosmetic department's contribution margin is:

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

Which of the following statements is incorrect?

In departmental accounting, it is necessary to break down revenue, but not expenses by departments.

When a company tracks gross profit by department, the sales journal has separate columns for Accounts Receivable for each department.

A human resource department would be a profit center.

Indirect expenses may be allocated to departments based on the cost of goods sold in each department.

Of two departments, the men's department has 8,000 square feet and the women's department has 22,000 square feet. Depreciation is divided by square footage. If total depreciation is $50,000, the total amount allocated to the men's department would be approximately $13,333.

Indirect expenses are allocated to departments based on:

Direct expenses are those expenses that:

When a company tracks gross profit by department, the sales journal will:

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: the Conclusion of the Payroll Process

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, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Manufacturing Accounting

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