Question 1

Direct labor costs in a paint factory would include wages of employees who:

Accepted Answer

A)  Supervise heavy equipment operators. 
B)  Operate paint-mixing machines. 
C)  Develop highly secret formulas for new products. 
D)  Paint the interior of the factory every two years. 
A)  Supervise heavy equipment operators. 
B)  Operate paint-mixing machines. 
C)  Develop highly secret formulas for new products. 
D)  Paint the interior of the factory every two years.

Question 2

Period costs are recognized in the period in which the costs are incurred and placed on the income statement as part of Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 3

Product costs are offset against revenue in the period in which the related products are manufactured, rather than the period in which the products are sold.

Accepted Answer

A) True 
 B)False

Question 4

The payment of wages to factory employees who work directly on the goods being manufactured is recorded by an entry crediting:

Accepted Answer

A)  Wages Expense. 
B)  Direct Labor. 
C)  Work in Process Inventory. 
D)  Cash. 
A)  Wages Expense. 
B)  Direct Labor. 
C)  Work in Process Inventory. 
D)  Cash.

Question 5

Manufacturing companies normally have three types of inventory:

Accepted Answer

A)  Direct materials, direct labor, and manufacturing overhead. 
B)  Raw materials, work in process, and finished goods. 
C)  Work in process, finished goods, and returned merchandise. 
D)  Economy, standard, and deluxe. 
A)  Direct materials, direct labor, and manufacturing overhead. 
B)  Raw materials, work in process, and finished goods. 
C)  Work in process, finished goods, and returned merchandise. 
D)  Economy, standard, and deluxe.

Question 6

Since manufacturing costs (direct materials, direct labor, and overhead) are incurred in the process of manufacturing units of product, these costs are debited to:

Accepted Answer

A)  The Direct Materials Inventory, Direct Labor, and Manufacturing Overhead accounts. 
B)  Expense accounts. 
C)  The Work in Process Inventory account. 
D)  The Cost of Goods Sold account. 
A)  The Direct Materials Inventory, Direct Labor, and Manufacturing Overhead accounts. 
B)  Expense accounts. 
C)  The Work in Process Inventory account. 
D)  The Cost of Goods Sold account.

Question 7

The payment of raw materials previously purchased on account is recorded by an entry debiting:

Accepted Answer

A)  Raw Materials Inventory. 
B)  Accounts Payable. 
C)  Work in Process Inventory. 
D)  Cash. 
A)  Raw Materials Inventory. 
B)  Accounts Payable. 
C)  Work in Process Inventory. 
D)  Cash.

Question 8

The total amount of inventory that should appear in the company's balance sheet at December 31, 2011 is:

Accepted Answer

A)  $115,000. 
B)  $860,000. 
C)  $85,000. 
D)  Some other amount. $_____________ 
A)  $115,000. 
B)  $860,000. 
C)  $85,000. 
D)  Some other amount. $_____________

Question 9

It is the first year of operations at Johnny's Subs and the cost of all work in process during the year is $830,000. Assuming the cost of finished goods manufactured is $860,000, what is the value of the ending Work in Process inventory?

Accepted Answer

A)  $0. 
B)  $30,000. 
C)  Some other amount. 
D)  This is an impossible situation. 
A)  $0. 
B)  $30,000. 
C)  Some other amount. 
D)  This is an impossible situation.

Question 10

Goods that are still in the production process would be in which account?

Accepted Answer

A)  Raw Materials Inventory. 
B)  Work in Process Inventory. 
C)  Finished Goods Inventory. 
D)  Cost of Goods Sold. 
A)  Raw Materials Inventory. 
B)  Work in Process Inventory. 
C)  Finished Goods Inventory. 
D)  Cost of Goods Sold.

Question 11

A schedule of the cost of finished goods manufactured summarizes the flow of manufacturing costs into and out of the finished goods inventory account.

Accepted Answer

A) True 
 B)False

Question 12

When goods are completed and transferred from the assembly line:

Accepted Answer

A)  Cost of Goods Sold is debited and Finished Goods Inventory is credited. 
B)  Work in Process Inventory is debited and Finished Goods Inventory is credited. 
C)  Finished Goods Inventory is debited and Cost of Goods Sold is credited. 
D)  Work in Process Inventory is credited and Finished Goods Inventory is debited. 
A)  Cost of Goods Sold is debited and Finished Goods Inventory is credited. 
B)  Work in Process Inventory is debited and Finished Goods Inventory is credited. 
C)  Finished Goods Inventory is debited and Cost of Goods Sold is credited. 
D)  Work in Process Inventory is credited and Finished Goods Inventory is debited.

Question 13

The managerial functions of planning and controlling include all of the following activities except:

Accepted Answer

A)  Setting objectives and goals for future performance. 
B)  Monitoring the extent to which planned objectives are being achieved. 
C)  Taking corrective action when actual results differ from the plan. 
D)  Directing the work of employees. 
A)  Setting objectives and goals for future performance. 
B)  Monitoring the extent to which planned objectives are being achieved. 
C)  Taking corrective action when actual results differ from the plan. 
D)  Directing the work of employees.

Question 14

The principal difference between managerial accounting and financial accounting is that managerial accounting information is:

Accepted Answer

A)  Prepared by managers. 
B)  Intended primarily for use by decision makers inside the business organization. 
C)  Prepared in accordance with a set of accounting principles developed by the Institute of Certified Managerial Accountants. 
D)  Oriented toward measuring solvency rather than profitability. 
A)  Prepared by managers. 
B)  Intended primarily for use by decision makers inside the business organization. 
C)  Prepared in accordance with a set of accounting principles developed by the Institute of Certified Managerial Accountants. 
D)  Oriented toward measuring solvency rather than profitability.

Question 15

The placing of direct materials into the production process is recorded by an entry crediting:

Accepted Answer

A)  Materials Expense. 
B)  Raw Materials Inventory. 
C)  Work in Process Inventory. 
D)  Finished Goods Inventory. 
A)  Materials Expense. 
B)  Raw Materials Inventory. 
C)  Work in Process Inventory. 
D)  Finished Goods Inventory.

Question 16

Until the related goods are sold, product costs are viewed as:

Accepted Answer

A)  Assets. 
B)  Liabilities. 
C)  Operating expenses. 
D)  Manufacturing overhead. 
A)  Assets. 
B)  Liabilities. 
C)  Operating expenses. 
D)  Manufacturing overhead.

Question 17

The cost of finished goods manufactured will exceed the cost of goods sold whenever:

Accepted Answer

A)  The inventory of finished goods increases over the period. 
B)  The inventory of work in process increases over the period. 
C)  The inventory of finished goods decreases over the period. 
D)  The inventory of work in process decreases over the period. 
A)  The inventory of finished goods increases over the period. 
B)  The inventory of work in process increases over the period. 
C)  The inventory of finished goods decreases over the period. 
D)  The inventory of work in process decreases over the period.

Question 18

Since production employees work directly on the goods being manufactured, the related labor costs are recorded by debiting:

Accepted Answer

A)  Wages Expense. 
B)  Direct Labor. 
C)  Work in Process Inventory. 
D)  Manufacturing Overhead. 
A)  Wages Expense. 
B)  Direct Labor. 
C)  Work in Process Inventory. 
D)  Manufacturing Overhead.

Question 19

The Schedule of Finished Goods Manufactured summarizes all production costs incurred through an entire accounting year.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not one of the three types of inventories of a manufacturing company?

Accepted Answer

A)  Raw materials inventory. 
B)  Work in process inventory. 
C)  Product inventory. 
D)  Finished goods inventory. 
A)  Raw materials inventory. 
B)  Work in process inventory. 
C)  Product inventory. 
D)  Finished goods inventory.

Exam 16: Management Accounting: a Business Partner

Direct labor costs in a paint factory would include wages of employees who:

Period costs are recognized in the period in which the costs are incurred and placed on the income statement as part of Cost of Goods Sold.

Product costs are offset against revenue in the period in which the related products are manufactured, rather than the period in which the products are sold.

The payment of wages to factory employees who work directly on the goods being manufactured is recorded by an entry crediting:

Manufacturing companies normally have three types of inventory:

Since manufacturing costs (direct materials, direct labor, and overhead) are incurred in the process of manufacturing units of product, these costs are debited to:

The payment of raw materials previously purchased on account is recorded by an entry debiting:

The total amount of inventory that should appear in the company's balance sheet at December 31, 2011 is:

It is the first year of operations at Johnny's Subs and the cost of all work in process during the year is $830,000. Assuming the cost of finished goods manufactured is $860,000, what is the value of the ending Work in Process inventory?

Goods that are still in the production process would be in which account?

A schedule of the cost of finished goods manufactured summarizes the flow of manufacturing costs into and out of the finished goods inventory account.

When goods are completed and transferred from the assembly line:

The managerial functions of planning and controlling include all of the following activities except:

The principal difference between managerial accounting and financial accounting is that managerial accounting information is:

The placing of direct materials into the production process is recorded by an entry crediting:

Until the related goods are sold, product costs are viewed as:

The cost of finished goods manufactured will exceed the cost of goods sold whenever:

Since production employees work directly on the goods being manufactured, the related labor costs are recorded by debiting:

The Schedule of Finished Goods Manufactured summarizes all production costs incurred through an entire accounting year.

Which of the following is not one of the three types of inventories of a manufacturing company?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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