Exam 1 Multiple Choice

d. It is the process of a detailed formulation of action to achieve a particular end.

Identify a true statement about the planning activity in managerial accounting.

a. It is preceded by the controlling activity.

b. It is the process of monitoring a plan's implementation and taking corrective action.

c. It is followed by the decision-making activity.

d. It is the process of a detailed formulation of action to achieve a particular end.

d. It represents a company's internal accounting system.

Which of the following is true of managerial accounting?

a. It provides only nonfinancial information to its users.

b. It is bound by formal criteria such as generally accepted accounting principles (GAAP).

c. It is the provision of accounting information for a company's external users only.

d. It represents a company's internal accounting system.

c. places emphasis on providing information about future events.

Managerial accounting:

a. provides only objective financial information to users.

b. is more self-contained in nature than financial accounting.

c. places emphasis on providing information about future events.

d. targets external users of an entity.

a. on providing information to internal management.

Managerial accounting is focused:

a. on providing information to internal management.

b. on providing only the externally focused financial information about a firm.

c. on following externally imposed rules.

d. on providing objective financial information about the firm as a whole.

b. Design, develop, produce, market, and deliver

The managerial accounting system tracks a wide variety of activities that span the value chain. Which of the following best describes the steps (in order) in a firm's value chain?

a. Develop, design, produce, market, and deliver

b. Design, develop, produce, market, and deliver

c. Develop, design, market, produce, and deliver

d. Design, market, develop, produce, and deliver

c. activity-based costing.

A detailed approach to determine the cost of goods and services that improves costing accuracy is called:

a. process-value analysis.

b. cost differentiation strategy.

c. activity-based costing.

d. total quality management.

d. The controller is responsible for SEC reports.

Which of the following statements is true of the controller of a large company having a separate treasury department?

a. The controller manages cash and investments.

b. The controller is responsible for the finance function.

c. The controller is responsible for raising capital.

d. The controller is responsible for SEC reports.

a. finance function.

The treasurer of an organization is responsible for the:

a. finance function.

b. research function.

c. marketing function.

d. production function.

b. It attempts to limit securities frauds in a company.

Identify a true statement about the Sarbanes-Oxley Act (SOX).

a. It prevented all subsequent frauds after its implementation.

b. It attempts to limit securities frauds in a company.

c. It resulted in decreased attention on corporate ethics.

d. It mandated reporting requirements for large companies having huge revenues.

c. the Institute of Certified Public Accountants (AICPA) and the Institute of Management Accountants (IMA).

Ethical standards for accountants are established by:

a. the Institute of Certified Public Accountants (AICPA) and the Institute of Internal Accountants (IIA).

b. the Institute of Management Accountants (IMA) and the Securities and Exchange Commission (SEC).

c. the Institute of Certified Public Accountants (AICPA) and the Institute of Management Accountants (IMA).

d. the Institute of Internal Accountants (IIA) and the Securities and Exchange Commission (SEC).

c. A Certified Public Accountant

Which of the following is allowed to serve as an external auditor?

a. A Certified Internal Auditor

b. A Certified Fraud Examiner

c. A Certified Public Accountant

d. A Certified Management Accountant

a. Certified Public Accountants

_____ must pass a national examination and be licensed by the state in which they practice.

a. Certified Public Accountants

b. Certified Internal Auditors

c. Certified Fraud Examiners

d. Certified Management Accountants

c. direct cost.

The cost of the wheels purchased for use in the manufacture of cars is an example of a(n):

a. overhead cost.

b. administrative cost.

c. direct cost.

d. conversion cost.

b. the process of assigning indirect costs to cost objects.

Cost allocation is:

a. the tracking of direct costs to cost objects.

b. the process of assigning indirect costs to cost objects.

c. is same as cost accumulation.

d. done only for variable costs.

c. Prime Cost = Direct Materials + Direct Labor

Which of the following is the formula to calculate prime cost?

a. Prime Cost = Direct Materials + Manufacturing Overhead

b. Prime Cost = Direct Labor + Manufacturing Overhead

c. Prime Cost = Direct Materials + Direct Labor

d. Prime Cost = Conversion Cost + Direct Labor

d. a period cost.

Selling costs incurred during delivery of a product by a business is an example of:

a. manufacturing overhead.

b. a conversion cost.

c. a prime cost.

d. a period cost.

a. $56,000.

Taylor Company reported the following information for December:

Line Item Description	Amount
Direct materials	$37,000
Direct labor	20,000
Manufacturing overhead	36,000
Beginning work in process inventory	23,000
Ending work in process inventory	24,000

The total conversion cost is:

a. $56,000.

b. $57,000.

c. $140,000.

d. $93,000.

a. $50,000

During May, the cost of goods manufactured was $60,000. The beginning finished goods inventory for the month was $22,000, and the ending finished goods inventory was $32,000. What was the cost of goods sold for May?

a. $50,000

b. $28,000

c. $114,000

d. $64,000

c. It is an expense that appears on the income statement.

Which of the following is true of cost of goods sold?

a. It represents the total conversion cost of the goods manufactured.

b. It includes all selling and administrative expenses.

c. It is an expense that appears on the income statement.

d. The balance in this account is transferred to finished goods inventory.

d. the cost of producing the units that were sold during a time period.

The cost of goods sold is:

a. the sum of cost of goods manufactured and administrative expenses.

b. the total of direct materials, direct labor, and selling overhead.

c. the cost of selling the units that were sold during a time period.

d. the cost of producing the units that were sold during a time period.