D196- Principles of Financial and Managerial Accounting

What budget includes corporate office expenses?

A. Manufacturing Budget

B. Selling and Administrative Expense Budget

B. Selling and Administrative Expense Budget

Insurance policy on office building

A. Product Cost

B. Period Cost

B. Period Cost

What budget is used for large corporate purchases?

A. Sales Budget

B. Capital Budget

B. Capital Budget

What budget is usually the last budget prepared?

A. Budgeted Income Statement

B. Budgeting Balance Sheet

B. Budgeting Balance Sheet

What budget is the first budget prepared?

A. Sales Budget

B. Production Budget

A. Sales Budget

What budget includes information on the cost of materials?

A. Finished Goods Budget

B. Direct Materials Budget

B. Direct Materials Budget

What budget includes information on the depreciation of factory equipment?

A. Manufacturing Budget

B. Selling and Administrative Budget

A. Manufacturing Budget

What budget helps with inventory control?

A. Production Budget

B. Finished Goods Budget

B. Finished Goods Budget

What budget shows revenues?

A. Sales Budget

B. Selling and Administrative Budget

A. Sales Budget

What budget uses the rate of pay for assembly line workers?

A. Direct Material Budget

B. Direct Labor Budget

B. Direct Labor Budget

What is an unfavorable cost variance?

A. A difference between the actual cost and the budgeted cost where the actual cost is less than the budgeted amount.

B. A difference between the actual cost and the budgeted cost where the actual cost is more than the budgeted amount.

B. A difference between the actual cost and the budgeted cost where the actual cost is more than the budgeted amount.

What is a direct cost?

A. Costs normally incurred for the benefit of several segments within the organization; sometimes called common costs or joint costs.

B. Costs that are specifically traceable to a unit of business or segment being analyzed.

B. Costs that are specifically traceable to a unit of business or segment being analyzed.

What is a cost center?

A. An organizational unit in which a manager has control over and is held accountable for cost performance.

B. An organizational unit in which a manager has control over and is held accountable for both cost and revenue performance.

A. An organizational unit in which a manager has control over and is held accountable for cost performance.

What is an uncontrollable cost?

A. Costs that are specifically traceable to a unit of business or segment being analyzed.

B. Costs over which a manager does not have direct authority and cannot change.

B. Costs over which a manager does not have direct authority and cannot change.

What is a decentralized organization?

A. An organizational unit in which a manager has control over and is held accountable for cost performance.

B. An organization in which managers at all levels have the authority to make decisions concerning the operations for which they are responsible. This is often based on geographical location.

B. An organization in which managers at all levels have the authority to make decisions concerning the operations for which they are responsible. This is often based on geographical location.

What is an indirect cost?

A. Costs over which a manager has direct authority and can change.

B. Costs normally incurred for the benefit of several segments within the organization; sometimes called common costs or joint costs.

B. Costs normally incurred for the benefit of several segments within the organization; sometimes called common costs or joint costs.

What is a segment?

A. A subsection of an organization that is distinct from the whole organization based on its operational activities, customers, or geographic location.

B. A system of evaluating performance in which managers are held accountable for the costs, revenues, assets, or other elements over which they have control.

A. A subsection of an organization that is distinct from the whole organization based on its operational activities, customers, or geographic location.

What is a profit center?

A. A system of evaluating performance in which managers are held accountable for the costs, revenues, assets, or other elements over which they have control.

B. An organizational unit in which a manager has control over and is held accountable for both cost and revenue performance.

B. An organizational unit in which a manager has control over and is held accountable for both cost and revenue performance.

What is a controllable cost?

A. Costs over which a manager has direct authority and can change.

B. Costs over which a manager does not have direct authority and cannot change.

A. Costs over which a manager has direct authority and can change.

What is a favorable cost variance?

A. A difference between the actual cost and the budgeted cost where the actual cost is more than the budgeted amount.

B. A difference between the actual cost and the budgeted cost where the actual cost is less than the budgeted amount.

B. A difference between the actual cost and the budgeted cost where the actual cost is less than the budgeted amount.

What is responsibility accounting?

A. An organization in which managers at all levels have the authority to make decisions concerning the operations for which they are responsible. This is often based on geographical location.

B. A system of evaluating performance in which managers are held accountable for the costs, revenues, assets, or other elements over which they have control.

B. A system of evaluating performance in which managers are held accountable for the costs, revenues, assets, or other elements over which they have control.

The three functions of an accounting system.

A. Manage, Report and Prepare

B. Analysis, Bookkeeping and Evaluation

C. Report, Prepare and Submit

D. Analysis, Evaluation and Manage

B. Analysis, Bookkeeping and Evaluation

The US organization that monitors the financial accounting disclosures of companies (both U.S. and foreign) whose stocks trade on U.S. stock exchanges.

A. FASB

B. AICPA

C. SEC

D. IRS

C. SEC

What shows the financial position of an organization's assets, liabilities, and equity at a specific date in time.

A. Balance Sheet

B. Statement of Cash Flows

C. Income Statement

A. Balance Sheet

The US organization that sets accounting standards for publicly listed companies.

A. SEC

B. FASB

C. AICPA

D. IRS

B. FASB

The third step in the financial accounting cycle.

A. Prepare Reports

B. Analyze Transactions

C. Record Transactions

D. Summarize the Effects of Transactions

D. Summarize the Effects of Transactions

The first step of the financial accounting cycle.

A. Analyze Transactions

B. Summarize the Effects of Transactions

C. Record the Effects of Transactions

D. Prepare Reports

A. Analyze Transactions

The fourth step in the financial accounting cycle.

A. Summarize the Effects of Transactions

B. Prepare Reports

C. Record the Effects of Transactions

D. Analyze Transactions

B. Prepare Reports

Shows the amount of cash inflows and outflows for an organization's operating, investing, and financing activities.

A. Balance Sheet

B. Income Statement

C. Statement of Cash Flows

C. Statement of Cash Flows

The language of business.

A. Bookkeeping

B. Financial Statements

C. Reports

D. Accounting

D. Accounting

Shows the profitability of an organization by comparing revenues and expenses for a period of time.

A. Income Statement

B. Balance Sheet

C. Statement of Cash Flows

A. Income Statement

The second step in the financial accounting cycle.

A. Prepare Reports

B. Record the Effects of Transactions

C. Analyze Transactions

D. Summarize the Effects of Transactions

B. Record the Effects of Transactions

Utilities Expense is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

E. Expense

Notes Payable is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

B. Liability

Cash is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

A. Asset

Prepaid Expense is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

A. Asset

Service Revenue is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

D. Revenue

Taxes Payable is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

B. Liability

Patents are classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

A. Asset

Accounts Payable is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

B. Liability

Inventory is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

A. Asset

Retained Earnings is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

C. Equity

Salaries Expense is classified as? (Pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

E. Expense

Mortgage Payable is classified as

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

B. Liability

Maintenance Expense is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

E. Expense

Fee Income is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

D. Revenue

Unearned Revenue is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

B. Liability

Capital Stock is classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

C. Equity

Buildings are classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

A. Asset

Sales are classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

D. Revenue

Retained Earnings are classified as? (pick one)

A. Asset

B. Liability

C. Equity

D. Revenue

E. Expense

F. Dividend

C. Equity

What is actual manufacturing overhead?

A. Budgeted manufacturing overhead costs that are used to establish the predetermined overhead rate.

B. Manufacturing costs other than direct materials and direct labor.

B. Manufacturing costs other than direct materials and direct labor.

What is an indirect cost?

A. The amount of the manufacturing overhead that is assigned to the goods produced.

B. Costs normally incurred for the benefit of several segments within the organization.

B. Costs normally incurred for the benefit of several segments within the organization.

What is overapplied manufacturing overhead?

A. The excess of actual manufacturing overhead costs over the applied manufacturing overhead costs for the period.

B. The excess of applied manufacturing overhead costs over the actual manufacturing overhead costs for the period.

B. The excess of applied manufacturing overhead costs over the actual manufacturing overhead costs for the period.

What is estimated manufacturing overhead?

A. Budgeted manufacturing overhead costs that are used to establish the predetermined overhead rate.

B. The excess of actual manufacturing overhead costs over the applied manufacturing overhead costs for the period

A. Budgeted manufacturing overhead costs that are used to establish the predetermined overhead rate.

What is underapplied manufacturing overhead?

A. Budgeted manufacturing overhead costs that are used to establish the predetermined overhead rate.close

B. The excess of actual manufacturing overhead costs over the applied manufacturing overhead costs for the period.

B. The excess of actual manufacturing overhead costs over the applied manufacturing overhead costs for the period.

What is the predetermined overhead rate?

A. This is estimated manufacturing overhead cost for the year divided by a total estimated activity base (such as machine hours, direct labor hours, direct labor cost, and so forth).

B. The amount of the manufacturing overhead that is assigned to the goods produced.

A. This is estimated manufacturing overhead cost for the year divided by a total estimated activity base (such as machine hours, direct labor hours, direct labor cost, and so forth).

What is applied manufacturing overhead?

A. The amount of the manufacturing overhead that is assigned to the goods produced.

B. Costs normally incurred for the benefit of several segments within the organization.

A. The amount of the manufacturing overhead that is assigned to the goods produced.

Assembly line worker's wages are classified as?

A. Product Cost

B. Period Cost

A. Product Cost

Rubber for making bicycle tires?

A. Product Cost

B. Period Cost

A. Product Cost

Depreciation on office copy machine?

A. Product Cost

B. Period Cost

B. Period Cost

Depreciation on factory machinery?

A. Product Cost

B. Period Cost

A. Product Cost

Sales commissions

A. Product Cost

B. Period Cost

B. Period Cost

Indirect Materials

A. Product Cost

B. Period Cost

A. Product Cost

Factory supervisor's salary

A. Product Cost

B. Period Cost

A. Product Cost

Corporate office property taxes

A. Product Cost

B. Period Cost

B. Period Cost

Plant repair and maintenance costs

A. Product Cost

B. Period Cost

A. Product Cost

Factory supplies

A. Product Cost

B. Period Cost

A. Product Cost

Insurance policy on factory building

A. Product Cost

B. Period Cost

A. Product Cost

Office manager's salary

A. Product Cost

B. Period Cost

B. Period Cost

Indirect labor

A. Product Cost

B. Period Cost

A. Product Cost

Advertising expense

A. Product Cost

B. Period Cost

B. Period Cost

Company President's salary

A. Product Cost

B. Period Cost

B. Period Cost

Bright Future makes and sells class rings for local schools. Operating information is as follows: Selling price per ring $750 Variable cost per ring 300 Total fixed costs $450,000 Calculate Contribution Margin per Unit

A. $750

B. $450

C. $350

D. $400

B. $450

Explanation

CM=Sales-Variable Costs 750-300=450

Bright Future makes and sells class rings for local schools. Operating information is as follows: Selling price per ring $750 Variable cost per ring 300 Total fixed costs $450,000 Calculate Contribution Margin Ratio?

A. 60%

B. 40%

B. 40%

Explanation

VC Ratio=VC/Sales 300/750=.40

Bright Future makes and sells class rings for local schools. Operating information is as follows: Selling price per ring $750 Variable cost per ring 300 Total fixed costs $450,000 Calculate Break-Even in Units

A. 2,000

B. 1,000

B. 1,000

Explanation

BE in Units=FC/CM in units 450,000/450

Bright Future makes and sells class rings for local schools. Operating information is as follows: Selling price per ring $750 Variable cost per ring 300 Total fixed costs $450,000 Calculate Breakeven in Total Sales?

A. 750,000

B. 450,000

A. 750,000

Explanation

BE in Total Sales=FC/CM Ratio 450,000/.6=750,000

Flying Kites sells 3 types of kites: Just for Tots, Flying Steady, and High in the Sky. The company reported the following data for the Flying Steady model: Sales price per kite $200 Variable costs per kite 125 Total Fixed costs $250,000 Calculate net income for the Flying Steady model if the company sold 500,000 of this model using the CVP equation. Assume the identified total fixed costs are those applied to this model.

A. 62,500,000

B. 37,250,000

B. 37,250,000

Explanation

Sales revenue $100,000,000 (200500,000 units)Varible costs $62,500,000 (125500,000 units)Contributiom margin $37,500,000 (Sales - VC)

Fixed costs $250,000Net income for Flying Steady $37,250,000 (Sales - VC - FC)

What is job order costing?

A. A method of costing that averages costs over all products made

B. A method of costing that assigns costs to specific jobs or products

C. A method of costing that assigns costs to direct labor and direct material

D. A method of costing that allocates costs to overhead based on activities

B. A method of costing that assigns costs to specific jobs or products

How is activity-based costing (ABC) overhead allocated?

A. Overhead is allocated based on direct labor

B. Overhead is allocated based on custom job activity

C. Overhead is allocated based on different activity levels

D. Overhead is allocated based on machine hours

C. Overhead is allocated based on different activity levels

Your company has products such as generic, simple to custom-designed, complex. The company currently uses a traditional method to allocate overhead. You believe the overhead is not being properly allocated to the products and think a different method should be implemented using direct labor hours as the basis. Which type of costing system should the company use instead?

A. Process costing

B. Job order costing

C. Product-line costing

D. Activity-based costing

D. Activity-based costing

When would you use process costing?

A. Custom build homes

B. Paint

C. Engineer creating custom designs

D. Boeing airplane

B. Paint

When using job order costing, how would you classify the wages of the factory custodian?

A. Administrative expense

B. Selling expense

C. Direct labor

D. Manufacturing overhead

D. Manufacturing overhead

The three general type of overhead cost activities in ABC systems are?

A. Activity-level, job-level, process-level

B. Product-level, period-level, manufacturing-level

C. Unit-level, batch-level, product-line

D. Variable-level, fixed-level, mixed-level

C. Unit-level, batch-level, product-line

What is the formula for calculating activity rates?

A. Overhead cost pool divided by cost driver

B. Manufacturing costs divided by cost driver

C. Budgeted overhead divided by activity

D. Fixed costs divided by cost pool

A. Overhead cost pool divided by cost driver

What is a cost driver?

A. Numerical measure used to reflect the amount of a specific cost associated with particular activity.

B. Total cost being generated by specific overhead cost activity.

C. Overhead activity performed each time a unit is produced.

D. Overhead activity associated with capability to produce different type of products.

A. Numerical measure used to reflect the amount of a specific cost associated with particular activity.

What is a cost pool?

A. Overhead activity performed each time new production started.

B. Activity that drive overhead costs.

C. Total cost being generated by a specific overhead cost activity.

D. Activities that take place each time a unit of product is produced.

C. Total cost being generated by a specific overhead cost activity.