Question 1

On a departmental income statement,sales less cost of goods sold and direct expenses equals:

Accepted Answer

A) gross margin. 
B) income before taxes. 
C) indirect expenses. 
D) departmental contribution margin. 
A) gross margin. 
B) income before taxes. 
C) indirect expenses. 
D) departmental contribution margin. D

Question 2

Why would it be advisable for a company to keep separate accounting records for various departments?

Accepted Answer

Management needs to measure the efficiency and the contribution of each department to the overall performance of the company. Management may use departmental information in making decisions such as expanding a department,reducing a department,or eliminating a department. Management may use this type of information to determine a supervisor's merit for a raise,promotion,etc.

Question 3

A line on the income statement that indicates what a department has left after covering cost of goods and sold and direct expenses is:

Accepted Answer

A) the gross margin. 
B) the net income. 
C) the contribution margin. 
D) None of these answers are correct. 
A) the gross margin. 
B) the net income. 
C) the contribution margin. 
D) None of these answers are correct. C

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Compute the contribution margin for the video department,when gross profit is $880,000,direct expenses $370,000,and indirect expenses are $190,000.

Accepted Answer

A) $320,000 
B) $690,000 
C) $510,000 
D) $700,000 
A) $320,000 
B) $690,000 
C) $510,000 
D) $700,000

Question 6

Department contribution margin equals gross profit on sales minus indirect departmental expenses.

Accepted Answer

A) True 
 B)False

Question 7

Direct expenses and indirect expenses are separated in determining contribution margin.

Accepted Answer

A) True 
 B)False

Question 8

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 9

The accountant must always consider operating expenses,such as rent and advertising,when determining gross profit for a department.

Accepted Answer

A) True 
 B)False

Question 10

The cosmetic department experienced the following revenue and expenses during December: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 86,000 \
\hline \text { Cost of Goods Sold } & 29,000 \
\hline \text { Direct Operating Expenses } & 7,000 \
\hline \text { Indirect Operating Expenses } & 3,000 \
\hline
\end{array}$$ 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

In a department store,the men's clothing section would be a(n):

Accepted Answer

A) profit center. 
B) direct expense. 
C) cost center. 
D) indirect expense. 
A) profit center. 
B) direct expense. 
C) cost center. 
D) indirect expense.

Question 12

The candy department experienced the following revenue and expenses during October: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 13,500 \
\hline \text { Cost of Goods Sold } & 8,200 \
\hline \text { Direct Operating Expenses } & 1,100 \
\hline \text { Indirect Operating Expenses } & 700 \
\hline
\end{array}$$ The candy departmental net income is:

Accepted Answer

A) $6,400. 
B) $3,500. 
C) $4,200. 
D) $5,300. 
A) $6,400. 
B) $3,500. 
C) $4,200. 
D) $5,300.

Question 13

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 14

Joyful Praises Corporation has total advertising expenses of $84,000: $32,000 for radio advertising and $52,000 for print advertising.The print advertising is allocated to Departments A and B based on net sales generated in each department.Department A has net sales of $558,000 and Department B has net sales of $186,000.How much of the print advertising should be allocated to Department A?

Accepted Answer

A) $13,000 
B) $39,000 
C) $63,000 
D) $21,000 
A) $13,000 
B) $39,000 
C) $63,000 
D) $21,000

Question 15

The difference between a department's gross profit and its operating expenses is known as the:

Accepted Answer

A) departmental operating margin. 
B) departmental operating cost. 
C) departmental operating income. 
D) departmental gross profit. 
A) departmental operating margin. 
B) departmental operating cost. 
C) departmental operating income. 
D) departmental gross profit.

Question 16

A department should always be eliminated when it becomes unprofitable.

Accepted Answer

A) True 
 B)False

Question 17

If the property,plant,and equipment can be traced to a specific department,depreciation expense is a(n):

Accepted Answer

A) direct expense. 
B) indirect expense. 
C) cash expense. 
D) sales expense. 
A) direct expense. 
B) indirect expense. 
C) cash expense. 
D) sales expense.

Question 18

Direct expenses,such as salaries,can be traced to a particular department.

Accepted Answer

A) True 
 B)False

Question 19

On a departmental income statement,contribution margin minus total indirect expenses equals:

Accepted Answer

A) departmental contribution margin. 
B) net income. 
C) income before taxes. 
D) income taxes. 
A) departmental contribution margin. 
B) net income. 
C) income before taxes. 
D) income taxes.

Question 20

The data processing department of a tax firm would be a profit center.

Accepted Answer

A) True 
 B)False

Exam 24: Departmental Accounting

On a departmental income statement,sales less cost of goods sold and direct expenses equals:

Why would it be advisable for a company to keep separate accounting records for various departments?

A line on the income statement that indicates what a department has left after covering cost of goods and sold and direct expenses is:

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

Compute the contribution margin for the video department,when gross profit is $880,000,direct expenses $370,000,and indirect expenses are $190,000.

Department contribution margin equals gross profit on sales minus indirect departmental expenses.

Direct expenses and indirect expenses are separated in determining contribution margin.

A profit center is a unit in which the manager:

The accountant must always consider operating expenses,such as rent and advertising,when determining gross profit for a department.

The cosmetic department experienced the following revenue and expenses during December: Sales \ 86,000 Cost of Goods Sold 29,000 Direct Operating Expenses 7,000 Indirect Operating Expenses 3,000 The cosmetic department's contribution margin is:

In a department store,the men's clothing section would be a(n):

The candy department experienced the following revenue and expenses during October: Sales \ 13,500 Cost of Goods Sold 8,200 Direct Operating Expenses 1,100 Indirect Operating Expenses 700 The candy departmental net income is:

Indirect expenses are those expenses that:

The difference between a department's gross profit and its operating expenses is known as the:

A department should always be eliminated when it becomes unprofitable.

If the property,plant,and equipment can be traced to a specific department,depreciation expense is a(n):

Direct expenses,such as salaries,can be traced to a particular department.

On a departmental income statement,contribution margin minus total indirect expenses equals:

The data processing department of a tax firm would be a profit center.

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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