Question 1

Both financial and managerial accounting affect people's decisions and actions.

Accepted Answer

A) True 
 B)False

Question 2

The following list indicates costs as they flow through the business as a product is manufactured. Some items are missing. Compute the missing amounts.

Accepted Answer

A. 295,000 + 1,065,400 - 315,7

Question 3

Selling and administrative expenses are normally product costs.

Accepted Answer

A) True 
 B)False

Question 4

Products that are in the process of being manufactured but are not yet complete are called:

Accepted Answer

A)  Raw materials inventory. 
B)  Conversion costs. 
C)  Cost of goods sold. 
D)  Goods in process inventory. 
E)  Finished goods inventory. 
A)  Raw materials inventory. 
B)  Conversion costs. 
C)  Cost of goods sold. 
D)  Goods in process inventory. 
E)  Finished goods inventory.

Question 5

Raw materials that physically become part of the product and can be traced to specific units or batches of product are called:

Accepted Answer

A)  Raw materials sold. 
B)  Chargeable materials. 
C)  Goods in process. 
D)  Indirect materials. 
E)  Direct materials. 
A)  Raw materials sold. 
B)  Chargeable materials. 
C)  Goods in process. 
D)  Indirect materials. 
E)  Direct materials.

Question 6

A sunk cost has already been incurred and cannot be avoided or changed, so it is irrelevant to decision making.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following items does not represent a difference between financial and managerial accounting?

Accepted Answer

A)  Users of the information. 
B)  Flexibility of practices. 
C)  Timeliness and time dimension of the information reported. 
D)  Nature of the information. 
E)  Purpose of accounting. 
A)  Users of the information. 
B)  Flexibility of practices. 
C)  Timeliness and time dimension of the information reported. 
D)  Nature of the information. 
E)  Purpose of accounting.

Question 8

An opportunity cost requires a future cash outlay and is relevant for decision making.

Accepted Answer

A) True 
 B)False

Question 9

Use the following data to determine the cost of goods manufactured:
$$\begin{array} { l r } 
\text { Beginning finished goods inventory } & \$ 10,800 \
\text { Direct labor } & 30,600 \
\text { Beginning goods in process inventory } & 7,200 \
\text { General and administrative expenses } & 13,500 \
\text { Direct materials used } & 40,500 \
\text { Ending goods in process inventory } & 9,000 \
\text { Indirect labor } & 6,300 \
\text { Ending finished goods inventory } & 9,500 \
\text { Indirect materials } & 13,500 \
\text { Depreciation - factory equipment } & 7,500
\end{array}$$

Accepted Answer

A)  $102,000 
B)  $110,100 
C)  $96,600 
D)  $113,700 
E)  $100,200 
A)  $102,000 
B)  $110,100 
C)  $96,600 
D)  $113,700 
E)  $100,200

Question 10

Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.

Accepted Answer

A) True 
 B)False

Question 11

The following are all examples of product costs:

Accepted Answer

A)  Direct material, Direct Labor and Indirect Labor. 
B)  Direct Labor, VP of Sales salary, and Insurance on the factory. 
C)  Depreciation on the factory equipment, depreciation on the office building, and depreciation on the factory building. 
D)  Factory Insurance, Interest expense, and Property taxes on the factory. 
E)  Office supplies, Sales commissions, and maintenance costs on office copier. 
A)  Direct material, Direct Labor and Indirect Labor. 
B)  Direct Labor, VP of Sales salary, and Insurance on the factory. 
C)  Depreciation on the factory equipment, depreciation on the office building, and depreciation on the factory building. 
D)  Factory Insurance, Interest expense, and Property taxes on the factory. 
E)  Office supplies, Sales commissions, and maintenance costs on office copier.

Question 12

Flexibility of practice when applied to managerial accounting means that:

Accepted Answer

A)  The information must be presented in electronic format so that it is easily changed. 
B)  Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for. 
C)  The managerial accountants need to be on call twenty-four hours a day. 
D)  The design of a company's managerial accounting system largely depends on the nature of the business and the arrangement of the internal operations of the company. 
E)  Managers must be flexible with information provided in varying forms and using inconsistent measures. 
A)  The information must be presented in electronic format so that it is easily changed. 
B)  Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for. 
C)  The managerial accountants need to be on call twenty-four hours a day. 
D)  The design of a company's managerial accounting system largely depends on the nature of the business and the arrangement of the internal operations of the company. 
E)  Managers must be flexible with information provided in varying forms and using inconsistent measures.

Question 13

Current information for the Austin Company follows: 
$$\begin{array} { l r } 
\text { Beginning raw materials inventory } & \$ \
& 15,200 \
\text { Beginning goods in process inventory } & 22,400 \
\text { Ending raw materials inventory } & 16,600 \
\text { Ending goods in process inventory } & 28,000 \
\text { Direct labor } & 42,800 \
\text { Total factory overhead } & 30,000 \
\text { Raw material purchases } & 60,000
\end{array}$$ 
All raw materials used were traceable to specific batches of product. Austin Company's cost of goods manufactured for the year is:

Accepted Answer

A)  $125,800 
B)  $128,600 
C)  $131,400 
D)  $137,000 
E)  $139,000 
A)  $125,800 
B)  $128,600 
C)  $131,400 
D)  $137,000 
E)  $139,000

Question 14

Which of the following is never included in direct materials costs?

Accepted Answer

A)  Invoice costs of direct materials. 
B)  Outgoing delivery charges. 
C)  Materials storage costs. 
D)  Materials handling costs. 
E)  Insurance on stored material. 
A)  Invoice costs of direct materials. 
B)  Outgoing delivery charges. 
C)  Materials storage costs. 
D)  Materials handling costs. 
E)  Insurance on stored material.

Question 15

The following information is available for the year ended December 31: 
$$\begin{array} { l r } 
\text { Beginning raw materials inventory } & \$ 2,500 \
\text { Raw materials purchases } & 4,000 \
\text { Ending raw materials inventory } & 3,000 \
\text { Office supplies expense } & 1,000
\end{array}$$
The amount of raw materials used in production for the year is:

Accepted Answer

A)  $4,100 
B)  $5,100 
C)  $3,500 
D)  $6,500 
E)  $4,000 
A)  $4,100 
B)  $5,100 
C)  $3,500 
D)  $6,500 
E)  $4,000

Question 16

Which of the following items appears only in a manufacturing company's financial statements?

Accepted Answer

A)  Cost of goods sold. 
B)  Cost of goods manufactured. 
C)  Goods available for sale. 
D)  Gross profit. 
E)  Net income. 
A)  Cost of goods sold. 
B)  Cost of goods manufactured. 
C)  Goods available for sale. 
D)  Gross profit. 
E)  Net income.

Question 17

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following accounts would all appear on a manufacturing statement?

Accepted Answer

A)  Raw materials, factory insurance expired, indirect labor. 
B)  Raw materials, goods in process, finished goods. 
C)  Factory buildings, delivery equipment, and depreciation on factory equipment. 
D)  Direct labor, indirect labor, sales salaries. 
E)  Direct labor, factory repairs and maintenance, wages payable. 
A)  Raw materials, factory insurance expired, indirect labor. 
B)  Raw materials, goods in process, finished goods. 
C)  Factory buildings, delivery equipment, and depreciation on factory equipment. 
D)  Direct labor, indirect labor, sales salaries. 
E)  Direct labor, factory repairs and maintenance, wages payable.

Question 19

___________________ is the process of setting goals and making plans to achieve them.

Accepted Answer

The answer of ___________________ is the process of setting goals...

Question 20

A ___________________ cost has already been incurred and cannot be avoided or changed, so it irrelevant to decision making.

Accepted Answer

The answer of A ___________________ cost has already been incurred...

Exam 14: Managerial Accounting Concepts and Principles

Both financial and managerial accounting affect people's decisions and actions.

The following list indicates costs as they flow through the business as a product is manufactured. Some items are missing. Compute the missing amounts.

Selling and administrative expenses are normally product costs.

Products that are in the process of being manufactured but are not yet complete are called:

Raw materials that physically become part of the product and can be traced to specific units or batches of product are called:

A sunk cost has already been incurred and cannot be avoided or changed, so it is irrelevant to decision making.

Which of the following items does not represent a difference between financial and managerial accounting?

An opportunity cost requires a future cash outlay and is relevant for decision making.

Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.

The following are all examples of product costs:

Flexibility of practice when applied to managerial accounting means that:

Which of the following is never included in direct materials costs?

The following information is available for the year ended December 31: Beginning raw materials inventory \ 2,500 Raw materials purchases 4,000 Ending raw materials inventory 3,000 Office supplies expense 1,000 The amount of raw materials used in production for the year is:

Which of the following items appears only in a manufacturing company's financial statements?

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

Which of the following accounts would all appear on a manufacturing statement?

___________________ is the process of setting goals and making plans to achieve them.

A ___________________ cost has already been incurred and cannot be avoided or changed, so it irrelevant to decision making.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters