Question 1

An actual outlay of cash is a(n)

Accepted Answer

A) out-of-pocket cost. 
B) opportunity cost. 
C) direct cost. 
D) cost object.

Question 2

Prime costs include direct materials,direct labor,and manufacturing overhead.Taken together,direct materials and direct labor are referred to as prime cost.

Accepted Answer

A) True 
 B)False

Question 3

A cost object is

Accepted Answer

A) an item for which managers are trying to determine the cost. 
B) an item to which managers must directly trace costs. 
C) an item to which it is not worth the effort of tracing costs. 
D) an item for sale by a business.

Question 4

Out-of-pocket costs involve an actual outlay of cash.Out-of-pocket costs are those paid for items purchased,and involve an actual outlay of cash.

Accepted Answer

A) True 
 B)False

Question 5

Investors,creditors and regulators are the primary users of managerial accounting information.Managerial accounting information is used by internal business owners and managers.

Accepted Answer

A) True 
 B)False

Question 6

GAAP reporting rules require that all manufacturing costs be treated as

Accepted Answer

A) period costs. 
B) product costs. 
C) value-added costs. 
D) relevant costs.

Question 7

For a cost to be relevant,it must be

Accepted Answer

A) a differential cost and a sunk cost. 
B) a differential cost,but not a sunk cost. 
C) a sunk cost,but not a differential cost. 
D) neither a differential cost nor a sunk cost.

Question 8

Although there are numerous ways to categorize costs,each individual cost will only be classified in one particular way.A single cost can be classified in more than one way,depending on how the information will be used.

Accepted Answer

A) True 
 B)False

Question 9

Since hospitals,universities,and charitable organizations do not exist strictly to earn profit for shareholders,managerial accounting information is not vital to their operations.Managerial accounting information is vital to nonprofit organizations,including hospitals,universities,and charitable organizations.Although these organizations do not exist strictly to earn profit for shareholders,their managers still need managerial accounting information to prepare budgets,manage resources,and make strategic and operational decisions.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following functions of management involves taking corrective action if needed?

Accepted Answer

A) Planning 
B) Organizing 
C) Directing/leading 
D) Control

Question 11

Which of the following is not a characteristic of financial accounting?

Accepted Answer

A) Financial reports are prepared according to GAAP. 
B) Information is used by external parties. 
C) Information is subjective,relevant and future-oriented. 
D) Reports are prepared periodically.

Question 12

Financial accounting information is prepared according to generally accepted accounting principles.External financial statements are required to be prepared according to GAAP.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to reduce opportunities for error and fraud?

Accepted Answer

A) Internal control report from management 
B) Code of ethics 
C) Stronger oversight by directors 
D) Internal control audit by external auditors

Question 14

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to encourage good character?

Accepted Answer

A) Anonymous tip lines 
B) Whistle-blower protection 
C) Code of ethics 
D) Stiffer fines and prison terms

Question 15

Manufacturing costs are generally classified into which of the following categories?

Accepted Answer

A) relevant costs and irrelevant costs 
B) direct materials,direct labor,and manufacturing overhead 
C) prime costs and conversion costs 
D) conversion costs,marketing costs,and administrative costs

Question 16

All manufacturing costs are inventoriable costs.Manufacturing costs are product costs that are assigned to the product as it is being manufactured.Product costs are also called inventoriable costs because they are counted as inventory until the product is finally sold.

Accepted Answer

A) True 
 B)False

Question 17

An opportunity cost is

Accepted Answer

A) the foregone benefit of the path not taken. 
B) an actual outlay of cash. 
C) the initial investment required to pursue an opportunity. 
D) a cost that cannot be traced to a specific cost object.

Question 18

Robin Company has the following balances for the current month: What are Robin's conversion costs?

Accepted Answer

A) $70,400 
B) $60,800 
C) $91,200 
D) $57,600

Question 19

Conversion costs can be defined as

Accepted Answer

A) Manufacturing costs plus non-manufacturing costs. 
B) Direct labor plus direct materials. 
C) Variable costs plus fixed costs. 
D) Manufacturing costs minus direct materials.

Question 20

Which of the following is the correct sequencing of the managerial process?

Accepted Answer

A) Planning - Organizing - Control - Directing/Leading 
B) Planning - Directing/Leading - Organizing - Control 
C) Planning - Organizing - Directing/Leading - Control 
D) Organizing - Directing/Leading - Planning - Control

Exam 1: Introduction to Managerial Accounting

An actual outlay of cash is a(n)

Prime costs include direct materials,direct labor,and manufacturing overhead.Taken together,direct materials and direct labor are referred to as prime cost.

A cost object is

Out-of-pocket costs involve an actual outlay of cash.Out-of-pocket costs are those paid for items purchased,and involve an actual outlay of cash.

Investors,creditors and regulators are the primary users of managerial accounting information.Managerial accounting information is used by internal business owners and managers.

GAAP reporting rules require that all manufacturing costs be treated as

For a cost to be relevant,it must be

Although there are numerous ways to categorize costs,each individual cost will only be classified in one particular way.A single cost can be classified in more than one way,depending on how the information will be used.

Which of the following functions of management involves taking corrective action if needed?

Which of the following is not a characteristic of financial accounting?

Financial accounting information is prepared according to generally accepted accounting principles.External financial statements are required to be prepared according to GAAP.

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to reduce opportunities for error and fraud?

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to encourage good character?

Manufacturing costs are generally classified into which of the following categories?

All manufacturing costs are inventoriable costs.Manufacturing costs are product costs that are assigned to the product as it is being manufactured.Product costs are also called inventoriable costs because they are counted as inventory until the product is finally sold.

An opportunity cost is

Robin Company has the following balances for the current month: What are Robin's conversion costs?

Conversion costs can be defined as

Which of the following is the correct sequencing of the managerial process?