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WorksheetsAccounting test
Total questions: 65
Worksheet time: 41mins
Information about the company's financial result (profit or loss) can be found in:
Balance sheet and Income Statement
Statement of cash flows and Balance Sheet
Statement of retained earnings
A relevant cost is a ... cost that differs between the decision alternatives
future
present
past
Payment of dividends is:
ouflow
cost
neither cos or outflow
cost and outflow
An intangible asset is:
a fax
a printer
a computer
a computer software
The purchase of 2-year treasury bonds should be recorded as:
financial cost
financial income
long-term financial assets
financial assets for reselling
During its first month of business, Jones started 15 000 units and completed 10 000 units, leaving 5 000 units in process 30 percent complete. How many equivalent units of production did Jones have for the month?
10 000
11 500
13 500
15 000
Now assume that Jones incurred $ 27 600 in production costs for the 11 500 equivalent units. What was Jones' cost per equivalent unit for the period
$2,40
$2,76
$2,90
$1,84
Which method will produce the highest value for work in process and finished goods inventories?
Variable costing
Absorption costing
They produce the same values for these inventories
It depends...
Which method will produce the highest retained earnings? (Hint: remember the balance sheet equation)
Depends...
No differences in retained earnings under the two methods
Variable costing
Absorption costing
The net operating income under absorption costing was $120 000 and under variable costing it was $90 000 because of higher expenses. Where is the missing $30 000 under absorption costing?
It is in the ending inventories
It represents taxes that have been saved
It has disappeared into an accounting black hole
The $30 000 wasn't a real cost, so nothing is really missing
Users of accounting information
managers
owners
shareholders
potential investors
accountants
Of what consists Balance Sheet
Assets
Liabilities
Stockholders' Equity
Revenue
Expenses
Which refers to Financial Accounting
Its focus is on reporting to external parties
It provides financial statements based on
generally accepted accounting principles
It measures and records business transactions
Information for decision
making and control of an
organization’s operations
It measures and reports financial and
nonfinancial information that helps
managers make decisions to fulfill the
goals of an organization
Published financial
statements and other
reports
Which refers to Managerial Finance
Published financial
statements and other
reports
Information for decision
making and control of an
organization’s operations
Its focus is on reporting to external parties
It provides financial statements based on
generally accepted accounting principles
Pick internal users
Employees
Lenders and suppliers
Management and employees
Customers
Who establishes generally accepted accounting principles for U.S. companies?
International Accounting Standard Board
U.S. Accounting Association
Financial Accounting Standard Board
Managerial Accounting Standard Board in U.S.
What does stockholders' equity represent in a corporation?
the economic resources of a company
that are expected to benefit the company’s future
operations
the present obligations to
pay cash, transfer assets, or provide services to
other entities in the future
the amount that stockholders invest
in the business
the claims of the owners of a
corporation to the assets of the
business
What is the term used for the amount over par value when the value received for stocks is greater than par value?
an amount per share that when multiplied by the number of shareholders becomes the corporation's common shares amount
it is the minimum amount that can be reported as contributed capital
an amount per share that when multiplied by the number of common shares becomes the corporation’s common stock amount
it is the maximum amount that can be reported as contributed capital
How many years of information does comparative balance sheet typically present?
one
two
five
ten
Income Statement consists of:
Costs
Expenses
Revenues
Fees earned
... represent the accumulated earnings generated by a business's income- producing activities less amounts that have been paid out to the stockholders
(a)
Cash flows are the ... and outflows of cash
into and out of a business
(a)
Cash Flows from (pick wrong one)
Investing Activities
Operating Activities
Managing Activities
Financing Activities
CPA firms have economic incentives to perform credible audits (refers to)
Bank credit
Reputation
Bonuses
Lawsuit
Public stock price
To which concept refers the description: requires
that the amounts recorded in the
accounting records be based on
objective evidence
Business entity concept
Cost concept
Objectivity concept
Unit of Measure concept
Under the (a) concept,
amounts are initially recorded
in the accounting records at
their cost or purchase price.
The Accounting Equation
Owner’s Equity = Liabilities + Assets
Assets = Liabilities + Owner’s Equity
Liabilities = Assets + Owner’s Equity
Owner's Equity = Assets - Liabilities
An
economic event or condition that
directly changes an entity’s
financial condition or its results
of operations
business exchange
accounting principle
accounting event
business transaction
Under which title should you account it:
On November 30, 2019, NetSolutions paid creditors on account, $950.
Cash (A), Accounts payable (L)
Accounts receivable (A), Accounts payable (OE)
Cash (A), Accounts payable (OE)
Accounts receivable (A), Fees earned (OE)
It reports
the revenues and expenses for
a period of time, based on the
matching concept. What does it stands for?
Financial Statement
Income Statement
Statement of Owner's Equity
Net income or net
loss appears on...
Statement of Owner's Equity
Income Statement
Both Income Statement and Statement of Owner's Equity
None of the above
Units produced, Machine hours, Km driven, Labor hours
What do them refer to?
Cost Pools
Cost Drivers
Cost Objects
Cost Groups
... (Plural form) can
not be conveniently
or economically
traced to cost pools
or cost objects
(a)
The assignment of indirect
costs to cost pools and cost
objects, using cost drivers
(allocation bases), is called
...
(a)
Which is NOT a cost driver type?
activity-based
structural
volume-based
time-based
executional
Structural type of cost driver:
Short-term operational decisions:
-Workforce involvement
-Production process design
-Supplier relationships
Identified using activity analysis,
a detailed description of specific
activities and the relationship
between the activity and costs
Relationship between costs and
volume measures such as units
produced, direct labor hours,
or quantity of materials used
Involves strategic plans and decisions:
-Scale
-Experience
-Technology
-Complexity
Inventory Cost Flow Formula
Cost Added - Beginning Inventory Balance
=
Cost Transferred Out - Ending Inventory Balance
Beginning Inventory Balance
=
Cost Transferred Out - Ending Inventory Balance + Cost Added
Ending Inventory Balance - Beginning Inventory Balance
=
Cost Transferred Out - Cost Added
Beginning Inventory Balance + Cost Added
=
Cost Transferred Out + Ending Inventory Balance
... cannot be changed by any decision. They are
not differential costs and should be ignored when
making decisions
(a)
Attributes of Cost Information for Decision Making
Controllability
Timeliness
Cost versus Value
Management risk preferences
Accuracy
Cost allocation
where a cost cannot be directly
assigned to a cost object
where a cost can be directly assigned
to a cost object
The Strategic Role of Cost Allocation
Provide the right incentive for managers to make decisions that are consistent with the goals of top management
Determine accurate departmental and product costs for evaluating the cost efficiency of departments and the profitability of products
Motivate managers to exert a high level of effort to achieve the goals of top management
Fairly determine the rewards earned by the managers for their effort and skill, and for the effectiveness of their decision making
A traditional volume-based overhead costing system, whether plant-wide or departmental, often leads to ... product costs
(a)
Reciprocal method of Allocating Service Department Costs
Service department costs are allocated to other service departments and to production departments, usually starting with the service department that provides the greatest amount of service to other departments.Once a service department’s costs are allocated, other service department costs are not allocated back to it
Interdepartmental services are given full recognition rather than partial recognition as with the step method
Cost of services between service departments are ignored and all costs are allocated directly to user departments.
Job costing would be implemented to:
Chemical plants
Film-producing companies
Food processors
Textile companies
Process costing would be implemented to:
Petroleum products manufacturers
Custom furniture manufacturers
Glass factories
Advertising agencies
Which one is correct?
POHR = (Budgeted factory overhead amount for the year) / (Expected level of cost driver for the year)
POHR = (Budgeted factory overhead amount for the year) x (Expected level of cost driver for the year)
POHR = (Expected level of cost driver for the year) - (Budgeted factory overhead amount for the year)
POHR = (Expected level of cost driver for the year) x (Budgeted factory overhead amount for the year)
In Process Costing, what Conversion refers to?
Direct labor combined with factory overhead
Direct materials combined with direct labor
Factory overhead combined with direct materials
Treats all manufacturing costs as product costs,
and non-manufacturing costs as period costs
Absorption Costing
Variable Costing
It is used for internal planning and
control only; it’s not consistent with legal
requirements
Absorption Costing
Variable Costing
In Absorption Costing, Fixed Manufacturing Overhead refers to?
Product Costs
Period Costs
Net operating income is not affected by changes in production using ... costing
(a)
Advantages of Variable Costing
Doesn’t understate the importance of fixed costs
Management finds it easy to understand.
Consistency with external reporting
Consistent with standard costs and flexible budgeting
Consistent with CVP analysis
Production Volume Variance =
(Denominator level – Actual level) × Budgeted fixed manufacturing overhead rate
Budgeted fixed manufacturing overhead – (Fixed manufacturing overhead allocated using budgeted cost per output unit allowed for actual output produced)
(Fixed manufacturing overhead allocated using budgeted cost per output unit allowed for actual output produced) + Budgeted fixed manufacturing overhead
(Denominator level + Actual level) × Budgeted fixed manufacturing overhead rate
Changes in Manufacturing and Business
advances in manufacturing technology
changes in the competitive environment
expansions in product diversity
increases in factory overhead amounts and categories
ABC is
Activity-Based Costing
Account-Based Costing
Allocation of Basic Costs
Which are Unit-level activites?
machine setup, purchase ordering, production scheduling
security, safety, maintenance, plant management
direct materials, direct labor hours, inserting a component
product design, parts administration, issuance of engineering change orders, expediting
Pick the right one
Cost / Activity Consumption = Activity Rate
Activity Consumption / Cost = Activity Rate
(Cost / Activity Consumption) * 100 = Activity Rate
(Activity Consumption / Cost) * 100 = Activity Rate
Pick the right one
Activity Rate * Number of Activity = Total Overhead
Total Overhead * Activity Rate = Number of Activity
Number of Activity * Total Overhead = Activity Rate
The CVP model is as follows:
Operating profit = Sales - Total costs
Sales = Fixed costs + Variable costs + Operating profit
(Units sold x price) = Fixed costs + (Units sold x unit var. cost) + Operating profit
Which one refers to The Contribution Margin Methods, B?E in sales units (Q)
Y = F/M%
Q = F/(p – v)
p x Q = (v x Q) + F + N
p x Q = (v x Q) + F
Y = [(v/p) x Y] + F + N
Y = [(v/p) x Y] + F
A ... value for operating leverage indicates a higher risk in the sense that a given change in sales will have a relatively greater impact on profits
(a)
Pick the examples of relevant cost
Original cost of old machine, $4 200
Purchase price of a new machine, $7 000
Power for either machine is expected to be $2,50/hour
Current book value of old machine, $ 2 100
Repairs to old machine would be $3 500 and would allow one more year of productivity
Which refers to Strategic Analysis?
Short-term focus
Linked to the firm's strategy
Product cost focus
Considers all customer factors
The assumption that the firm will attempt to set the selling price at a level where profits are maximized
Economic theory
Accounting theory
Market theory
Profit theory
Market methods of setting prices:
Demand-based concept
Total cost concept
Competition-based concept
Product cost concept
Variable cost concept
