(Test Bank) Accounting 201-A Complete Guide For Exam Preparation-Verified A+

Unknown, 1

Business

Test Bank

1st Edition

• $15.00 $50.00

---

Description

Test Bank for Accounting 201-A Complete Guide For Exam Preparation-Verified A+, The downloadable file consists of 860 pages, and the total size of the file is 4.08 MB. Purchase now only for highly discounted price.

---

---

Study Note Preview

Chapter 1 Managerial Accounting and the Business Environment Garrison, Managerial Accounting, 12th Edition 3 True/False Questions 1. Although financial and managerial accounting differ in many ways, they are similar in that both rely on the same underlying financial data. Answer: True Level: Medium LO: 1 2. Managerial accounting is a branch of financial accounti ng and serves essentially the same purposes as financial accounting. Answer: False Level: Medium LO: 1 3. Managerial accounting places greater emphasis on the future than financial accounting, which is primarily concerned with the past. Answer: True Level: Easy LO: 1 4. Managerial accounting is not needed in a non-profit or governme ntal organization. Answer: False Level: Easy LO: 1 5. When carrying out their planning activities , managers select a course of action and specify how the action will be implemented. Answer: True Level: Easy LO: 2 6. When carrying out their planning activities , managers obtain feedback to ensure that the plan is actually carried out and is appr opriately modified as circumstances change. Answer: False Level: Medium LO: 2 7. The controller occupies a lin e position in an organization. Answer: False Level: Easy LO: 2 8. Decentralization means the delegation of decision-making authority throughout an organization by allowing managers at various operating levels to make key decisions relating to their own ar ea of responsibility. Answer: True Level: Easy LO: 2 Chapter 1 Managerial Accounting and the Business Environment 4 Garrison, Managerial Accounting, 12th Edition 9. A firm's organization chart will normally s how both the formal and informal lines of reporting and communication. Answer: False Level: Easy LO: 2 10. The Chief Financial Officer of an organi zation is responsible for ensuring that line operations run smoothly. Answer: False Level: Medium LO: 2 11. Traditionally, companies have maintained large amounts of raw materials, work in process, and finished goods inventories to act as buffers so that operations can proceed smoothly even if there are unanticipated disruptions. Answer: True Level: Medium LO: 3 12. Process Reengineering is generally consid ered to be a more radical approach to improvement than Total Quality Management. Answer: True Level: Easy LO: 3 13. Process Reengineering emphasizes a team approach involving front-line workers, whereas Total Quality Management is usua lly implemented using outside specialists and is imposed from above. Answer: False Level: Medium LO: 3 14. If ethical standards were not generally followed, one of the results would probably be fewer goods and services available in the marketplace. Answer: True Level: Medium LO: 4 15. The Standards of Ethical Conduct for Ma nagement Accountants promulgated by the Institute of Management Accountants specif ically state that management accountants' sole ethical responsibility is to not break any laws. Answer: False Level: Easy LO: 4 Chapter 1 Managerial Accounting and the Business Environment Garrison, Managerial Accounting, 12th Edition 5 Multiple Choice Questions 16. Management accounting focuses primarily on providing data for: A) internal uses by managers. B) external uses by stockholders and creditors. C) external uses by the In ternal Revenue Service. D) external uses by the Securities and Exchange Commission. Answer: A Level: Easy LO: 1 17. Managerial accounting: A) is more future oriented than financial accounting. B) tends to summarize information more than financial accounting C ) i s p r i m a r i l y c o n c e r n e d w i t h p r o v i d ing information to external users. D) is more concerned with precision than timeliness. Answer: A Level: Easy LO: 1 18. Compared to financial accounting, mana gerial accounting places more emphasis on: A) the flexibility of information. B) the precision of information. C) the timeliness of information. D) both A and C above. Answer: D Level: Easy LO: 1 19. The function of management that compares planned results to actual results is known as: A) planning. B) directing and motivating. C) controlling. D) decision making. Answer: C Level: Easy LO: 2 20. Which of the functions of management i nvolves overseeing day- to-day activities? A) Planning B) Directing and motivating C) Controlling D) Decision making Answer: B Level: Easy LO: 2 Chapter 1 Managerial Accounting and the Business Environment 6 Garrison, Managerial Accounting, 12th Edition 21. Which of the following is not one of th e three basic activitie s of a manager? A) Planning B ) C o n t r o l l i n g C) Directing and motivating D) Compiling manageme nt accounting reports Answer: D Level: Easy LO: 2 22. The delegation of decision making to lower levels in an organization is known as: A ) t h e p l a n n i n g a n d c o n t r o l c y c l e . B) controlling. C) decentralization. D) none of these. Answer: C Level: Easy LO: 2 23. Which of the following statements are false concerning line and staff functions? I. Persons occupying staff functions have authority over persons occupying line functions. II. Both line and staff functions are de picted on the organization chart. III. Line functions are directly related to the basic objec tives of an organization. A) Only I B) Only II C) Only I and II D ) I , I I , a n d I I I Answer: A Level: Medium LO: 2 24. Which of following would normally be found on a manufacturing company's organization chart? A) the layout of the factory assembly lines B ) a l i s t o f t h e m a t e r i a l s n e e d e d t o produce each of the company's products C) the informal lines of reporting and communication D) none of the above Answer: D Level: Easy LO: 2 Chapter 1 Managerial Accounting and the Business Environment Garrison, Managerial Accounting, 12th Edition 7 25. For a hospital, what type of position (line or staff) is each of the following? Emergency Room Manager Human Resources (Personnel) Manager A) Staff Staff B) Staff Line C) Line Staff D) Line Line Answer: C Level: Easy LO: 2 26. A detailed financial plan fo r the future is known as a: A) budget. B) performance report. C) organization chart. D) segment. Answer: A Level: Easy LO: 2 27. A performance report is: A) a detailed report comparing budgeted data to actual data for a specific time period. B) a formal statement of plans for the upcoming period. C) required to be filed monthly by th e Securities and Exchange Commission. D) not used in decentralized organizations. Answer: A Level: Easy LO: 2 28. A clustering of two or more machines at a single workstation is referred to as: A ) a m a n u f a c t u r i n g c e l l . B) an activity center. C ) a f u n c t i o n a l l a y o u t . D ) a s e t u p . Answer: A Level: Medium LO: 3 29. A focused factory is: A) a factory that make s only a single product. B) a factory that performs a single step in the production proce ss and subcontracts the other steps. C ) a p l a n t l a y o u t i n w h i c h a l l m a c h i n e s needed to make a particular product are brought together in one location. D) required to bid for defense contracts. Answer: C Level: Easy LO: 3 Chapter 1 Managerial Accounting and the Business Environment 8 Garrison, Managerial Accounting, 12th Edition 30. Large work in process inventories: A) are essential for efficient operations. B) reduce defect rates. C) increase throughput time. D ) a r e a k e y p a r t o f J u s t - I n - T i m e s y s t e m s . Answer: C Level: Medium LO: 3 31. Ideally, how many units should be produced in a just-in-time manufacturing system? A) budgeted customer demand for the current week. B) budgeted customer demand for the following week. C) actual customer demand for the current week. D) maximum production capac ity for the current week. Answer: C Level: Medium LO: 3 32. After careful planning, Jammu Manufacturi ng Corporation has deci ded to switch to a just-in-time inventory system. At the beginni ng of this switch, Jammu has 30 units of product in inventory. Jammu has 2,000 labor hour s available in the first month of this switch. These hours could produce 500 units of product. Customer demand for this first month is 400 units. If just-in-time principles are correct ly followed, how many units should Jammu plan to produce in the first month of the switch? A) 370 B) 400 C) 430 D) 470 Answer: A Level: Medium LO: 3 33. Process Reengineering includes a ll of the following steps except: A) constructing a diagram flow charting the current process. B) redesigning the process. C) elimination of non- value-added activities. D) elimination of all constraints. Answer: D Level: Hard LO: 3 Chapter 1 Managerial Accounting and the Business Environment Garrison, Managerial Accounting, 12th Edition 9 34. According to the Theory of Constraint s, improvement efforts should usually be focused on: A) work centers that are not constraints. B) the work center that is the constraint. C) the work center with the highest total cost. D) the work center with the most obsolete equipment. Answer: B Level: Medium LO: 3 35. Which of the following is true rega rding the theory of constraints? A) The theory of constraints does not apply to companies with multiple products because of capacity measurement difficulties. B) In any profit-seeking company, ther e must be at least one constraint. C) Constraints or bottlenec ks stop organizations from se lling an infinite number of units or services. D) both B and C above. Answer: D Level: Medium LO: 3 36. Pizza World makes forty-three kinds of pizza for takeout and delivery. Which of the following could be the cons traint at Pizza World? A) the person who makes the pizza crust. B ) t h e p e r s o n w h o p u t s t o p p i n g s o n t h e p i z z a s . C) the pizza oven. D) any of the above c ould be the constraint. Answer: D Level: Medium LO: 3 37. The Standards of Ethical Conduct for Management Accountants developed by the Institute of Management Accountants cont ain a policy regarding confidentiality that requires management accountants to refrain from disclosing confidential information acquired in the course of their work: A) except when authorized by management. B) in all situations. C) except when authorized by manageme nt, unless legally obligated to do so. D) in all cases not prohibited by law. Answer: C Level: Hard LO: 4 Chapter 1 Managerial Accounting and the Business Environment 10 Garrison, Managerial Accounting, 12th Edition 38. Wide-spread adherence to ethical standard s in an advanced market economy tends to result in all of the following except: A) higher prices. B) higher quality goods and services. C) greater variety of goods and services available for sale. D) safer products. Answer: A Level: Medium LO: 4 39. The Institute of Management Accountant s (IMA) has developed ethical standards for management accountants. What four categorie s has the IMA classified these standards into? A ) R e l i a b i l i t y , O b j e c t i v i t y , Commitment, and Competence B ) O b j e c t i v i t y , I n t e g r i t y , C o m m i t m e n t , a n d C o n f i d e n t i a l i t y C) Observation, Integrity, Closure, and Competence D) Competence, Objectivity, Integrity, and Confidentiality E) Reliability, Understandabili ty, Flexibility, and Integrity Answer: D Level: Medium LO: 4 40. Samantha Galloway is a managerial accountant in the accounting department of Mustang Industries, Inc. Samantha has just discovered evidence that some of the corporation's marketing managers have been wrongfully inflating their expense reports in order to obtain higher reimbursements from the firm. According to the Institute of Management Accountants' Standards of Et hical Conduct, what should Samantha do upon discovering this evidence? A) notify the controller. B) notify the marketing managers involved. C) notify the presiden t of the corporation. D) ignore the evidence because she is no t part of the Marketing Department. Answer: A Level: Hard LO: 4 Chapter 2 Cost Terms, Concepts, and Classifications Garrison, Managerial Accounting, 12th Edition 15 True/False Questions 1. Manufacturing overhead is an indirect co st with respect to units of product. Answer: True Level: Medium LO: 1 2. Depreciation on office equipment would not be included in the cost of goods manufactured. Answer: True Level: Easy LO: 2,4 3. Rent on a factory building used in the pr oduction process would be classified as a period cost and as a fixed cost. Answer: False Level: Medium LO: 2,5 4. Period costs are found only in manufac turing companies, not in merchandising companies. Answer: False Level: Medium LO: 2 5. Depreciation on equipment a company uses in its selling and administrative activities would be classified as a product cost. Answer: False Level: Medium LO: 2 6. If the finished goods inventory increase s between the beginnin g and the end of a period, then the cost of goods manufactured is smaller than the cost of goods sold. Answer: False Level: Hard LO: 3,4 7. The cost of goods manufactured is calcul ated by adding the amount of work in process at the end of the year to the cost of ra w materials used, dire ct labor worked, and manufacturing overhead incurred for the year and then subtracting work in process at the beginning of the year. Answer: False Level: Medium LO: 4 8. A publisher that sells its books through ag ents who are paid a constant percentage commission on each book sold would classify the commissions as a fixed cost. Answer: False Level: Medium LO: 5 Chapter 2 Cost Terms, Concepts, and Classifications 16 Garrison, Managerial Accounting, 12th Edition 9. Variable costs per unit are a ffected by changes in activity. Answer: False Level: Easy LO: 5 10. A cost is either direct or indirect. The classification will not cha nge if the cost object changes. Answer: False Level: Medium LO: 6 11. The amount that a manufacturing compa ny could earn by renting unused portions of its warehouse is an exampl e of an opportunity cost. Answer: True Level: Easy LO: 7 12. Labor fringe benefits may be charged to direct labor or manufacturing overhead while overtime premiums paid usually are consider ed a part of manuf acturing overhead. Answer: True Level: Easy LO: 8 Appendix: 2A 13. The cost of idle time should be charged as direct labor of the j ob that is in process when the breakdown occurs. Answer: False Level: Medium LO: 8 Appendix: 2A 14. Internal failure costs result from identific ation of defects during the appraisal process. Such costs may include scrap, rejected products, rework, and downtime. Answer: True Level: Easy LO: 9 Appendix: 2B 15. ISO 9000 certification is re latively easy to achieve b ecause little documentation on quality control procedures is needed. Answer: False Level: Easy LO: 11 Appendix: 2B Chapter 2 Cost Terms, Concepts, and Classifications Garrison, Managerial Accounting, 12th Edition 17 Multiple Choice Questions 16. Indirect labor is a part of: A) Prime cost. B) Conversion cost. C) Period cost. D) Nonmanufacturing cost. Answer: B Level: Medium LO: 1,2 Source: CPA, adapted 17. The cost of lubricants used to grea se a production machin e in a manufacturing company is an example of a(n): A) period cost. B ) d i r e c t m a t e r i a l c o s t . C ) i n d i r e c t m a t e r i a l c o s t . D) none of the above. Answer: C Level: Easy LO: 1,2 18. The salary paid to the pr esident of King Company would be classified on the income statement as a(n): A) administrative expense. B) direct labor cost. C) manufacturing overhead cost. D) selling expense. Answer: A Level: Easy LO: 1 19. Direct labor co st is a part of: Conversion cost Prime cost A) No No B) No Yes C) Yes Yes D) Yes No Answer: C Level: Easy LO: 1 Source: CPA, adapted Chapter 2 Cost Terms, Concepts, and Classifications 18 Garrison, Managerial Accounting, 12th Edition 20. Direct material cost is a: Conversion cost Prime cost A) No No B) No Yes C) Yes Yes D) Yes No Answer: B Level: Medium LO: 1 Source: CPA, adapted 21. Prime cost and conversion cost shar e what common element of total cost? A) Direct materials. B) Direct labor. C) Variable overhead. D) Fixed overhead. Answer: B Level: Easy LO: 1 Source: CPA, adapted 2 2 . P r i m e c o s t c o n s i s t s o f : A) direct labor and manufacturing overhead. B) direct materials a nd manufacturing overhead. C) direct materials and direct labor. D) direct materials, direct la bor and manufacturing overhead. Answer: C Level: Easy LO: 1 23. Wages paid to a timekeeper in a factory are a: Prime cost Conversion cost A) Yes No B) Yes Yes C) No No D) No Yes Answer: D Level: Medium LO: 1 Source: CPA, adapted 24. Property taxes on a company's factory bu ilding would be classified as a(n): A) product cost. B) opportunity cost. C) period cost. D) variable cost. Answer: A Level: Easy LO: 2,5,7 Chapter 2 Cost Terms, Concepts, and Classifications Garrison, Managerial Accounting, 12th Edition 19 25. Depreciation on a personal computer us ed in the marketing department of a manufacturing firm would be classified as: A) a product cost that is fixed w ith respect to the company's output. B) a period cost that is fixed w ith respect to the company's output. C) a product cost that is variable wi th respect to the company's output. D) a period cost that is fixed w ith respect to the company's output. Answer: B Level: Medium LO: 2,5 26. The nursing station on the fourth floor of Central Hospital is responsible for the care of patients who have undergone orthopedic su rgery. The costs of drugs administered by the nursing station to patient s would be classified as: A) direct costs of the patients. B) indirect costs of the patients. C) overhead costs of the nursing station. D) period costs of the hospital. Answer: A Level: Hard LO: 2,6 27. All of the following would be cl assified as produc t costs except: A) property taxes on production equipment. B) insurance on factory machinery. C) salaries of the advertising staff. D) wages of machine operators. Answer: C Level: Easy LO: 2 28. Product costs appear on the balance sheet: A) only if goods are partially comp leted at the end of the period. B) only if goods are unsold at the end of a period. C) only if goods are partially completed or are unsold at the end of a period. D ) o n l y i n m e r c h a n d i s i n g f i r m s . Answer: C Level: Medium LO: 2 Chapter 2 Cost Terms, Concepts, and Classifications 20 Garrison, Managerial Accounting, 12th Edition 29. Ross Corporation shipped finished goods to a customer on credit, but the sale was not recorded and the costs of the finished goods were incorrectly included on the period's balance sheet as part of the finished goods inventory. Which one of the following statements is correct concerning the effects of this error? A) Accounts receivable was not affecte d, inventory was overstated, sales were understated, and cost of goods sold was understated. B) Accounts receivable was understated, i nventory was not affected, sales were understated, and cost of goods sold was understated. C) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated. D) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was understated. Answer: D Level: Easy LO: 3 Source: CMA, adapted 30. Data for Cost A and Cost B are as follows: Number of Units Produced Unit Cost Total Cost Cost A 1 ? $10 10 ? $100 100 ? $1,000 1,000 ? $10,000 Cost B 1 $5,000 ? 10 $500 ? 100 $50 ? 1,000 $5 ? Which of the above best describe s the behavior of Costs A and B? A) Cost A is fixed, Cost B is variable. B) Cost A is variab le, Cost B is fixed. C) Both Cost A and Cost B are variable. D) Both Cost A and Cost B are fixed. Answer: B Level: Medium LO: 5 Chapter 2 Cost Terms, Concepts, and Classifications Garrison, Managerial Accounting, 12th Edition 21 31. Fixed costs expressed on a per unit basis: A) will increase with increases in activity. B ) w i l l d e c r e a s e w i t h i n c r e a s e s i n a c t i v i t y . C) are not affected by activity. D) should be ignored in making d ecisions since they cannot change. Answer: B Level: Medium LO: 5 32. The costs of staffing and operating the accounting department at Central Hospital would be considered by the Depa rtment of Surgery to be: A) direct costs. B) indirect costs. C ) i n c r e m e n t a l c o s t s . D) opportunity costs. Answer: B Level: Hard LO: 6,7 33. A cost incurred in the past that is not re levant to any current d ecision is classified as a(n): A) period cost. B) opportunity cost. C) sunk cost. D) differential cost. Answer: C Level: Easy LO: 7 3 4 . D i f f e r e n t i a l c o s t s c a n : A) only be fixed costs. B) only be variable costs. C) be either fixed or variable. D ) b e i n c r e m e n t a l b u t n o t d e c r e m e n t a l . Answer: C Level: Easy LO: 7 35. John Johnson decided to leave his former job where he earned $12 per hour to go to a new job where he will earn $13 per hour. In the decision process, the former wage of $12 per hour would be cl assified as a(n): A) sunk cost. B) direct cost. C ) f i x e d c o s t . D) opportunity cost. Answer: D Level: Easy LO: 7