Term
01. Which department is often responsible for a direct materials variance based on usage?
A. The accounting department
B. The production department
C. The purchasing department
D. The budgeting department |
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Definition
| B. The production department |
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Term
02. Capital budgeting decisions can be difficult because
A. Decision may be difficult or impossible to reverse.
B. Large amounts of money are usually involved.
C. Investment involves a long-term commitment
D. Outcome is uncertain.
E. All of the above. |
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Definition
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Term
03. Which of the following accounts is closed at the end of the year?
A. Cash
B. Revenue
C. Retained earnings
D. Accounts payable |
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Definition
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Term
04. When a company receives a utility bill that is not due until next month, it should
A. debit utilities expense and credit accounts payable.
B. debit utilities expense and credit accounts receivable.
C. debit accounts payable and credit utilities expense.
D. debit utilities expense and credit cash
E. make no entry until the bill is paid. |
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Definition
| A. debit utilities expense and credit accounts payable. |
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Term
05. How long will it take an investment of $25,000 to accumulate to a total of $35,462.50 assuming an interest rate of 6 percent?
A. 4 years.
B. 10 years.
C. 5 years.
D. 6 years.
E. 2 years. |
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Definition
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Term
06. Cobert Company’s actual sales results exceeded the planned results for July. This amount exceeded the amount of an unfavorable difference reported for June sales. Which of the following statements about the sales performance report for both months is true?
A. The sales report is not useful since it shows a favorable and unfavorable difference for the two months.
B. The differences for the two months will offset each other so the differences should not be a concern.
C. The difference for July can be ignored.
D. The differences for both months should be investigated if the amounts are significant. |
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Definition
| D. The differences for both months should be investigated if the amounts are significant. |
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Term
07. Which of the following statements is true?
A. A flexible budget expresses all costs on a per unit basis.
B. Sales variances may be computed in a manner similar to cost variances and can be caused by a difference from planned prices or volume.
C. The final budget amounts in a performance report are based on an expected level of sales or production.
D. If an actual amount is more than a budgeted amount, an unfavorable variance will always result. |
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Definition
| B. Sales variances may be computed in a manner similar to cost variances and can be caused by a difference from planned prices or volume. |
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Term
08. When deciding whether to replace some equipment, the purchase price of the new equipment is
A. a relevant cost.
B. a semi-relevant cost.
C. a sunk cost.
D. none of the above |
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Definition
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Term
09. The Ooey Gooey Candy Company produces chocolate frosted sugar bombs that are used in one of the company’s products. For the production of the component, the company incurs direct material costs of $2,000, direct labor costs of $1,000, variable overhead costs of $4,000 and fixed overhead costs of $3,000. If the company purchases the component from an outside supplier, $2,000 of the fixed costs can be eliminated. At what purchase price is the company indifferent between making or buying?
A. 8,000
B. 10,000
C. 7,000
D. 9,000
E. 6,000 |
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Definition
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Term
10. Debits
A. increase both assets and liabilities.
B. decrease both assets and liabilities.
C. increase assets and decrease liabilities.
D. decrease assets and increase liabilities |
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Definition
| C. increase assets and decrease liabilities. |
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Term
12. The purpose of the ledger is to
A. record chronologically the day’s transactions.
B. keep a record of documentation to support each transaction.
C. keep in one place all information about changes in specific account balances.
D. make sure that all assets, liabilities, etc., have normal balances at all times. |
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Definition
| C. keep in one place all information about changes in specific account balances. |
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Term
14. Which of the following interest rates will produce the smallest present value?
A. 10%
B. 5%
C. 4%
D. 2% |
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Definition
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Term
22. If a company were considering whether or not to accept a special order, nonfinancial information that management might evaluate would include all of the following except
A. ability to meet customer’s schedule for delivery
B. availability of raw materials needed to produce order
C. availability of workers
D. amount of overtime pay for workers |
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Definition
| D. amount of overtime pay for workers |
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Term
25. In a flexible budget report, actual fixed costs
A. cannot be different from budgeted fixed costs.
B. should not be different from budgeted fixed costs.
C. should be different from budgeted fixed costs.
D. should not appear in the budget report. |
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Definition
| B. should not be different from budgeted fixed costs. |
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Term
26. Accrual accounting requires a company recognize
A. revenues as they occur.
B. revenues when the related cash is received.
C. expenses when the related cash is paid.
D. Both B and C
E. None of the above |
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Definition
| A. revenues as they occur. |
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Term
. The Garza Company purchased a copy machine for $2,400 and expects it to be useful for 4 years at which time it can be sold for $200. What amount of depreciation expense would the company record?
A. 650
B. 550
C. 600
D. 50 |
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Definition
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Term
28. The Murphy Company had supplies on hand of $500 at the beginning of the period, purchased $300 of supplies during the period and had $200 worth of supplies on hand at the end of the period. The related adjusting entry at the end of the period would record supplies expense of
A. $500
B. $300
C. $600
D. $200
E. none of the above |
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Definition
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