acct 2302 test1 (16)

7) Which of the following is an objective of managerial accounting?
A) to generate a company's financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their business
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant

B) to provide information to business managers to assist them in controlling their business

Which of the following statements is true of managerial accounting?
A) The external stakeholders of a company are the primary users of managerial accounting.
B) Managerial accounting information is used to help managers plan and control their operations.
C) An external audit by an independent CPA is required for managerial accounting information.
D) Managerial accounting information must comply with Generally Accepted Accounting Principles.

B) Managerial accounting information is used to help managers plan and control their operations.

Managerial accounting information for a company is primarily used by ________.
A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan and control operations
D) its investors to make their investment decisions

C) its employees to plan and control operations

Which of the following statements is true of financial accounting?
A) It provides information to investors needed for their investment decisions.
B) It provides forward-looking information needed for managing and delegating operations.
C) It focuses on detailed reports for parts of the company rather than the whole company.
D) It focuses on planning and controlling day-to-day operations.

A) It provides information to investors needed for their investment decisions.

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business's managerial accounting?
A) comparing actual performance to previously budgeted amounts
B) creating detailed budgets
C) implementing operational plans
D) evaluating results of operations

B) creating detailed budgets

Comparing actual performance to previously budgeted amounts is part of the ________.
A) controlling function of managerial accounting
B) planning function of managerial accounting
C) reporting function of managerial accounting
D) organizing function of managerial accounting

A) controlling function of managerial accounting

Which of the following is the primary objective of managerial accounting?
A) providing information that managers need to make operational decisions
B) providing historical data to investors and creditors
C) providing summarized results of operations
D) providing information to comply with laws and regulations of government bodies

A) providing information that managers need to make operational decisions

Which of the following is the primary focus of financial accounting?
A) providing information that managers need to make operational decisions
B) providing summarized information on operational results to investors and creditors
C) providing budgets for future periods
D) providing highly detailed information on product lines, regions, and divisions

B) providing summarized information on operational results to investors and creditors

Management's accountability to its suppliers and vendors is to ________.
A) provide products to customers that are safe and free of defects
B) obey laws and pay taxes timely
C) provide a return on shareholders' investment
D) make timely payments and comply with contract terms

D) make timely payments and comply with contract terms

How is the management of a company accountable to its employees?
A) The management must provide products that are safe and free of defects.
B) The management must provide a safe workplace.
C) The management must ensure that it earns a net positive return on its investments.
D) The management must ensure the business is environmentally responsible to its community.

B) The management must provide a safe workplace.

Management of a company is accountable to ________ for obeying laws and paying taxes.
A) the natural environment
B) its asset vendors
C) the securities exchange
D) the government

D) the government

In which of the following ways is the management of a company accountable to its communities?
A) making timely interest payments to creditors and dividend payments to investors
B) ensuring the company's environmental impact is not harmful to its community
C) providing a capital return on the shareholders' investment
D) repaying principal and interest to the suppliers

B) ensuring the company's environmental impact is not harmful to its community

________ is a philosophy of continuous improvement of products and processes.
A) Just-in-Time (JIT) Management
B) Enterprise Resource Planning (ERP)
C) Supply Chain Management (SCM)
D) Total Quality Management (TQM)

D) Total Quality Management (TQM)

Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be filled?
A) Supply Chain Management (SCM)
B) Just-in-Time (JIT) Management
C) Enterprise Resource Planning (ERP)
D) Total Quality Management (TQM)

B) Just-in-Time (JIT) Management

What is Total Quality Management (TQM)?
A) a philosophy of supplying customers with superior products and services
B) an exchange of information with suppliers and customers to create efficient and effective processes
C) a software system that integrates a company's functions, departments, and data into a single system
D) a system that speeds the transformation of raw materials into finished products

A) a philosophy of supplying customers with superior products and services

An Enterprise Resource Planning system (ERP) ________.
A) is a cost management system in which a company produces products just in time to satisfy needs
B) requires the implementation of Total Quality Management
C) integrates all worldwide functions, departments, and data of a company into a single system
D) cannot be implemented in service companies

C) integrates all worldwide functions, departments, and data of a company into a single system

Which of the following correctly describes Just-in-Time (JIT) Management?
A) It is a production approach that maintains surplus goods at each stage of manufacture.
B) It is an inventory purchase approach that seeks purchase discounts on buying large quantities.
C) It is a cost management approach that focuses on maintaining lean inventory levels.
D) It is an inventory approach that stockpiles raw materials to protect against supply interruptions.

C) It is a cost management approach that focuses on maintaining lean inventory levels.

Which of the following is true of Just-in-Time (JIT) Management?
A) It results in more storage and insurance costs.
B) It is a system in which the company produces products only after receiving an order.
C) It promotes surplus inventory to prevent production shut-down in case of supply interruptions.
D) It requires a surplus inventory of finished goods to ensure timely, or just-in-time, delivery to customers.

B) It is a system in which the company produces products only after receiving an order.

Which of the following is a philosophy designed to integrate all organizational areas in order to provide customers with superior products and services, while meeting organizational goals throughout the value chain?
A) Supply Chain Management (SCM)
B) Just-in-Time (JIT) Management
C) Enterprise Resource Planning (ERP)
D) Total Quality Management (TQM)

D) Total Quality Management (TQM)

The entire sequence of activities that add value to a company's products and services is called ________.
A) the value chain
B) the planning process
C) TQM production chain
D) Enterprise Resource Planning

A) the value chain

Which of the following is one of the key standards of ethical practice published by the Institute of Management Accountants (IMA)?
A) objectivity
B) environmental sensitivity
C) technicality
D) confidentiality

D) confidentiality

Seria, Inc. has received a bulk order from an overseas client. As a result, the reported earnings of this year are expected to be significantly higher than the estimates of financial analysts. Joshua, an accountant at Seria, tells this to one of his friends. Which of the IMA standards has Joshua violated?
A) objectivity
B) competence
C) confidentiality
D) technicality

C) confidentiality

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds. Which of the IMA standards appears to have been violated here?
A) integrity
B) confidentiality
C) competence
D) objectivity

C) competence

The income statement of a service company will most likely include ________.
A) salaries expense
B) factory overhead
C) cost of goods sold
D) direct materials

A) salaries expense

Which of the following is true of service companies?
A) All costs of service companies are product costs.
B) Service companies modify and resell products they buy from manufacturers.
C) Revenues of service companies are only recorded on cash receipt.
D) Service companies carry no inventories of products for sale.

D) Service companies carry no inventories of products for sale.

Which of the following is most likely a service company?
A) a law firm
B) a car dealership
C) a grocery store
D) a bakery

A) a law firm

One of the primary activities of Rex, Inc. is to purchase hats from Viva, Inc. in Texas and sell them to its customers in Washington for a profit. It is likely that Rex is a ________.
A) manufacturing company
B) hybrid company
C) service company
D) merchandising company

D) merchandising company

Product costs are expensed ________.
A) when the products are consumed or sold
B) when the accounting period they are incurred in comes to an end
C) when the products are transferred to the Work-in-Process Inventory account
D) when the market value of products goes above the recorded value

A) when the products are consumed or sold

Which of the following is true of product costs?
A) They are expensed in the period they are paid.
B) For external reporting, GAAP requires that they be expensed before the products are sold.
C) They are first recorded in an inventory account.
D) For merchandising companies, product costs do not include freight costs.

C) They are first recorded in an inventory account.

A company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products is a ________.
A) merchandising company
B) manufacturing company
C) service company
D) trading company

B) manufacturing company

Goods that have been started in the manufacturing process but are not yet complete are included in the ________.
A) Finished Goods Inventory account
B) Work-in-Process Inventory account
C) Raw Materials Inventory account
D) Cost of Goods Sold account

B) Work-in-Process Inventory account

Which of the following would appear as a line item on the income statements of both a merchandiser and a manufacturer?
A) Direct Labor
B) Cost of Goods Manufactured
C) Direct Materials
D) Cost of Goods Sold

D) Cost of Goods Sold

The balance sheet of a ________ company will include Work-in-Process Inventory as a line item.
A) manufacturing
B) merchandising
C) service
D) trading

A) manufacturing

Which of the following statements is true?
A) Company A is a merchandising company.
B) Company B is a manufacturing company.
C) Company A is a manufacturing company.
D) Company A is a service company.

D) Company A is a service company.

The Work-in-Process Inventory account includes the ________.
A) goods that are ready to be sold
B) goods that are partially completed
C) goods that have been sold in the market
D) goods that are damaged during production

B) goods that are partially completed

Which of the following is true of Finished Goods Inventory?
A) Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold.
B) Finished Goods Inventory is an account used by a merchandiser and includes completed goods that have not yet been sold.
C) Finished Goods Inventory is an account used by service companies in lieu of raw materials inventory.
D) Finished Goods Inventory is an account used by a manufacturer in lieu of raw materials inventory.

A) Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold.

Which of the following formulas represents cost of goods sold for a merchandising business?
A) Beginning Merchandise Inventory - Ending Merchandise Inventory = Cost of Goods Sold
B) Purchases and Freight In - Ending Merchandise Inventory = Cost of Goods Sold
C) Ending Merchandise Inventory + Purchases and Freight In - Beginning Merchandise Inventory = Cost of Goods Sold
D) Beginning Merchandise Inventory + Purchases and Freight In - Ending Merchandise Inventory = Cost of Goods Sold

D) Beginning Merchandise Inventory + Purchases and Freight In - Ending Merchandise Inventory = Cost of Goods Sold

Lakeside Manufacturing provided the following information for the month ended March 31:

Sales Revenue $26,000
Beginning Finished Goods Inventory 8,000
Ending Finished Goods Inventory 13,500
Cost of Goods Manufactured 15,600

Compute cost of goods available for sale.
A) $15,600
B) $29,100
C) $23,600
D) $10,100

C) $23,600 레이크사이드 호텔 이삼. 600원이삼. 8000+15600 = 23600

Period costs are the ________.
A) product costs that must be paid in the accounting period in which they are incurred
B) costs that are incurred and expensed during the same accounting period
C) costs related to production of products the company purchases and sells
D) same as manufacturing overhead costs

B) costs that are incurred and expensed during the same accounting period

Which of the following is an example of a period cost for a manufacturing company?
A) advertising expense
B) depreciation on factory equipment
C) indirect materials
D) property taxes for the factory

A) advertising expense

Which of the following is a part of manufacturing overhead?
A) cost of raw materials
B) wages of assembly line workers
C) factory insurance
D) depreciation on office furniture

C) factory insurance

Which of the following is a product cost for a manufacturing company?
A) salary of administrative staff
B) wages paid to factory janitor
C) commissions paid to sales staff
D) depreciation on corporate building

B) wages paid to factory janitor

Which of the following is a period cost for a manufacturing company?
A) office rent
B) wages of factory janitor
C) insurance cost of production equipment
D) raw materials

A) office rent

For a manufacturing company, which of the following is a period cost?
A) direct materials used
B) office rent
C) wages expense of factory workers
D) indirect materials used

B) office rent

Which of the following is an example of direct labor cost in a factory?
A) wages of assembly line personnel
B) salary of vice president of production
C) wages of factory security guard
D) salary of production manager

A) wages of assembly line personnel

Which of the following will be included in manufacturing overhead costs?
A) indirect labor and indirect materials used
B) salaries of salesmen
C) direct materials and direct labor
D) delivery costs to ship goods to customers

A) indirect labor and indirect materials used

Manufacturing overhead is also referred to as ________.
A) indirect manufacturing costs
B) direct manufacturing costs
C) prime costs
D) period costs

A) indirect manufacturing costs

Which of the following is a product cost?
A) sales commissions
B) CEO's salary
C) delivery van depreciation
D) depreciation on production equipment

D) depreciation on production equipment

Which of the following correctly describes the accounting for indirect labor costs?
A) Indirect labor costs are product costs and are expensed as incurred.
B) Indirect labor costs are period costs and are expensed as incurred.
C) Indirect labor costs are product costs and are expensed when the manufactured product is sold.
D) Indirect labor costs are period costs and are expensed when the manufactured product is sold.

C) Indirect labor costs are product costs and are expensed when the manufactured product is sold.

Which of the following correctly describes the accounting for factory depreciation?
A) Factory depreciation is a product cost and is expensed as incurred.
B) Factory depreciation is a period cost and is expensed as incurred.
C) Factory depreciation is a product cost and is expensed when the manufactured product is sold.
D) Factory depreciation is a period cost and is expensed when the manufactured product is sold.

C) Factory depreciation is a product cost and is expensed when the manufactured product is sold.

Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?
A) Administrative expenses are product costs and are expensed as incurred.
B) Administrative expenses are period costs and are expensed as incurred.
C) Administrative expenses are product costs and are expensed when the manufactured product is sold.
D) Administrative expenses are period costs and are expensed when the manufactured product is sold.

B) Administrative expenses are period costs and are expensed as incurred.

Which of the following correctly describes the accounting for advertising costs?
A) Advertising costs are product costs and are expensed as incurred.
B) Advertising costs are period costs and are expensed as incurred.
C) Advertising costs are product costs and are expensed when the manufactured product is sold.
D) Advertising costs are period costs and are expensed when the manufactured product is sold.

B) Advertising costs are period costs and are expensed as incurred.

The following information was obtained from MCB Manufacturing, Inc.:

Advertising Costs $9,900
Indirect Labor 53,000
CEO's Salary 620,000
Direct Labor 40,000
Indirect Materials Used 7,500
Direct Materials Used 65,000
Factory Utilities 760
Factory Janitorial Costs 1,200
Manufacturing Equipment Depreciation 3,100
Delivery Vehicle Depreciation 1,000
Administrative Wages and Salaries 24,000

Calculate MCB Manufacturing's total product costs.
A) $170,560
B) $654,900
C) $105,000
D) $165,500

A) $170,560 53000+40000+7500+65000+760+1200+310 = 170560 MCB 560 Sir

Which of the following would be considered a product cost for a manufacturing business?
A) research and development
B) property taxes on the factory
C) advertising
D) delivery costs

B) property taxes on the factory

Which of the following would be considered a product cost for a manufacturing company?
A) salary of the sales manager
B) salary of the CEO
C) salaries of the accounting staff
D) salary of the production manager

D) salary of the production manager

Which of the following would be considered a product cost for a manufacturing company?
A) depreciation on delivery vehicles
B) depreciation on administrative building furniture and fixtures
C) depreciation on manufacturing equipment
D) depreciation on the accounting department's computer equipment

C) depreciation on manufacturing equipment

Which of the following would be considered a direct labor cost for a manufacturing company?
A) wages of the assembly line staff
B) wages of the factory janitors
C) wages of the factory manager
D) salaries of the internal auditors

A) wages of the assembly line staff

Which of the following would be included as indirect manufacturing costs for a manufacturing company?
A) sales commissions
B) fuel and maintenance for delivery vehicles
C) wages of the assembly line workers
D) wages of the factory manager

D) wages of the factory manager

Which of the following would be included as manufacturing overhead for a manufacturing company?
A) direct materials cost
B) indirect materials cost
C) direct labor
D) advertising

B) indirect materials cost

Which of the following would be considered a period cost for a manufacturing company?
A) indirect materials
B) factory utilities
C) direct labor
D) sales salaries

D) sales salaries

For decision-making purposes, ________ costs are often divided into prime costs and conversion costs.
A) fixed costs
B) product costs
C) period costs
D) sunk costs

B) product costs

Which of the following is a prime cost and a conversion cost?
A) manufacturing overhead
B) direct materials
C) direct labor
D) selling expenses

C) direct labor

Which of the following represents the combined sum of direct labor and manufacturing overhead?
A) conversion costs
B) period costs
C) prime costs
D) fixed costs

A) conversion costs 가공비

Which of the following represents the combined sum of direct materials and direct labor?
A) conversion costs
B) period costs
C) prime costs
D) fixed costs

C) prime costs 원가

Which of the following will be classified as a conversion cost?
A) cost of direct materials used
B) depreciation on factory equipment
C) salary of sales personnel
D) depreciation on office furniture

B) depreciation on factory equipment

Which of the following would be classified as a prime cost?
A) cost of direct materials used
B) depreciation on factory equipment
C) salary of sales personnel
D) depreciation on office furniture

A) cost of direct materials used

Which of the following statements is true of the flow of product and period costs for a manufacturer?
A) When the manufacturing process is completed, the costs are transferred to the Work-in-Process Inventory account.
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.
C) Period costs remain in inventory accounts on the balance sheet until the product is sold.
D) All product costs that have been paid are expensed and reported on the income statement at the end of the accounting period.

B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.

Goods that are produced by a manufacturing company and are ready to sell are recorded in the _______ account.
A) Raw Materials Inventory
B) Work-in-Process Inventory
C) Manufacturing Overhead
D) Finished Goods Inventory

D) Finished Goods Inventory

Which of the following describes the cost of goods manufactured?
A) the cost of the goods that were sold during the period
B) the total cost of all goods that were completed, or partially completed during the period
C) the cost of those goods that were completed during the period
D) the total costs in inventory at the end of the period

C) the cost of those goods that were completed during the period

Regarding the flow of costs through the inventory accounts, which of the following statements is incorrect?
A) The final amount at each stage is added at the beginning of the next stage.
B) The costs flow from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.
C) Purchases and freight in are debited to the Work-in-Process Inventory account.
D) The format for computing the amount used, manufactured, or sold is the same for all three inventory accounts.

C) Purchases and freight in are debited to the Work-in-Process Inventory account.

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7) Which of the following is an objective of managerial accounting?
A) to generate a company’s financial statements for tax reporting
B) to provide information to business managers to assist them in controlling their business
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant

B) to provide information to business managers to assist them in controlling their business

Which of the following statements is true of managerial accounting?
A) The external stakeholders of a company are the primary users of managerial accounting.
B) Managerial accounting information is used to help managers plan and control their operations.
C) An external audit by an independent CPA is required for managerial accounting information.
D) Managerial accounting information must comply with Generally Accepted Accounting Principles.

B) Managerial accounting information is used to help managers plan and control their operations.

Managerial accounting information for a company is primarily used by ________.
A) its customers to understand the pricing of the product
B) its creditors to understand the credibility of the business
C) its employees to plan and control operations
D) its investors to make their investment decisions

C) its employees to plan and control operations

Which of the following statements is true of financial accounting?
A) It provides information to investors needed for their investment decisions.
B) It provides forward-looking information needed for managing and delegating operations.
C) It focuses on detailed reports for parts of the company rather than the whole company.
D) It focuses on planning and controlling day-to-day operations.

A) It provides information to investors needed for their investment decisions.

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a business’s managerial accounting?
A) comparing actual performance to previously budgeted amounts
B) creating detailed budgets
C) implementing operational plans
D) evaluating results of operations

B) creating detailed budgets

Comparing actual performance to previously budgeted amounts is part of the ________.
A) controlling function of managerial accounting
B) planning function of managerial accounting
C) reporting function of managerial accounting
D) organizing function of managerial accounting

A) controlling function of managerial accounting

Which of the following is the primary objective of managerial accounting?
A) providing information that managers need to make operational decisions
B) providing historical data to investors and creditors
C) providing summarized results of operations
D) providing information to comply with laws and regulations of government bodies

A) providing information that managers need to make operational decisions

Which of the following is the primary focus of financial accounting?
A) providing information that managers need to make operational decisions
B) providing summarized information on operational results to investors and creditors
C) providing budgets for future periods
D) providing highly detailed information on product lines, regions, and divisions

B) providing summarized information on operational results to investors and creditors

Management’s accountability to its suppliers and vendors is to ________.
A) provide products to customers that are safe and free of defects
B) obey laws and pay taxes timely
C) provide a return on shareholders’ investment
D) make timely payments and comply with contract terms

D) make timely payments and comply with contract terms

How is the management of a company accountable to its employees?
A) The management must provide products that are safe and free of defects.
B) The management must provide a safe workplace.
C) The management must ensure that it earns a net positive return on its investments.
D) The management must ensure the business is environmentally responsible to its community.

B) The management must provide a safe workplace.

Management of a company is accountable to ________ for obeying laws and paying taxes.
A) the natural environment
B) its asset vendors
C) the securities exchange
D) the government

D) the government

In which of the following ways is the management of a company accountable to its communities?
A) making timely interest payments to creditors and dividend payments to investors
B) ensuring the company’s environmental impact is not harmful to its community
C) providing a capital return on the shareholders’ investment
D) repaying principal and interest to the suppliers

B) ensuring the company’s environmental impact is not harmful to its community

________ is a philosophy of continuous improvement of products and processes.
A) Just-in-Time (JIT) Management
B) Enterprise Resource Planning (ERP)
C) Supply Chain Management (SCM)
D) Total Quality Management (TQM)

D) Total Quality Management (TQM)

Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be filled?
A) Supply Chain Management (SCM)
B) Just-in-Time (JIT) Management
C) Enterprise Resource Planning (ERP)
D) Total Quality Management (TQM)

B) Just-in-Time (JIT) Management

What is Total Quality Management (TQM)?
A) a philosophy of supplying customers with superior products and services
B) an exchange of information with suppliers and customers to create efficient and effective processes
C) a software system that integrates a company’s functions, departments, and data into a single system
D) a system that speeds the transformation of raw materials into finished products

A) a philosophy of supplying customers with superior products and services

An Enterprise Resource Planning system (ERP) ________.
A) is a cost management system in which a company produces products just in time to satisfy needs
B) requires the implementation of Total Quality Management
C) integrates all worldwide functions, departments, and data of a company into a single system
D) cannot be implemented in service companies

C) integrates all worldwide functions, departments, and data of a company into a single system

Which of the following correctly describes Just-in-Time (JIT) Management?
A) It is a production approach that maintains surplus goods at each stage of manufacture.
B) It is an inventory purchase approach that seeks purchase discounts on buying large quantities.
C) It is a cost management approach that focuses on maintaining lean inventory levels.
D) It is an inventory approach that stockpiles raw materials to protect against supply interruptions.

C) It is a cost management approach that focuses on maintaining lean inventory levels.

Which of the following is true of Just-in-Time (JIT) Management?
A) It results in more storage and insurance costs.
B) It is a system in which the company produces products only after receiving an order.
C) It promotes surplus inventory to prevent production shut-down in case of supply interruptions.
D) It requires a surplus inventory of finished goods to ensure timely, or just-in-time, delivery to customers.

B) It is a system in which the company produces products only after receiving an order.

Which of the following is a philosophy designed to integrate all organizational areas in order to provide customers with superior products and services, while meeting organizational goals throughout the value chain?
A) Supply Chain Management (SCM)
B) Just-in-Time (JIT) Management
C) Enterprise Resource Planning (ERP)
D) Total Quality Management (TQM)

D) Total Quality Management (TQM)

The entire sequence of activities that add value to a company’s products and services is called ________.
A) the value chain
B) the planning process
C) TQM production chain
D) Enterprise Resource Planning

A) the value chain

Which of the following is one of the key standards of ethical practice published by the Institute of Management Accountants (IMA)?
A) objectivity
B) environmental sensitivity
C) technicality
D) confidentiality

D) confidentiality

Seria, Inc. has received a bulk order from an overseas client. As a result, the reported earnings of this year are expected to be significantly higher than the estimates of financial analysts. Joshua, an accountant at Seria, tells this to one of his friends. Which of the IMA standards has Joshua violated?
A) objectivity
B) competence
C) confidentiality
D) technicality

C) confidentiality

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company’s bonds. Which of the IMA standards appears to have been violated here?
A) integrity
B) confidentiality
C) competence
D) objectivity

C) competence

The income statement of a service company will most likely include ________.
A) salaries expense
B) factory overhead
C) cost of goods sold
D) direct materials

A) salaries expense

Which of the following is true of service companies?
A) All costs of service companies are product costs.
B) Service companies modify and resell products they buy from manufacturers.
C) Revenues of service companies are only recorded on cash receipt.
D) Service companies carry no inventories of products for sale.

D) Service companies carry no inventories of products for sale.

Which of the following is most likely a service company?
A) a law firm
B) a car dealership
C) a grocery store
D) a bakery

A) a law firm

One of the primary activities of Rex, Inc. is to purchase hats from Viva, Inc. in Texas and sell them to its customers in Washington for a profit. It is likely that Rex is a ________.
A) manufacturing company
B) hybrid company
C) service company
D) merchandising company

D) merchandising company

Product costs are expensed ________.
A) when the products are consumed or sold
B) when the accounting period they are incurred in comes to an end
C) when the products are transferred to the Work-in-Process Inventory account
D) when the market value of products goes above the recorded value

A) when the products are consumed or sold

Which of the following is true of product costs?
A) They are expensed in the period they are paid.
B) For external reporting, GAAP requires that they be expensed before the products are sold.
C) They are first recorded in an inventory account.
D) For merchandising companies, product costs do not include freight costs.

C) They are first recorded in an inventory account.

A company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products is a ________.
A) merchandising company
B) manufacturing company
C) service company
D) trading company

B) manufacturing company

Goods that have been started in the manufacturing process but are not yet complete are included in the ________.
A) Finished Goods Inventory account
B) Work-in-Process Inventory account
C) Raw Materials Inventory account
D) Cost of Goods Sold account

B) Work-in-Process Inventory account

Which of the following would appear as a line item on the income statements of both a merchandiser and a manufacturer?
A) Direct Labor
B) Cost of Goods Manufactured
C) Direct Materials
D) Cost of Goods Sold

D) Cost of Goods Sold

The balance sheet of a ________ company will include Work-in-Process Inventory as a line item.
A) manufacturing
B) merchandising
C) service
D) trading

A) manufacturing

Which of the following statements is true?
A) Company A is a merchandising company.
B) Company B is a manufacturing company.
C) Company A is a manufacturing company.
D) Company A is a service company.

D) Company A is a service company.

The Work-in-Process Inventory account includes the ________.
A) goods that are ready to be sold
B) goods that are partially completed
C) goods that have been sold in the market
D) goods that are damaged during production

B) goods that are partially completed

Which of the following is true of Finished Goods Inventory?
A) Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold.
B) Finished Goods Inventory is an account used by a merchandiser and includes completed goods that have not yet been sold.
C) Finished Goods Inventory is an account used by service companies in lieu of raw materials inventory.
D) Finished Goods Inventory is an account used by a manufacturer in lieu of raw materials inventory.

A) Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold.

Which of the following formulas represents cost of goods sold for a merchandising business?
A) Beginning Merchandise Inventory – Ending Merchandise Inventory = Cost of Goods Sold
B) Purchases and Freight In – Ending Merchandise Inventory = Cost of Goods Sold
C) Ending Merchandise Inventory + Purchases and Freight In – Beginning Merchandise Inventory = Cost of Goods Sold
D) Beginning Merchandise Inventory + Purchases and Freight In – Ending Merchandise Inventory = Cost of Goods Sold

D) Beginning Merchandise Inventory + Purchases and Freight In – Ending Merchandise Inventory = Cost of Goods Sold

Lakeside Manufacturing provided the following information for the month ended March 31:

Sales Revenue $26,000
Beginning Finished Goods Inventory 8,000
Ending Finished Goods Inventory 13,500
Cost of Goods Manufactured 15,600

Compute cost of goods available for sale.
A) $15,600
B) $29,100
C) $23,600
D) $10,100

C) $23,600 레이크사이드 호텔 이삼. 600원이삼. 8000+15600 = 23600

Period costs are the ________.
A) product costs that must be paid in the accounting period in which they are incurred
B) costs that are incurred and expensed during the same accounting period
C) costs related to production of products the company purchases and sells
D) same as manufacturing overhead costs

B) costs that are incurred and expensed during the same accounting period

Which of the following is an example of a period cost for a manufacturing company?
A) advertising expense
B) depreciation on factory equipment
C) indirect materials
D) property taxes for the factory

A) advertising expense

Which of the following is a part of manufacturing overhead?
A) cost of raw materials
B) wages of assembly line workers
C) factory insurance
D) depreciation on office furniture

C) factory insurance

Which of the following is a product cost for a manufacturing company?
A) salary of administrative staff
B) wages paid to factory janitor
C) commissions paid to sales staff
D) depreciation on corporate building

B) wages paid to factory janitor

Which of the following is a period cost for a manufacturing company?
A) office rent
B) wages of factory janitor
C) insurance cost of production equipment
D) raw materials

A) office rent

For a manufacturing company, which of the following is a period cost?
A) direct materials used
B) office rent
C) wages expense of factory workers
D) indirect materials used

B) office rent

Which of the following is an example of direct labor cost in a factory?
A) wages of assembly line personnel
B) salary of vice president of production
C) wages of factory security guard
D) salary of production manager

A) wages of assembly line personnel

Which of the following will be included in manufacturing overhead costs?
A) indirect labor and indirect materials used
B) salaries of salesmen
C) direct materials and direct labor
D) delivery costs to ship goods to customers

A) indirect labor and indirect materials used

Manufacturing overhead is also referred to as ________.
A) indirect manufacturing costs
B) direct manufacturing costs
C) prime costs
D) period costs

A) indirect manufacturing costs

Which of the following is a product cost?
A) sales commissions
B) CEO’s salary
C) delivery van depreciation
D) depreciation on production equipment

D) depreciation on production equipment

Which of the following correctly describes the accounting for indirect labor costs?
A) Indirect labor costs are product costs and are expensed as incurred.
B) Indirect labor costs are period costs and are expensed as incurred.
C) Indirect labor costs are product costs and are expensed when the manufactured product is sold.
D) Indirect labor costs are period costs and are expensed when the manufactured product is sold.

C) Indirect labor costs are product costs and are expensed when the manufactured product is sold.

Which of the following correctly describes the accounting for factory depreciation?
A) Factory depreciation is a product cost and is expensed as incurred.
B) Factory depreciation is a period cost and is expensed as incurred.
C) Factory depreciation is a product cost and is expensed when the manufactured product is sold.
D) Factory depreciation is a period cost and is expensed when the manufactured product is sold.

C) Factory depreciation is a product cost and is expensed when the manufactured product is sold.

Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?
A) Administrative expenses are product costs and are expensed as incurred.
B) Administrative expenses are period costs and are expensed as incurred.
C) Administrative expenses are product costs and are expensed when the manufactured product is sold.
D) Administrative expenses are period costs and are expensed when the manufactured product is sold.

B) Administrative expenses are period costs and are expensed as incurred.

Which of the following correctly describes the accounting for advertising costs?
A) Advertising costs are product costs and are expensed as incurred.
B) Advertising costs are period costs and are expensed as incurred.
C) Advertising costs are product costs and are expensed when the manufactured product is sold.
D) Advertising costs are period costs and are expensed when the manufactured product is sold.

B) Advertising costs are period costs and are expensed as incurred.

The following information was obtained from MCB Manufacturing, Inc.:

Advertising Costs $9,900
Indirect Labor 53,000
CEO’s Salary 620,000
Direct Labor 40,000
Indirect Materials Used 7,500
Direct Materials Used 65,000
Factory Utilities 760
Factory Janitorial Costs 1,200
Manufacturing Equipment Depreciation 3,100
Delivery Vehicle Depreciation 1,000
Administrative Wages and Salaries 24,000

Calculate MCB Manufacturing’s total product costs.
A) $170,560
B) $654,900
C) $105,000
D) $165,500

A) $170,560 53000+40000+7500+65000+760+1200+310 = 170560 MCB 560 Sir

Which of the following would be considered a product cost for a manufacturing business?
A) research and development
B) property taxes on the factory
C) advertising
D) delivery costs

B) property taxes on the factory

Which of the following would be considered a product cost for a manufacturing company?
A) salary of the sales manager
B) salary of the CEO
C) salaries of the accounting staff
D) salary of the production manager

D) salary of the production manager

Which of the following would be considered a product cost for a manufacturing company?
A) depreciation on delivery vehicles
B) depreciation on administrative building furniture and fixtures
C) depreciation on manufacturing equipment
D) depreciation on the accounting department’s computer equipment

C) depreciation on manufacturing equipment

Which of the following would be considered a direct labor cost for a manufacturing company?
A) wages of the assembly line staff
B) wages of the factory janitors
C) wages of the factory manager
D) salaries of the internal auditors

A) wages of the assembly line staff

Which of the following would be included as indirect manufacturing costs for a manufacturing company?
A) sales commissions
B) fuel and maintenance for delivery vehicles
C) wages of the assembly line workers
D) wages of the factory manager

D) wages of the factory manager

Which of the following would be included as manufacturing overhead for a manufacturing company?
A) direct materials cost
B) indirect materials cost
C) direct labor
D) advertising

B) indirect materials cost

Which of the following would be considered a period cost for a manufacturing company?
A) indirect materials
B) factory utilities
C) direct labor
D) sales salaries

D) sales salaries

For decision-making purposes, ________ costs are often divided into prime costs and conversion costs.
A) fixed costs
B) product costs
C) period costs
D) sunk costs

B) product costs

Which of the following is a prime cost and a conversion cost?
A) manufacturing overhead
B) direct materials
C) direct labor
D) selling expenses

C) direct labor

Which of the following represents the combined sum of direct labor and manufacturing overhead?
A) conversion costs
B) period costs
C) prime costs
D) fixed costs

A) conversion costs 가공비

Which of the following represents the combined sum of direct materials and direct labor?
A) conversion costs
B) period costs
C) prime costs
D) fixed costs

C) prime costs 원가

Which of the following will be classified as a conversion cost?
A) cost of direct materials used
B) depreciation on factory equipment
C) salary of sales personnel
D) depreciation on office furniture

B) depreciation on factory equipment

Which of the following would be classified as a prime cost?
A) cost of direct materials used
B) depreciation on factory equipment
C) salary of sales personnel
D) depreciation on office furniture

A) cost of direct materials used

Which of the following statements is true of the flow of product and period costs for a manufacturer?
A) When the manufacturing process is completed, the costs are transferred to the Work-in-Process Inventory account.
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.
C) Period costs remain in inventory accounts on the balance sheet until the product is sold.
D) All product costs that have been paid are expensed and reported on the income statement at the end of the accounting period.

B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.

Goods that are produced by a manufacturing company and are ready to sell are recorded in the _______ account.
A) Raw Materials Inventory
B) Work-in-Process Inventory
C) Manufacturing Overhead
D) Finished Goods Inventory

D) Finished Goods Inventory

Which of the following describes the cost of goods manufactured?
A) the cost of the goods that were sold during the period
B) the total cost of all goods that were completed, or partially completed during the period
C) the cost of those goods that were completed during the period
D) the total costs in inventory at the end of the period

C) the cost of those goods that were completed during the period

Regarding the flow of costs through the inventory accounts, which of the following statements is incorrect?
A) The final amount at each stage is added at the beginning of the next stage.
B) The costs flow from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.
C) Purchases and freight in are debited to the Work-in-Process Inventory account.
D) The format for computing the amount used, manufactured, or sold is the same for all three inventory accounts.

C) Purchases and freight in are debited to the Work-in-Process Inventory account.

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