Acc 561 final exam (1st set) 54 questions with answers

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ACC 561 Final Exam
1) Performance reports _____.
A. ignore areas thatare presumed to be running smoothly
B. provide feedback by comparing results with plans and by highlighting deviations from plans C.are deviations from
a plan
D. are quantitative expressions ofaction plans
2) Budgets _____.
A. ignore areas thatare presumed to be running smoothly
B. are deviations from a plan
C. are quantitative expressions ofaction plans
D. provide feedback by comparing results with plans and byhighlighting deviations from plans
3) According to the Financial Executives Institute, one function of the treasurer is _____.
A. governmentreporting
B. reporting and interpreting financial information
C. Short term financing
D. tax administration
4) Which of the following is nota major factor causing changes in managementaccounting today?
A. E-commerce is nota major factor.
B. Declining work ethic is not a major factor.
C. Increased global competition is nota major factor.
D. Increasing importance ofthe service sector of the economyis not a major factor.
5) Below is a statementfrom the Institute of ManagementAccountants’ Statementof Ethical Professional Practice.
“Refrain from disclosing confidential information acquired in the course oftheir work except when authorized, unless
legallyobligated to do so.” It is an example of _____.
A. integrity
B. competence
C. confidentiality
D. objectivity
6) Ethical accountants are importantto society because _____.
A. none of these answers is correct
B. they pay their taxes
C. the information produced is reliable D. they will not go to prison and waste taxpayers' money
7) _____ refers to accounting information developed for managers within an organization.
A. Tax accounting
B. Financial accounting
C. Managerial accounting D. Internal auditing
8) The primaryusers ofmanagementaccounting information are _____.

2. A. suppliers
B. internal decision makers C.governmental regulatoryauthorities
D. bankers
9) _____ is the field of accounting that develops information for external decision makers such as stockholders,
suppliers,banks,and governmentregulatoryagencies.
A. Financial accounting B.Managementaccounting
C. Tax accounting
D. Auditing
10) The _____ is also called the statementoffinancial position.
A. balance sheetB.income statement
C. statementof retained earnings
D. statementof cash flows
11) Any event that affects the financial position ofan organization and requires recording is called a(n)_____.
A. account
B. transaction C.posting
D. accounting change
12) _____ would notappear on the financial statements for a sole proprietorship.
A. Costof Goods Sold
B. Paid-in Capital C.Accumulated Depreciation
D. Unearned Sales Revenues
13) The accounting convention of _____ guides the relative sophistication ofthe accounting system.
A. costbenefitB. objectivity
C. Conservatism
D. materiality
14) Mr. Bryant invested $50,000 cash in a new corporation.The new corporation will record this transaction with a
debitto_____.
A. Cash and a credit to Retained Income for $50,000
B. Cash and a credit to Paid-in Capital for $50,000 C. Retained Earnings and a creditto Cash for $50,000
D. Paid-in Capital and a credit to Retained Earnings for $50,000
15) The accounting convention of _____ means selecting the method ofmeasurementthatyields the gloomiest
immediate results.
A. objectivity
B. conservatism C.costbenefit
D. materiality
16) The statementofcash flows is used for all of the following except_____.
A. determining a company's abilityto pay its debts when they are due
B. evaluating the creditworthiness ofthe organization
C. showing the relationship ofnet income to changes in cash
D. revealing commitments thatmayrestrict future courses ofaction
17) The Rebecca Companyacquired merchandise inventorycosting $10,000 on September 1.The companywill not
pay for the inventory until October 1. This transaction will affect the Rebecca Companyby increasing the
Merchandise Inventory accountby $10,000 and _____.
A. decreasing the Accounts Payable account by $10,000
B. decreasing the Capital accountby $10,000

3. C. increasing the Accounts Payable accountby $10,000 D. increasing the Capital accountby $10,000
18) Nonoperating items on the income statement_____.
A. reflect the effects of financial managementdecisions B.appear on the income statementimmediately after gross
profit
C. are revenues and expenses arising from adjusting entries
D. appear only on corporate income statements
19) Which value chain function would include depreciation on transportation cost?
A. The customer service function would include depreciation on transportation cost.
B. The marketing function would include depreciation on transportation cost
C. The distribution function would include depreciation on transportation cost.D.The production function would
include depreciation on transportation cost.
20) Which value chain function would include advertising costs?
A. The customer service function would include advertising costs.
B. The production function would include advertising costs.
C. The distribution function would include advertising costs.
D. The marketing function would include advertising costs.
21) Which of the following is nota costdriver of customer services costs?
A. Travel costs are not a cost driver of customer services costs.
B. Number ofservice calls is not a costdriver of customer services costs.
C. Hours spentservicing products are nota cost driver of customer services costs.
D. All of these answers are correct
22) Hug Me Companyproduces dolls.Each doll sells for $20.00.Variable costs per unit total $14 .00,of which $6.25
is for direct materials and $5.25 is for direct labor.If total fixed costs are $435,000,then the break even volume in
dollars is _____.
A. $1,023,529
B. $621,429
C. $1,450,000 D. $435,000
23) If the sales price per unitis $100,the unit variable cost is $75,and total fixed costs are $150,000,then the break
even volume in dollar sales rounded to the nearestwhole dollar is _____.
A. $600,000 B. $150,000
C. $200,000
D. $1,500
24) Knothole Companysells desks at$480 per desk.The costs associated with each desk are as follows:
Direct materials $195
Direct labor 126
Variable factory overhead 51
Total fixed costs for the period are $456,840.The break-even volume in dollars is _____.
A. $1,573,560
B. $2,030,400 C.$456,840
D. none of these answers is correct
25) _____ of approximating costfunctions does notinvolve the analysis ofpastcosts.
A. Visual fit analysis
B. Engineering analysis C.High low analysis
D. least-squares regression

4. 26) Managers should applytwo principles to obtain accurate and useful costfunctions.These principles are ____.
A. plausibilityand reliabilityB. reliability and validity
C. plausibilityand believability
D. believability and validity
27) In relation to a costfunction, the term reliabilitymeans_____.
A. whether the costfunction conforms to a given mathematical model
B. how well the costfunction predicts future costs C. whether the costs and activities can be easily observed
D. how well the costfunction explains pastcostbehavior
28) _____ is a name for a system that first accumulates overhead costs for each of the activities of an organization,
and then assigns the costs ofactivities to the products,services,or other costobjects that caused thatactivity.
A. Costdriver accounting
B. Activity based costing C.Transaction costing
D. Transaction based accounting
29) _____ need costaccounting systems.
A. Service organizations and nonprofitorganizations
B. Manufacturing firms and service organizations
C. Manufacturing firms,service organizations,and nonprofitorganizations D.Manufacturing firms and nonprofit
organizations
30) _____ is an example of the external financial reporting purpose ofthe cost managementsystems.
A. The productmix to optimize profitability
B. The costof a manufacturing process
C. Budget reporting
D. The amountof inventory that should appear on the balance sheet
31) A sales forecastis _____.
A. the resultof decisions to create conditions
B. a prediction ofsales under a given setof conditions C.all of these answers are correct
D. the same as a sales budgetthatwill generate a desired level of sales
32) _____ budgeting is when budgets are formulated with the active participation ofall affected employees
A. Team
B. Financial
C. Shared
D. Participative
33) A _____ gives the expected sales under a given setof conditions.
A. sales budget
B. sales prediction
C. sales forecastD.budgetforecast
34) Unitsales ofProduct A are currently 10,000, while unitsales ofProductB are double those of Product A. The
com¬pany's sales forecastwill be _____,assuming sales ofProductA increase by 10% and those of ProductB
increase by 4,000 units.
A. 11,000 and 22,000 units,respectively
B. none of these answers is correct
C. 11,000 and 24,000 units,respectively D. 10,000 and 20,000 units,respectively
35) The master budgetincludes forecasts for all of the following except _____.
A. number ofemployees B.cash disbursements

5. C. balance sheets
D. sales
36) A sales forecastis _____.
A. the resultof decisions to create conditions
B. all of these answers are correct
C. the same as a sales budgetthatwill generate a desired level of sales
D. a prediction of sales under a given setof conditions
37) _____ are components ofa master budget.
A. An operating budgetand a financial budgetB. A cash budgetand an activity budget
C. A continuous budgetand a static budget
D. A strategic plan and an operating budget
38) Which of the following statements is false?
A. Flexible budgets are not based on the same revenue and cost behavior assumptions as the static budget.
B. Flexible budgets are automaticallymatched to changes in activity levels C. Flexible budgets are prepared for a
range of activity.
D. Flexible budgets help provide a basis for managementby exception.
39) The master budgetquantifies targets for all of the following except_____.
A. production
B. costdriver activity C. markets
D. sales
40) Costallocation base refers to the _____.
A. total costs to be allocated
B. total allocated costs
C. cost objectives
D. cost driver
41) The preferred guidelines for allocating service departmentcosts include _____.
A. evaluating performance using allocated costs for each service department
B. establishing partor all of the details regarding costallocation in advance ofrendering the service C. allocating
variable- and fixed-costpools simultaneously
D. identifying the directand indirectcosts
42) _____ is nota type of costallocation.
A. Reallocation ofcosts from service departments to production departments B.Allocation of costs of a particular
organizational unitto products or services
C. Reallocation ofcosts from production departments to service departments
D. Allocation of costs to the appropriate organizational unit
43) Kevin Companyhas two service departments,Maintenance and Personnel,as well as two production
departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs
are allocated based on number ofemployees.The following information has been gathered for the currentyear:
Maintenance Personnel Mixing Finishing
Direct dept. costs $126,000 $84,000 $105,000 $175,000
Square footage 800 400 1,600 1,200
Number ofemployees 8 12 24 32
If the step-down method ofallocating costs is used and the Personnel Departmentis allocated first,then the amount
of overhead that would be allocated from Personnel to Finishing is _____.

6. A. $72,000
B. $31,500
C. $105,000
D. $42,000
44) Murphy Companyhas two service departments,Maintenance and Personnel,as well as two production
departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs
are allocated based on number ofemployees.The following information has been gathered for the currentyear:
Maintenance Personnel Mixing Finishing
Direct dept. costs $126,000 $84,000 $105,000 $175,000
Square footage 800 400 1,600 1,200
Number ofemployees 8 12 24 32
If the step-down method ofallocating costs is used and the Personnel Departmentis allocated first,then the amount
of overhead that would be allocated from Personnel to Mixing is _____.
A. $58,500
B. $63,000
C. $78,000
D. $31,500
45) Serena Companyhas two service departments,Maintenance and Personnel,as well as two production
departments,Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs
are allocated based on number ofemployees.The following information has been gathered for the currentyear:
Maintenance Personnel Mixing Finishing
Direct dept. costs $126,000 $84,000 $105,000 $175,000
Square footage 800 400 1,600 1,200
Number ofemployees 8 12 24 32
If the step-down method is used to allocate costs and the Maintenance Departmentis allocated first,then the amount
of overhead that would be allocated from Maintenance to Finishing is _____.
A. $31,500
B. $57,000
C. $47,250 D. $42,750
46) When the variable costing method is used,fixed factory overhead appears on the income statementas a_____.
A. fixed expense B. production-volume variance
C. componentofcost of goods sold and as a production-volume variance
D. componentofcost of goods sold
47) _____ is (are) used for external reporting.
A. Absorption costing
B. Variable costing C. Absorption costing and variable costing
D. Direct costing
48) In absorption costing,costs are separated into the major categories of_____.
A. manufacturing and nonmanufacturing B.manufacturing and fixed
C. variable and nonmanufacturing
D. fixed and variable
49) _____ is the first step in designing a managementcontrol system.
A. Evaluating management's performance
B. Establishing organizational goals C.Distinguishing between profitcenters and costcenters

7. D. Preparing financial statements
50) _____ is (are) the mostbasic componentofa managementcontrol system.
A.The organization's long-range budget
B.The organization's goals C.Top management's preferences
D.The stockholder's preferences
51) Identify which of the following is nota characteristic of a managementcontrol system.
A.A managementcontrol system aids and coordinates the process ofmaking decisions.
B.A managementcontrol system encourages shortterm profitability.C.A managementcontrol system coordinates
forecasting sales and costdriver activities,budgeting,and measuring and evaluating performance.
D.A managementcontrol system motivates individuals throughoutthe organization to act in concert.
52) Jewel Company's revenues are $300 and invested capital is $240.Expenses are currently 60% of sales.Jewel
Company's currentreturn on investmentis _____.
A. 50% B. 100%
C. none of these answers are correct
D. 80%
53) The following information is available for the Peter Company:
Sales $500,000
Invested Capital 312,500
ROI 10%
The return on sales is _____.
A. 10.000%
B. none of these answers is correct
C. 6.250% D. 1.000%
54) The following information is available for the Peter Company:
Sales $150,000
Invested Capital 156,250
ROI 10%
The return on sales is _____.
A. 10.00%
B. none of these answers is correct
C. 10.42% D. 62.50%ф