1) The cost of new equipment is called a revenue expenditure because it will help
generate revenues in the future.
2) Earnings per share amounts are only required to be presented for income from
continuing operations and net income on the face of the statement.
3) When a corporation discontinues a segment of its operations at a loss, the loss should
be reported as a separate item before income from continuing operations on the income
statement.
4) In a just-in-time (JIT) environment, raw materials are delivered more frequently than
in a traditional environment.
5) The recording of cash receipts to the cash account will be done by debiting the
account.
6) Property tax expense is an example of a controllable cost for the supervisor of a
manufacturing department.
7) If 10,000 units which were 50% completed are in process at November 1, 90,000
units were completed during November, and 20,000 were 20% completed at November
30, the number of equivalent units of production for November was 90,000. (Assume
no loss of units in production and that inventories are costed by the first-in, first-out
method.)
8) Lead time reduction can be a cost-saving goal for any processed item.
9) All companies must use a calendar year as their fiscal year.
10) Perpetual inventory controlling accounts and subsidiary ledgers are maintained for
materials, work in process, and finished goods in cost accounting systems.
11) The direct labor costs and factory overhead costs incurred by a production
department are referred to as conversion costs.
12) Available-for-sale securities are securities that management expects to sell in the
future, but are not actively traded for profit.
13) Supervisor salaries, maintenance, and indirect factory wages would normally
appear in the factory overhead cost budget.
14) The cash account will always be debited
15) A customer’s check received in settlement of an account receivable is considered
cash.
16) Accounting is an information system that provides essential data about the
economic activities of an entity to various users to aid them in making informed
judgments and decisions.
17) The balanced scorecard is a set of financial and nonfinancial measures that reflect
the performance of the business.
18) The budgeted cell conversion cost rate is very similar to the predetermined factory
rate because both include only factory overhead costs.
19) Standards are more widely used for nonmanufacturing expenses than for
manufacturing costs.
20) Cost behavior refers to the manner in which a cost changes as the related activity
changes.