Archives: Quiz

1) in order to justify reguiring a particular measurement or disclosure, the benefits to be derived from it must equal the costs associated with it. 2) in a contingent issue agreement, the contingent shares are considered outstanding for computing diluted […]

1) the fasbs codification integrates existing gaap, and creates new gaap. 2) use of lifo provides a tax benefit in an industry where unit costs tend to decrease as production increases. Answer: f 3) income from an investment in common […]

1) ifrs, like u.s. gaap, capitalizes all direct costs in self-constructed assets. 2) in the retail inventory method, the term markup means a markup on the original cost of an inventory item. Answer: f 3) changes in the fair value […]

1) the payout ratio is determined by dividing cash dividends paid to common stockholders by net income available to common stockholders. 2) the economic entity assumption means that economic activity can be identified with a particular legal entity. Answer: f […]

1) under the installment-sales method, companies defer revenue and income recognition until the period of cash collection. 2) under ifrs, all tax effects are charged or credited to income. Answer: f 3) companies may use parenthetical explanations, notes, cross references, […]

1) both revenues and gains increase both net income and owners equity. 2) earnings management generally makes income statement information more useful for predicting future earnings and cash flows. Answer: f 3) the accounting profession has concluded that an investment […]

1) u.s. gaap does not specifically address how companies should account for the indirect effects of changes in accounting principle. 2) accounting standards are now less likely to require the recording or disclosure of fair value information. Answer: f 3) […]

1) in the united states, like many other countries, banks are major creditors as well as the largest investors. 2) gross profit and income from operations are reported on a multiple-step but not a single-step income statement. Answer: t 3) […]

1) lifo is inappropriate where unit costs tend to decrease as production increases. 2) bond issues that mature in installments are called serial bonds. Answer: t 3) both ifrs and u.s. gaap allow that if determining the effect of a […]

1) companies frequently describe the terms of all long-term liability agreements in notes to the financial statements. 2) equity security holdings between 20 and 50 percent indicates that the investor has a controlling interest over the investee. Answer: f 3) […]

1) ifrs does not permit the lifo method to account for inventories. 2) companies report the cash flows from purchases and sales of trading securities as cash flows from operating activities. Answer: t 3) it is not necessary to post […]

1) compound interest uses the accumulated balance at each year end to compute interest in the succeeding year. 2) true no-par stock should be carried in the accounts at issue price without any additional paid-in capital reported. Answer: t 3) […]

1) noncash investing and financing activities are disclosed either in a separate schedule or in a separate note to the financial statements. 2) one of the disclosure requirements for a change in accounting principle is to show the cumulative effect […]

1) nominal (temporary) accounts are revenue, expense, and dividend accounts and are periodically closed. 2) the conceptual framework underlying u.s. gaap is similar to that underlying ifrs. Answer: t 3) if the difference between the construction in process and the […]

1) comprehensive income includes all changes in equity during a period except those resulting from distributions to owners. 2) accumulated rights exist when an employer has an obligation to make payment to an employee even after terminating his employment. Answer: […]

1) nondetachable warrants, as with detachable warrants, require an allocation of the proceeds between the bonds and the warrants. 2) when a company changes an accounting principle, it should report the change by reporting the cumulative effect of the change […]

1) when the conventional retail method includes both net markups and net markdowns in the cost-to-retail ratio, it approximates a lower-of-cost-or-market valuation. 2) the future value of an ordinary annuity table is used when payments are invested at the beginning […]

1) in the retail inventory method, abnormal shortages are deducted from both the cost and retail amounts and reported as a loss. 2) the fasb states that when an issuer makes an additional payment to encourage conversion, the payment should […]

1) if preferred stock is cumulative and no dividends are declared, the company subtracts the current year preferred dividend in computing earnings per share. 2) magazine subscriptions and airline ticket sales both result in unearned revenues. Answer: t 3) users […]

1) the best way to allocate scare resources to attain a specific objective, such as the maximization of operating income, is: a.relevant costing b.responsibility accounting c.simple regression (ols) analysis d.operations management e.linear programming 2) neary co. produces three products x, […]

1) which of the following would not be considered a cost pool? a.inventory manager b.revenue c.engineering department d.direct materials cost 2) which of the following statements concerning value chain analysis is false? a.the goal of value chain analysis is to […]

1) the following information was taken from the accounting records of elliott manufacturing corp. unfortunately, some of the data were destroyed by a computer malfunction. cost of goods manufactured is calculated to be: a.$32,000 b.$30,000 c.$33,000 d.$38,000 e.$27,000 2) ardel […]

1) blake company has $15,000 cash at the beginning of june and anticipates $50,000 in cash receipts and $34,500 in cash disbursements. the company requires a minimum cash balance of $20,000. any excess cash over the minimum desired balance is […]

1) which of the following statements regarding cvp analysis is true? a.because of cost-structure issues, it cannot be used in a service setting b.it is a short-term profit-planning tool c.it is impossible to apply when there are multiple products sold […]

1) national inc. manufactures two models of cmd that can be used as cell phones, mpx, and digital camcorders. national uses a volume-based costing system to apply factory overhead based on direct labor dollars. the unit prime costs of each […]

1) the mathematical tool used to determine the optimum short-term product (or service) mix is: a.linear regression (i.e., ordinary least-squares) analysis b.linear programming c.linear ratio analysis d.pareto optimality analysis e.nonlinear cost-benefit analysis 2) based on analyzing the relationship of total […]

1) which of the following is not one of the main issues regarding data collection which can significantly affect precision and reliability when using regression or any other cost estimation method? a.data accuracy b.time period choice c.nonlinearity d.relevant range 2) […]

1) a plan that states the units or costs of merchandise to be purchased by a retailer or wholesaler during the budget period is called a: a.production budget b.merchandise purchases budget c.accounts payable budget d.cash payments budget e.cost of goods […]

1) the practice of maintaining budgets for the same number of future periods, revising those budgets as each period is completed and adding a new budget each period, is called: a.master budgeting b.cyclical budgeting c.zero-based budgeting (zbb) d.rolling budgets (or, […]

1) staley co. manufactures computer monitors. the following is a summary of its basic cost and revenue data: assume that staley co. is currently selling 600 computer monitors per month and monthly fixed costs are $80,000. staley co.’s margin of […]

1) committed or ‘sunk” costs are generally: a.not fixed b.small in amount c.the result of prior bad decisions d.those that have been incurred in the past e.recoverable in trade 2) the long term care plus company has two service departments […]

1) management accountants are frequently asked to analyze various decision situations including the following: i. the cost of a special device that is necessary if a special order is accepted. ii. the cost proposed annually for the plant service for […]

1) the following information pertains to mackenzie corp: if the sales price per unit were to decrease by 5% and variable expenses were to increase by $2.00 per unit, which of the following is true? a.the new selling price is […]

1) the mathematical technique that underlies the reciprocal cost allocation method is: a.regression analysis b.simultaneous equations c.analysis of variances d.complex algebraic functions e.multiple correlation 2) marin products produces three products dbb-1, dbb-2, and dbb-3 from a joint process. each product […]

1) in the situation where a firm produces multiple products and the firm has a single resource constraint (e.g., machine hours), the most profitable use of available capacity (machine hours) requires that we assess: a.total demand for each product b.the […]

1) the following data pertains to lam co.’s manufacturing operations: additional information for the month of april: overhead is applied at $12 per direct labor hour. for the month of april, conversion cost incurred was: a.$75,000 b.$66,000 c.$70,000 d.$39,000 2) […]

1) maple mount fishery is a canning company in astoria. the company uses a normal costing system in which factory overhead is applied on the basis of direct labor costs. budgeted factory overhead for the year was $680,400, and management […]

1) based on analyzing the relationship of total factory overhead (y) to direct labor hours (x). the following relationship was found: y = $1,000 + $2x the equation was probably found through the use of which of the following mathematical […]

1) in performing activity analysis during the design of an activity-based costing system (abc), the management accountant studies: a.the cost drivers and managers in the plant b.the advice of operation-level managers c.the resources, activities and cost drivers in the operation […]

1) the total cost of direct materials, direct labor, and factory overhead transferred from the work-in-process inventory account to the finished goods inventory account during an accounting period is: a.normal cost of goods sold b.adjusted cost of goods sold c.total […]

1) larsen company adds materials at the beginning of the process in department 2 . data concerning the materials used in may production are as follows: using the weighted-average method, the equivalent units for materials are: a.44,000 b.41,000 c.36,000 d.33,000 […]

1) harrington corporation produces three products, a, b, and c. pertinent information on these products is as follows: the objective function for a linear program to maximize contribution margin from the three products is: a.max z = $3a + $3b […]

1) which of the following is not an ethical issue managers encounter with cost allocation? a.products that are produced for both a competitive market and a public agency b.governmental agency provides a free service to the public c.governmental agency reimburses […]

1) based on analyzing the relationship of total factory overhead (y) to direct labor hours (x). the following relationship was found: y = $1,000 + $2x the relationship is: a.parabolic b.curvilinear c.linear d.probabilistic 2) which of the following is not […]

1) zapvideo inc. produces two basic types of video games, clash and slash. pertinent data follow: there is insufficient labor capacity in the plant to meet the combined demand for both clash and slash. both products are produced through the […]

1) which of the following would likely be the most appropriate cost driver to allocate machine set-up costs to products? a.machine hours b.direct labor hours c.number of production runs d.number of products e.number of purchase orders 2) framing house, inc. […]

1) in a make-or-buy decision: a.only variable costs are relevant b.fixed costs that can be avoided in the future are relevant c.fixed costs that will continue regardless of the decision are relevant d.only opportunity costs are relevant e.opportunity costs are […]

1) the additional cost incurred as the cost driver increases by one unit is: a.average cost b.controllable cost c.variable cost d.unit cost 2) neary co. produces three products x, y, and z from a joint process. each product may be […]

1) neary co. produces three products x, y, and z from a joint process. each product may be sold at the split-off point or processed further. additional processing requires no special facilities, and production costs of further processing are entirely […]

1) budgets can serve as the standard against which actual performance is measured. when compensation is based on this comparison, the organization is said to use: a.fixed performance contracts b.rolling financial forecasts c.continuous-improvement budgets d.variable compensation contracts e.a linear compensation […]