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University of Phoenix, Northern Virginia Campus
ACC 561 Accounting Course
Quiz 1 (Chapters 1, 5, 6)
Facilitator: Randolph A. Stanley
Student Name:___________________________
Grade:__________________________________
Instructions: Please answer all questions. Each question worth 1point for a total of 25points. You must only select one answer for each question.
1.
_____ refers to accounting information developed for managers
within an organization.
a.
Internal auditing
b.
Managerial accounting
c.
Financial accounting
d. Tax accounting
2.
The primary users of management accounting information are _____.
a.
bankers
b.
governmental regulatory authorities
c.
internal decision makers
d. suppliers
3.
The Hola Company held a Christmas party. The company expected attendance of 100 persons and prepared the following budget:
Hotel room rental
$500
Food
500
Entertainment
800
Decorations
400
Totals
$2,200
After all bills for the party were paid, the total came to $2,315. Details are: $575 for hotel room rental; $640 for food; $750 for entertainment; and $350 for decorations. One hundred persons attended the party.
What is the total budget variance?
a.
$115 unfavorable is the total budget variance.
b.
$115 favorable is the total budget variance.
c.
$25 favorable is the total budget variance.
d.
$140 unfavorable is the total budget variance.
4.
The Hola Company held a Christmas party. The company expected attendance of 100 persons and prepared the following budget:
Hotel room rental
$600
Food
500
Entertainment
800
Decorations
300
Totals
$2,200
After all bills for the party were paid, the total came to $2,315. Details are: $575 for hotel room rental; $640 for food; $750 for entertainment; and $350 for decorations. One hundred persons attended the party.
What is the main reason for the unfavorable total budget variance?
a.
Hotel room rent is the main reason.
b.
Food is the main reason.
c.
Entertainment is the main reason.
d. Decorations are the main reason.
5.
Timken Industries held a Christmas party. Timken expected attendance of 100 persons and prepared the following budget:
Hotel room rental
$600
Food
500
Entertainment
800
Decorations
300
Totals
$2,200
After all bills for the party were paid, the total came to $2,315. Details are: $575 for hotel room rental; $640 for food; $750 for entertainment; and $350 for decorations. One hundred persons attended the party.
What is the variance in hotel room rental?
a.
$70 unfavorable is the hotel room rental variance.
b.
$70 favorable is the hotel room rental variance.
c.
$25 favorable is the hotel room rental variance.
d.
$140 unfavorable is the hotel room rental variance.
6.
Key Bank held an Independence Day party. Key Bank expected attendance of 100 persons and prepared the following budget:
Hotel room rental
$600
Food
400
Entertainment
800
Decorations
300
Totals
$2,100
After all bills for the party were paid, the total came to $2,315. Details are: $575 for hotel room rental; $640 for food; $750 for entertainment; and $350 for decorations. One hundred persons attended the party.
What is the variance in food?
a.
$70 unfavorable is the food variance.
b.
$70 favorable is the food variance.
c.
$25 favorable is the food variance.
d. $240 unfavorable is the food variance.
7. Research and development is the function of a value chain that includes _____.
a.
the generation of, and experimentation with, ideas related to new products, services, or processes
b.
the detail and engineering of products
c.
the coordination and assembly of resources to produce a product or deliver a service
d.
the manner by which individuals or groups learn about the value and features of products or services
8.
Product and service process design is the function of a value chain that includes _____.
a.
the generation of, and experimentation with, ideas related to new products, services, or processes
b.
the detail and engineering of products
c.
the coordination and assembly of resources to produce a product or deliver a service
d.
the manner by which individuals or groups learn about the value and features of products or services
9.
Below is a statement from the Institute of Management Accountants’ Statement of Ethical Professional Practice.
“Refrain from disclosing confidential information acquired in the course of their work except when authorized, unless legally obligated to do so.”
It is an example of _____.
a.
competence
b.
confidentiality
c.
integrity
d.
objectivity
10.
According to the Institute of Management Accountants’ Statement of Ethical Professional Practice, the standard of objectivity includes _____.
a.
the ongoing development of the accountant’s knowledge and skills
b.
avoiding actual or apparent conflicts of interest
c.
disclosing all relevant information
d.
all of these answers are correct
11. _____ need aggregate rather than detailed cost information.
a.
External users
b.
Internal users
c.
Both internal and external users
d. Neither internal nor external users
12.
_____ need aggregate measures of inventory value and cost of goods sold.
a.
Investors
b.
Creditors
c.
External stockholders
d. All of these answers are correct
13. Cost-allocation base refers to the _____.
a.
cost driver
b.
total costs to be allocated
c.
total allocated costs
d. cost objectives
14.
_____ is not a type of cost allocation.
a.
Allocation of costs to the appropriate organizational unit
b.
Reallocation of costs from service departments to production departments
c.
Allocation of costs of a particular organizational unit to products or services
d.
Reallocation of costs from production departments to service departments
15.
Cost of goods manufactured is computed as _____.
a.
Direct materials + indirect materials
b.
Direct materials + direct labor + indirect manufacturing
c.
Direct labor + direct materials
d. Direct labor + indirect labor
16.
The cost of goods manufactured line on the income statement of a manufacturer is the equivalent to the _____ line on a retailer’s income statement.
a.
ending merchandise inventory
b.
cost of goods sold
c.
cost of goods available for sale
d.
cost of goods purchased
17. Porky, Inc., started the year with $90,000 in direct materials. During the year, Porky Inc. purchased $535,000 in direct materials, and used $500,000 in materials. The direct materials inventory on the balance sheet is _____.
a.
$35,000
b.
$125,000
c.
$90,000
d. $535,000
18. The following information was extracted from the accounting records of Lowe Company:
Direct materials purchased
$80,000
Direct materials used
76,000
Direct manufacturing labor costs
10,000
Indirect manufacturing labor costs
12,000
Sales salaries
14,000
Other factory expenses
22,000
Selling and administrative expenses
20,000
The finished goods inventory was $0 at the beginning of the period and $30,000 at the end of the period. The cost of goods sold is _____.
a.
$90,000
b.
$113,000
c. $139,000
d.
$147,000
19.
_____ is the process of measuring products, services, and activities
against the best levels of performance.
a.
Value-adding
b.
Activity-based costing
c.
Benchmarking
d.
Continuous improvement
20.
_____ is the necessary cost of an activity that cannot be eliminated
without affecting a product’s value to the customer.
a.
A period cost
b.
A product cost
c.
A prime cost
d.
A value‑added cost
21. Jack Bowers has paid off the mortgage on his house and continues to live in the house. The interest income forgone by not selling the house and investing the proceeds is an example of a(n) _____.
a.
sunk cost
b.
detrimental cost
c.
opportunity cost
d.
outlay cost
22.
Opportunity cost _____.
a.
is the contribution of the best alternative that is excluded from consideration
b.
applies to resources owned by the company
c.
is the cost of resources owned by the company
d.
all of these answers are correct
23.
Birch Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows:
Direct materials
$3
Direct labor
5
Variable factory overhead
4
Fixed factory overhead
4
Total costs
$16
The fixed factory overhead costs are unavoidable. Spalding Corporation has offered to sell 5,000 units of the same part to Birch Company for $15 a unit. Assuming no other use for the facilities, Birch Company should _____.
a.
buy from Scalding Corporation to save $1 per unit
b. make the part to save $1 per unit
c.
buy from Scalding Corporation to save $3 per unit
d.
make the part to save $3 per unit
24.
Lakers Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows:
Direct materials
$3
Direct labor
5
Variable factory overhead
4
Fixed factory overhead
2
Total costs
$14
The fixed factory overhead costs are unavoidable.
Assume that Lakers Company has been offered 5,000 units of the part from another producer for $14 each. The facilities currently used could be used to make 5,000 units of a product that would contribute $5 a unit to fixed expenses. No additional fixed costs would be incurred. Lakers Company should _____.
a.
make the new product and buy the part to earn an extra $3 per unit contribution to profit
b.
make the new product and buy the part to earn an extra $1 per unit contribution to profit
c.
continue to make the part to earn an extra $1 per unit contribution to profit
d.
continue to make the part to earn an extra $3 per unit contribution to profit
25.
Match Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:
Direct materials
$108,000
Direct labor
156,000
Variable factory overhead
72,000
Fixed factory overhead
168,000
Total costs
$504,000
Of the fixed factory overhead costs, $72,000 are avoidable.
Match Company has offered to sell 5,000 units of the same part to Match for $86.40 per unit. Assuming there is no other use for the facilities, Match Company should _____.
a.
make the part to save $14.40 per unit
b.
buy the part to save $14.40 per unit
c.
buy the part to save the company $72,000
d. make the part to save $4.80 per unit
University of Phoenix, Northern Virginia Campus
ACC 561 Accounting Course
Quiz 2 (Chapters 15-16)
Facilitator: Randolph A. Stanley
Student Name:___________________________
Grade:__________________________________
Instructions: Please answer all questions. Each question worth 1point for a total of 25points. You must only select one answer for each question.
1. Any event that affects the financial position of an organization and requires recording is called a(n)_____.
a. transaction
b. account
c. posting
d. accounting change
2. The _____ is also called the statement of financial position.
a. income statement
b. balance sheet
c. statement of retained earnings
d. statement of cash flows
3. _____ is (are) economic resources that are expected to benefit future activities.
a. Stockholders’ equity
b. Liabilities
c. Assets
d. Retained earnings
4. For a corporation, the excess of the assets over the liabilities is called _____.
a. retained earnings
b. paid-in capital
c. common stock
d. owners’ equity
5. The entity’s economic obligations to nonowners is(are) called _____.
a. owners’ equity
b. liabilities
c. assets
d. retained earnings
6. The _____ discloses the economic resources of the organization and the claims against those resources.
a.
balance sheet
b. income statement
c. statement of cash flows
d. statement of retained earnings
7. _____ are sections of the balance sheet.
a. Revenues, assets, and liabilities
b. Assets, liabilities, and expenses
c. Expenses, revenues, and owners’ equity
d. Assets, liabilities, and owners’ equity
8. Identify which one of the following statements is
false
.
a. Owners’ equity solely represents the profits made by an organization in the current period.
b. Assets are economic resources that are expected to benefit future cash inflows or reduce future cash outflows.
c. Liabilities are economic obligations or claims against the assets of an organization by outsiders.
d. Assets must always equal the sum of liabilities and owners’ equity.
9. The following information was extracted from the accounting records of Ernest Company:
Beginning Paid-In Capital
$90,000
Beginning Retained Earnings
$210,000
Beginning Assets
$455,000
During the period assets increased by $150,000, revenues were $200,000, and expenses were $165,000. The owners made no additional investments.
The amount of Ernest Company’s liabilities at the beginning of the period is _____.
a. $545,000
b. $155,000
c. $300,000
d. $245,000
10.
The following information was extracted from the accounting records of Plum Company:
Beginning Paid-In Capital
$87,000
Beginning Retained Earnings
$211,000
Beginning Assets
$455,000
During the period assets increased by $150,000, revenues were $200,000, and expenses were $165,000. The owners made no additional investments.
The amount of Plum Company’s liabilities at the end of the period is _____.
a. $157,000
b. $272,000
c. $150,000
d. $ 45,000
11. The _____ adjusting entry increases owners’ equity and decreases liabilities.
a. depreciation
b. wages
c. deferred revenue
d. unrecorded revenue
12.
Unexpired costs are considered_____.
a. assets
b. expenses, if cash has been paid
c. expenses, whether or not cash has been paid
d. adjusted expenses
13.
Research and development costs are initially _____.
a. recorded as assets, and written off in a systematic way over a period of years
b. recorded as assets, and are expensed when the goods produced are sold
c. recorded as assets, and are expensed when they are paid in cash
d. expensed
14.
Depreciation is computed on_____.
a.
equipment and land
b.
land and buildings
c.
equipment and buildings
d.
equipment, land, and buildings
15.
Cash collected from the customers before goods are delivered is known as_____.
a. unearned revenue
b. deferred revenue
c. advances from customers
d. all of these answers are correct
16. Current assets are converted to cash or sold or consumed within _____.
a.
the longer of one year or one operating cycle
b.
the shorter of one year or one operating cycle
c.
one fiscal year or one calendar year
d.
one calendar year
17.
_____ is
not
a current asset.
a.
Accounts Receivable
b.
Goodwill
c.
Prepaid Expenses
d.
None of these answers is correct
18.
_____ is
not
considered in the determination of the operating cycle.
a.
Accounts Receivable
b.
Merchandise Inventory
c.
Cash
d. None of these answers is correct
19.
A _____ is
not
considered a cash equivalent.
a.
money market fund
b.
treasury bill
c.
bank account
d.
none of these answers is correct
20.
Depreciation is used to _____.
a.
establish the current market value of an asset
b.
allocate the original cost of an asset to particular periods or products
c.
accumulate funds to replace an asset
d.
all of these answers are correct
21.
The liabilities of Sam Company are listed below:
Accounts payable
$20,000
First Mortgage bonds payable
$100,000
Debentures payable
$80,000
Sam Company liquidated its assets, receiving $140,000 cash. The debenture holders will receive _____ if the debentures are subordinated.
a.
$10,000
b.
$20,000
c.
$40,000
d.
$60,000
22. The liabilities of Becky Company are listed below:
Accounts payable
$20,000
First Mortgage bonds payable
$100,000
Debentures payable
$80,000
Becky Company liquidated its assets, receiving $150,000 cash. The debenture holders will receive _____ if the debentures are unsubordinated.
a.
$10,000
b.
$30,000
c.
$40,000
d.
$50,000
23.
Convertibility allows a bondholder to exchange _____.
a.
subordinated debentures for unsubordinated debentures
b.
debentures for secured debt
c.
bonds for common stock
d.
all of these answers are correct
24.
Non-operating items on the income statement_____.
a.
are revenues and expenses arising from adjusting entries
b.
reflect the effects of financial management decisions
c.
appear only on corporate income statements
d.
appear on the income statement immediately after gross profit
25.
A company had the following information:
Cash
$6,000
Sales
$142,000
Depreciation expense
4,000
Dividends paid
3,000
Prepaid rent
1,400
Rent expense
3,600
Cost of goods sold
69,000
Wage expense
41,000
The net income for the period is_____.
a.
$22,400
b.
$23,800
c.
$24,400
d.
$26,800
