CLASS / COURSE: Accounting

QUESTION DESCRIPTION:

1.Expenses that are closely related to a particular department and can easily
be assigned to it during an accounting period are called _
expenses.

a.operating
b.indirect
c.allocated
d.direct

 

2.In a store with several sales departments, departmentalized accounts
would be used for:

a. sales only.
b. sales, purchases, and merchandise inventory.
c. sales and other income items only.
d.all expense accounts.

3.A department probably would be considered for elimination if it had a:
a.positive contribution margin and a net income from
operations.
b. positive contribution margin and a net loss from operations.
c.negative contribution margin and a net loss from operations.
d. net loss, regardless of the contribution margin.

 

4. The procedure for assigning indirect expenses to departments at the end
of an accounting period is called:
a. valuation.
b. amortization.
c.allocation.
d. distribution.

 

5.If a segment of business is considered a profit center:
a.it must sell products or services to customers outside the
business.
b.both revenue and cost data must be accumulated for the
segment.
c.no indirect expenses can be allocated to the segment.
d.only revenue is accumulated for the segment.

6.The contribution margin of a department is the difference between its:
a.net sales and the total expenses.
b.net sales and its cost of goods sold.
c.gross profit on sales and its indirect expenses.
d.gross profit on sales and its direct expenses.

7.A transfer price is the:

a.price for which a company sells its products to customers.
b.price at which goods are moved from one department of a company to anot~er
department of the company.
c. basis on \vhich indirect expenses are allocated.

d.price at which a company purchases its products from a
supplier.

8.Department B had net sales of $70,000, gross profit on sales of$35,000,
total direct expenses of $9,000, and total indirect expenses of $6,000.
Department B'g contribution margin is:
a.$20,000.
b.$29,000.
c.$26,000.
d.$35,000.

9.Department A had total sales of $84,000 and Department B had total sales
of$36,000. Other Office Expenses, totaling $2,500, are allocated on the
basis of total sales. The amount allocated to Department B is:

a.$750.
b.$1,750.
c.$1,250.
d.$1,071.

10.One department in a company had a contribution margin of $15,000 and a
net loss from opera'tions of $2,000. The indirect expenses allocated to this
department would have been incurred whether or not the department
existed. If this department had been eliminated, the company's reported
net income would have been:

a.$2,000 higher.
b.$15,000 lower.
c.$13,000 lower.
d. the same with or without the department.

11.The Balance Sheet of a manufacturing firm will include which account
that will NOT be included in the Balance Sheet of a service firm?
a. Cash
b.Accounts Payable
c. Prepaid insurance
d.Work in Process Inventory

 

12.Closing entries for a manufacturing firm include all of the following
EXCEPT:

a.transferring all manufacturing cost accounts to
Manufacturing Summary.
b.transferring a1l Revenue and Expense account balances to
Income Summary.
c.closing Manufacturing Summary to Income Summary.
d. closing Income Summaryto et Income.

 

13.Wages paid to the factory maintenance and repair personnel of a
manufacturing business are shown:
a.in the Operating Expenses section of the income statement
b.as Direct Labor on the statement of cost goods
manufactured.
c. as part of Manufacturing Overhead on the statement cost of
goods manu factu red.

d.as a part of the Cost of Goods Sold section of the income
statement.

 

14. The manufacturing costs incurred during the year are:
__a.shown by the expense accounts such as Wages Expense and
Utilities Expense that are listed in the Operating Expenses
section of the income statement.

__b.shown as Direct Labor, Raw Materials, and Manufacturing
Overhead in the Operating Expenses section of the income
statement.

__c.used in the computation of cost of goods manufactured.

__d.shown in the Cost of Goods Sold section of the income
statement.

 

15.Indirect labor fo~
a manufacturing business includes the wages of:
a. factory repair and maintenance employees.
__ b. employees who assemble the product.
c.employees who sell the product.
d. office employees.

16. Gross profit for a manufacturing business is computed by deducting:
__a. cost of goods sold from net sales.
__b. cost of goods manufactured from net sales.
__c. the ending finished goods inventory from the total goods
available for sale.

d. operating expenses from the costs of goods sold.

 

17.The three components of total manufacturing cost are:
a.cost of goods manufactured, cost of goods sold, and work in
process.
b.raw materials used, direct labor, and manufacturing
overhead.
__c.
selling expenses, administrative expenses, and
manufacturing overhead.

__d.raw materials used, direct labor, and cost of goods sold.

 

18.The cost of goods manufactured for a fiscal period is reported on:
__a. both the statement of cost of goods manufactured and the
income statement.

b. both the statement of the cost of goods manufactured and
the balance sheet.
c.both the income statement and the balance sheet.
d.the statement of cost of goods manufactured only.

19.The balance sheet of a manufacturing business shows:
a.the finished goods inventory and the cost of goods
manufactured.
b.the cost of goods manufactured rather than inventory
figures.

c.a single inventory figure-the amount of the finished goods
inventory.
d.the raw materials inventory, the work in process inventory,
and the finished goods inventory.

20.The Indirect Labor account is closed by crediting it and debiting:
a. Wages Payable.
b. income Summary.
c.Manufacturing Summary.
d.Wages Expense.

SOLUTION DESCRIPTION: Correct answers are in attached word file.

SUBJECTS / CATEGORIES:
1. Finance
2. Financial Management
3. Accounting
4. Corporate Finance