Fundamentals of Accounting Practice Exam
Course Introduction
This course provides a comprehensive introduction to the fundamental principles and concepts of accounting. Students will explore the accounting cycle, including the recording, classifying, and summarizing of financial transactions, as well as the preparation and interpretation of basic financial statements such as the balance sheet, income statement, and cash flow statement. The course emphasizes understanding generally accepted accounting principles (GAAP), analyzing financial information, and developing the skills necessary for effective decision-making in business. Ideal for those new to accounting, this course lays the groundwork for advanced study in financial and managerial accounting.
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College Accounting Chapters 1 to 30 15th Edition by John Price
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Page 2
Chapter 1: Accounting: The Language of Business
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Q1) List three individuals or groups who use financial information to make decisions about a firm. For each listed, give an example of why they would need the information.
Answer: Owners and managers-to evaluate results of operations or to make decisions about the future. Suppliers-to assess the ability of the firm to pay its bills and to set credit limits.
Banks-to determine whether the firm can repay the loan in a timely manner. Tax authorities-to determine the tax base of the firm. Regulatory agencies and investors-to fulfill the requirements of the law. Customers-to determine whether service on purchases will continue into the future. Employees and unions-to negotiate wages and benefits.
Q2) Laws passed by Congress in 1933 and 1934 gave the Securities and Exchange Commission (SEC)final say on matters of financial reporting by publicly owned corporations.
A)True
B)False
Answer: True
Q3) The people, companies, or government agencies to whom a firm owes money are called ________.
Answer: creditors
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Page 3
Chapter 2: Analyzing Business Transactions
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Q1) At the end of the first month of operations for SloMo Delivery Service, the business had the following accounts: Accounts Receivable, $11,350; Prepaid Insurance, $400; Equipment, $26,200 and Cash, $21,650. On the same date, SloMo owed the following creditors: Simpson Supply Company, $17,000; Allen Office Equipment, $14,500. The total amount of Liabilities is:
A)$17,000.
B)$14,500.
C)$28,100.
D)$31,500.
Answer: D
Q2) The balance sheet shows:
A)all revenues and expenses.
B)the financial position of a business at a given time.
C)the results of business operations.
D)the amount of net income or loss.
Answer: B
Q3) The ________ is the financial report that shows the assets, liabilities, and owner's equity of a business on a specific date.
Answer: balance sheet
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Page 4
Chapter 3: Analyzing Business Transactions Using T Accounts
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Q1) The ABC Company paid cash on account for supplies purchased last month. This would be recorded in the T-accounts as a:
A)debit Supplies and credit Accounts Payable.
B)debit to Accounts Payable and credit Cash.
C)debit Accounts Receivable and credit Cash.
D)debit Cash and credit Supplies.
Answer: B
Q2) Issued checks to pay salaries
Answer: Debit Salaries Expense; credit Cash
Q3) A business purchases equipment costing $5,500. They pay $1,500 right away and charge the remaining amount. To record this transaction, the business would:
A)Debit Equipment
B)Debit Equipment
$5,500; Credit Cash $1,500 and Credit Accounts Payable $4,000
$5,500; Credit Accounts Payable $5,500
C)Debit Equipment $4,000; Credit Accounts Payable $4,000
D)Debit Equipment $1,500; Credit Cash $1,500
Answer: A
Q4) The difference between the debit and credit side of an account is called the account
Answer: balance
5
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Chapter 4: The General Journal and the General Ledger
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Q1) Which of the following statements is CORRECT?
A)When entries are posted from the general journal to the general ledger, the account number is written in the Posting Reference column in the general ledger.
B)The general ledger contains the accounts that are used to prepare the financial statements.
C)Some companies use the general ledger instead of a general journal.
D)When entries are posted from the general journal to the general ledger, the page number is written in the Posting Reference column in the general journal.
Q2) A purchase of office equipment for cash is journalized as:
A)Debit Office Equipment; Credit Cash
B)Debit Office Equipment; Credit Accounts Payable
C)Debit Equipment Expense; Credit Cash
D)Debit Cash; Credit Office Equipment
Q3) A journal entry can consist of no more than one account to be debited and one account to be credited.
A)True
B)False
Q4) The process of recording transactions in a journal is referred to as ________.
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Page 6
Chapter 5: Adjustments and the Worksheet
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Q1) If the adjustment for expired rent is not recorded, the firm's expenses will be overstated.
A)True
B)False
Q2) Read each of the following transactions for Enterprises Security Systems. Determine the accounts and amounts to be debited and credited in the necessary end-of-July adjustments.
A. On July 1, 2019, Enterprises Security Systems, a new firm, bought supplies for $2,300. The $2,300 was debited to the Supplies account. An inventory of supplies at the end of July showed that supplies costing $900 were on hand.
B. On July 1, 2019, the firm bought equipment costing $24,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.
C. On July 1, 2019, the firm paid $4,500 rent in advance for a nine-month period. The $4,500 was debited to the Prepaid Rent account.
Q3) The account credited in the adjusting entry made to record the expiration of a portion of prepaid rent is the ________ account.
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Chapter 6: Closing Entries and Teh Postclosing Trial Balance
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Q1) On December 31 the Income Summary account of Cook Company has a debit balance of $18,000 after revenue of $49,000 and expenses of $67,000 were closed to the account. Maria Cook, Drawing has a debit balance of $23,000 and Maria Cook, Capital has a credit balance of $84,000. Record the journal entries necessary to complete closing the accounts. Use 22 as the general journal page number. Then, post the closing entries to the Maria Cook, Capital account.
Q2) The entry to transfer net income to the owner's capital account would include a debit to the owner's capital account.
A)True
B)False
Q3) The balance of the Income Summary account is transferred to the ________ account.
Q4) At the end of the accounting period, the balances of the revenue and expense accounts are transferred to the ________ account.
Q5) The postclosing trial balance lists only the ________ accounts.
Q6) The final closing entry transfers the balance of the ________ account to the owner's capital account.
Q7) The postclosing trial balance lists only the ________, and accounts.
Q8) The ________ entries transfer the results of operations to owner's equity. Page 8
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Page 9
Chapter 7: Accounting for Sales and Accounts Receivable
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Q1) The Sales account is classified as a(n)
A)liability account.
B)asset account.
C)expense account.
D)revenue account.
Q2) The amount of the trade discount taken by the customer is recorded as a(n)
A)liability.
B)asset.
C)reduction to the amount recorded as a sale.
D)expense.
Q3) Identify the statement below that correctly describes the Sales Returns and Allowances account.
A)It normally has a debit balance.
B)It is a liability account.
C)It is an expense account.
D)It normally has a credit balance.
Q4) In some states, a firm receives a discount for paying the amount of sales tax due on time.
A)True
B)False
Page 10
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Chapter 8: Accounting for Purchases and Accounts Payable
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Q1) After a supplier of merchandise is selected, the purchasing department issues a form called:
A)a sale invoice.
B)a purchase requisition.
C)a purchase order.
D)a purchase invoice.
Q2) The journal entry to record the purchase of merchandise on account for $2,750 with freight of $125 prepaid by their supplier and added to the invoice is:
A)debit Accounts Payable $2,875, debit Freight in $125; credit Purchases $2,750
B)debit Accounts Receivable $2,875; credit Sales $2,875
C)debit Purchases $2,750, debit Freight In $125; credit Accounts Payable $2,875
D)debit Purchases $2,750; credit Accounts Payable $2,750
Q3) Received an allowance for some merchandise that was slightly damaged but can be sold at a reduced price. Received a credit memorandum.
A)CR for cash receipts journal
B)CP for cash payments journal
C)S for sales journal
D)P for purchases journal
E)G for general journal.
Page 11
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Chapter 9: Cash Receipts, Cash Payments, and Banking Procedures
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Q1) A deposit in transit.
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Which of the following statements is NOT correct regarding the cash receipts journal?
A)The amounts recorded in the Accounts Receivable Credit column are posted daily to individual accounts in the accounts receivable subsidiary ledger.
B)The amounts that appear in the Other Accounts Credit column are posted individually to the general ledger accounts during the month.
C)After posting a column total from the cash receipts journal to a general ledger account, a (--)is entered at the bottom of the journal column.
D)Before any posting to the general ledger takes place, the equality of the debits and credits recorded in the cash receipts journal are proved.
Q3) The cash receipts journal for Able Company is shown below. Describe how the amounts would be posted to the general ledger accounts.
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Page 12
Chapter 10: Payroll Computations, Records, and Payment
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Q1) The total amount earned by the employee is called the A)payroll.
B)gross pay.
C)take home pay.
D)net pay.
Q2) Employers are required to pay for ________ insurance that will reimburse employees for losses suffered from job-related injuries.
Q3) Social Security Tax is 6.2%; Medicare Tax is 1.45% and federal and state unemployment compensation taxes total 5.4% (both added together). The federal income tax for the month is $250 and the state income taxes for the month is $40. If employee George Glass earned $2,500 for the current month and he has not reached any maximums for taxes, what is George's total net pay for the month?
A)$1,883.75
B)$2,018.75
C)$2,500.00
D)$2,173.75
Q4) The overtime rate is usually one and one-half times the regular hourly rate.
A)True B)False
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Chapter 11: Payroll Taxes, Deposits, and Reports
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Q1) The payroll register of Rapid Repairs showed total employee earnings of $1,870 for the week ended April 5, 2019. Compute the employer's payroll taxes for the period. The tax rates are: Social security tax, 6.2 percent; <b>Medicare</b> tax, 1.45 percent; <b>FUTA</b >tax, 0.6 percent; <b>SUTA</b> tax, 2.2 percent. All earnings are taxable. Record the employer's payroll taxes for the period on page 4 of a general journal.
Q2) Which of the following payroll taxes is not paid by the employee?
A)FICA (Social Security and Medicare)
B)federal unemployment tax
C)federal income tax
D)state income tax
Q3) After the ABC Corporation paid its employees on June 15, 2019, and recorded the corporation's share of payroll taxes for the payroll paid that date, the firm's general ledger showed a balance of $2,380 in the Social Security Tax Payable account, a balance of $685 in the Medicare Tax Payable account, and a balance of $3,050 in the Employee Income Tax Payable account. On June 16, 2019, the business issued a check to deposit the taxes owed in the local bank. Record this transaction on page 15 of a general journal.
Q4) Form 940 is used to report ________ taxes.
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Page 14
Chapter 12: Accruals, Deferrals, and the Worksheet
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Q1) Rose Bush Nursery purchased a delivery truck for $40,000. The truck is expected to have a useful life of 5 years and a residual value of $2,800. The company uses the straight-line method of depreciation. If the truck was purchased on June 1, 2019, what is the amount of depreciation expense for the truck for one full year?
A)$3,100
B)$4,340
C)$2,800
D)$7,440
Q2) If an account has a debit balance of $1,600 in the Trial Balance section of a worksheet and there is a debit of $300 in the Adjustments section, the account balance in the Adjusted Trial Balance section of the worksheet is a
A)$1,900 debit.
B)$1,300 credit.
C)$1,900 credit.
D)$1,300 debit.
Q3) The procedure that most nearly attains the objective of matching revenues and expenses to specific accounting periods is called the________ basis of accounting.
Q4) Uncollectible Accounts Expense is a(n)________ account.
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Page 15
Chapter 13: Financial Statements and Closing Procedures
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Q1) Which of the following accounts is not closed at the end of the accounting period?
A)Merchandise Inventory
B)Purchases
C)Rent Expense
D)Sales
Q2) Current assets are usually listed on a balance sheet in order of liquidity.
A)True
B)False
Q3) Which of the following should be classified as a General and Administrative Expense on a Multi-Step Income Statement:
A)Delivery Expense
B)Sales Salaries Expense
C)Advertising Expense
D)Insurance Expense
Q4) Current assets provide the funds needed to pay bills and meet expenses. A)True
B)False
Q5) All accounts appearing in the ________section of the worksheet are closed to the Income Summary account.
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Chapter 14: Accounting Principles and Reporting Standards
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Q1) The<i> monetary unit assumption </i>assumes that:
A)the value of money is not stable.
B)the idea that expressing financial facts and events is meaningful only when they can be expressed in monetary terms.
C)the business will continue to operate indefinitely.
D)revenues and expenses of a business can be separated into separate time periods.
Q2) Marvin's Appliance Store sold a 3-year service contract on a refrigerator receiving the entire amount in cash at the time of the sale. Recording the revenue from the prepaid service contract over its 3-year life is an example of
A)following the objectivity assumption.
B)applying the conservatism constraint.
C)applying the realization principle.
D)applying the revenue recognition principle.
Q3) Explain the following statement. "Investors and creditors expect to receive a cash flow directly or indirectly from the business entity."
Q4) An accountant generally assumes that a firm is a(n) ________and will continue to operate indefinitely.
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Chapter 15: Accounts Receivable and Uncollectible Accounts
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Q1) When there is a partial collection of a balance previously written off, the entry to record the reinstatement of the customer's account will be for the entire amount written off.
A)True
B)False
Q2) The practice of estimating losses from uncollectible accounts before specific accounts become uncollectible is referred to as the ________ method.
Q3) If the direct charge-off method of accounting for uncollectible receivables is used, what general ledger account is debited to<u> write off</u> a customer's account as uncollectible?
A)Accounts Receivable
B)Allowance for Doubtful Accounts
C)Uncollectible Accounts Expense
D)Uncollectible Accounts Payable
Q4) When the estimate of the losses from uncollectible accounts is based on the aging method, the primary concern is proper valuation of the accounts receivable on the balance sheet.
A)True B)False
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Chapter 16: Notes Payable and Notes Receivable
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Q1) The due date of a one-month note dated October 11, is November
A)11.
B)12.
C)13.
D)14.
Q2) Compute the amount of interest owed on a 6-month, 12 percent note for $18,000.
Q3) The interest rate stated on a note receivable or note payable is always the interest rate for
A)one year.
B)the exact number of days of the note.
C)one month.
D)depends on the terms of the note.
Q4) Compute the maturity value of a 5-month, 8 percent note with a face value of $8,000. (round answer to 2 decimal places)
Q5) The maturity date of a 90-day note issued May 10 is--------- .
Q6) Notes Receivable Discounted is usually shown in the Current Liabilities section of the balance sheet.
A)True
B)False
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Q7) A 3-month note payable is classified as a(n)-----------on the balance sheet.
Chapter 17: Merchandise Inventory
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Q1) The modifying convention of conservatism requires that inventory be presented on the balance sheet at A)cost.
B)net realizable value.
C)average cost during the period.
D)either cost or net realizable value, whichever is lower.
Q2) Inventory valuation is very important in computing federal income tax because the value placed on the inventory determines the net income reported.
A)True
B)False
Q3) The gross profit ratio is calculated by dividing Gross Profit by Net Sales.
A)True
B)False
Q4) The steps and proper order for estimating EI cost using the gross profit method are as follows:
A)determine COGA, estimate COGS, subtract COGS from COGA.
B)determine COGA, estimate COGS, subtract COGA from COGS.
C)estimate COGS, determine COGA, subtract COGA from COGS.
D)estimate COGS, determine COGA, subtract COGS from COGA.
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Chapter 18: Property, Plant, and Equipment
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Q1) In determining the impairment of a long-term asset, the------------ test is used to compare the asset's net book value with estimated cash flows from the asset's future use.
Q2) Intangible assets may be purchased or developed. If developed, they are categorized as Research and Development and:
A)expensed in the period in which the cost is incurred.
B)amortized over their useful life.
C)depleted over their useful life.
D)depreciated over their useful life.
Q3) The allocation of the costs of natural resources, such as minerals, to expense as the resource is extracted is referred to as:
A)depreciation.
B)amortization.
C)depletion
D)salvage value.
Q4) The normal balance of Accumulated Depreciation is a(n)----------- .
Q5) When an asset is acquired by trading in an asset already owned in exchange for the new one, the amount received on the trade-in is called the---------- .
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Chapter 19: Accounting for Partnerships
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Q1) Kaitlyn Fields and Tyler Unger are partners. To expand the expertise of their business, they have agreed to admit Serena Singh to the partnership on January 1, 2019. The capital account balances on January 1, 2019, after revaluation of assets, are Fields, $80,000, and Unger, $60,000. Net income or net loss is shared equally. On page 7 of a general journal, record the admission of Singh to the partnership on January 1, 2019, assuming that Fields sells one-half of her interest to Singh for $39,000 in cash. Omit the description.
Q2) The characteristic of a partnership that means that any partner can make valid contracts for the partnership is known as---------- .
Q3) Partnership net income of $60,000 is to be divided between two partners, Bob Garcia and Jerry McKernan, according to the following arrangement: There will be salary allowances of $30,000 for Garcia and $20,000 for McKernan, with the remainder divided equally. How much of the net income will be distributed to Garcia and McKernan, respectively?
A) $25,000 and $15,000
B)$30,000 and $20,000
C)$35,000 and $25,000
D)$30,000 and $30,000
Q4) Each general partner has--------- liability for the debts of a partnership.
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Chapter 20: Corporations: Formation and Capital Stock Transactions
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Q1) The outstanding stock of Adam Baum Company is composed of 25,000 shares of $100 par, 2%, cumulative preferred stock and 200,000 shares of $5 par common stock. Dividends have not been paid for the current year or the previous year. If $180,000 is to be distributed as dividends for the current year, what total amount will be distributed to the preferred stockholders?
A)$200,000.
B)$100,000
C)$50,000.
D)$80,000.
Q2) If a corporation sells 700 shares of 8 percent, $80 par-value preferred stock for $96 a share, the entry to record the transaction will include a credit of------------- to the Preferred Stock account.
Q3) Callable preferred stock gives the shareholder the right to exchange preferred shares of stock for common shares based on the conversion ratio indicated on the stock certificate.
A)True
B)False
Q4) Profit distribution to stockholders is called-------- .
Q5) The owners of a corporation are called----------- .
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Chapter 21: Corporate Earnings and Capital Transactions
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Q1) The Matt Tress Sofa Company has 11,000 shares of $2 par common stock outstanding. On August 22, 2019, a 3% stock dividend was declared to be distributed on September 30, 2019. The market value of the stock on August 22 was $21; the market value on September 30 was $18. What is the amount to be debited to the Retained Earnings account on August 22?
A)$6,270.
B)$990.
C)$5,940.
D)$6,930.
Q2) Deferred Tax Assets are created whenever taxes are paid on revenue transactions that will be reflected in future financial statement income.
A)True
B)False
Q3) Accumulated profits that are kept in the business, as opposed to being distributed as dividends to stockholders, are called---------- .
Q4) On August 10, 2019, a corporation received a donation of land for a future plant site. The land has a fair market value of $800,000. Record the entry to reflect the receipt of this asset as a gift on page 3 of a general journal. Omit the description.
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Chapter 22: Long-Term Bonds
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Q1) Lee Corporation has 10-year, 12% bonds payable of $100,000 that were sold on January 2, 2019 at a premium of $15,000. The amortization on the premium is recorded at the end of every year. Determine the Balance Sheet presentation of these bonds at December 31, 2021. (Present only the section of the Balance Sheet in which the bonds appear.)
Q2) To calculate the gain or loss on the retirement of bonds, the carrying value of the bonds is subtracted from the repurchase price.
A)True
B)False
Q3) Using borrowed funds to earn a profit greater than the interest that must be paid on the borrowed funds is called trading on the equity, or----------- .
Q4) When a corporation pays the periodic interest payment on its bonds, Bond Interest Expense is debited.
A)True
B)False
Q5) On September 1, 2019, a corporation paid $620,000 to retire bonds with a face value of $600,000 and an unamortized bond premium of $10,000. Record the transaction on page 8 of a general journal. Omit the description.
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Chapter 23: Financial Statement Analysis
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Q1) If total merchandise available for sale is 68 percent of net sales and cost of goods sold is 56 percent of net sales, gross profit on sales is:
A)32 percent of net sales.
B)68 percent of net sales.
C)44 percent of net sales.
D)56 percent of net sales.
Q2) Where the current ratio measures a company's ability to pay its current debts using current assets on a dollar for dollar basis, working capital provides a similar measure by providing the actual margin of security afforded to short-term creditors.
A)True
B)False
Q3) The fair market value of a share of common stock is determined by dividing the stockholders' equity by the number of shares of common stock outstanding. A)True
B)False
Q4) Financial statements presented side-by-side for two or more periods are called-----------statements.
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Chapter 24: The Statement of Cash Flows
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Q1) declared dividend
A)(O)operating
B)(I)investing
C)(F)financing, or a significant
D)(N)noncash financing and investing activity.
Q2) A decrease in accounts payable from $86,000 to $72,000 will be reported on the statement of cash flows as a:
A)$14,000 use of operating activity funds.
B)$14,000 source of operating activity funds.
C)$14,000 source of investing activity funds.
D)$14,000 use of investing activity funds.
Q3) The method most often used by companies to prepare the statement of cash flows is the:
A)accrual method.
B)direct method.
C)indirect method.
D)deferral method.
Q4) A gain on the sale of equipment is reported in the -------------section of the statement of cash flows.
Q5) Why is the Statement of Cash Flows important?
Page 27
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Chapter 25: Departmentalized Profit and Cost Centers
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Q1) Recording Studio
A)Cost
B)Profit
Q2) How much of the computer system's cost will be allocated to the Tax Division?
A)$90,000.
B)$67,500.
C)$121,500.
D)$81,000.
Q3) The difficulty of fairly allocating direct expenses is one limitation of departmental income statements.
A)True
B)False
Q4) Using the information provided, determine and present in good form, the Cost of Goods Sold section of the Income Statement for Cody's Conundrums.
Q5) Customer Service
A)Cost
B)Profit
Q6) The price at which goods are moved from one segment of a company to another is the------------price.
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Chapter 26: Accounting for Manufacturing Activities
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Q1) Gross profit for a manufacturing business is calculated by:
A)deducting cost of goods manufactured from net sales.
B)deducting cost of goods sold from net sales.
C)deducting the ending finished goods inventory from the total goods available for sale.
D)deducting operating expenses from the costs of goods sold.
Q2) Gross profit for a manufacturing business is calculated by deducting cost of goods manufactured from net sales.
A)True
B)False
Q3) Raw Materials Used is not a component of manufacturing overhead. A)True
B)False
Q4) If there are no errors, the amount needed to balance the Cost of Goods Manufactured columns of a worksheet will also be the amount required to balance the Balance Sheet columns.
A)True B)False
Q5) Beginning and ending finished goods inventory are used in the calculation of cost of goods---------.
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Chapter 27: Job Order Cost Accounting
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Q1) On May 5, a firm purchased 20 units of materials at a unit price of $2.20. On May 15, the firm purchased 35 units at a unit price of $2.45. If the firm uses the FIFO method of inventory pricing, the total cost of 30 units issued on May 20 would be:
A)$66.00.
B)$68.50.
C)$73.50.
D)$69.75.
Q2) The Manufacturing Overhead Applied account for Djos Domal Company had activity of $567 in indirect materials and supplies, $785 in indirect labor, and $3,455 in other overhead costs recorded in the account at August 31 of the current year. The Manufacturing Overhead Applied account had a total of $4,600 in overhead applied during August. What was the amount of overapplied or underapplied overhead for the month of August? Prepare the journal entry to close the related overhead accounts.
Q3) Indirect labor is recorded by debiting the account and crediting the---------Manufacturing Overhead Applied account.
Q4) Under a perpetual inventory system, when goods are sold the Cost of Goods Sold account is----------.
Q5) Record the necessary entries on page 8 of a general journal. Omit descriptions. To view all questions and flashcards with answers, click on the resource link above. Page 30
Chapter 28: Process Cost Accounting
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Q1) Equivalent units of production are determined for materials and labor but not for manufacturing overhead.
A)True
B)False
Q2) The entry to transfer costs from Department A to Department B is recorded as
A)a debit to Finished Goods Inventory and a credit to Work in Process-Dept. A.
B)a debit to Work in Process-Dept. B and a credit to Work in Process-Dept. A.
C)a debit to Work in Process-Dept. A and a credit to Work in Process-Dept. B.
D)a debit to Work in Process-Dept. A and a credit to Finished Goods Inventory.
Q3) Prepare equivalent production computations for Dept. A from the information provided.
Q4) In a process cost accounting system, the average unit cost of a product is determined by dividing the appropriate costs by
A)the number of units placed in production during the period.
B)In a process cost accounting system, the average unit .
C)the number of units transferred to another department.
D)the number of units transferred to the finished goods inventory.
Q5) The----------- summarizes all costs charged to each department as well as the costs transferred out and to the cost assigned to goods still in process.
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Chapter 29: Controlling Manufacturing Costs: Standard Costs
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Q1) To measure manufacturing efficiency, it is necessary to first identify costs behavior and separate cost into their behavioral components.
A)True
B)False
Q2) In a factory, the total variable costs are $1,100 if 500 units are produced. If 400 units are produced, the total variable costs would be
A)$1,100.
B)$900.
C)$880.
D)$760.
Q3) The material quantity variance for Trim used in January is:
A)$5,640 favorable.
B)$5,640 unfavorable.
C)$1,440 unfavorable.
D)$1,440 favorable.
Q4) A fixed budget is one that shows only one level of activity.
A)True
B)False
Q5) Costs in excess of established standards are----------- .
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Chapter 30: Cost-Revenue Analysis for Decision Making
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Q1) Using the absorption costing method, the net income for year is:
A)$170,000
B)$180,000
C)$200,000
D)$16,000
Q2) Using direct costing, the value of ending inventory of finished goods is:
A)$100,000
B)$120,000
C)$140,000
D)$220,000
Q3) The difference in net income reported under direct costing versus the net income reported under absorption costing is calculated based on the increase or decrease in the units available for sale.
A)True
B)False
Q4) Direct costing is the process of tracing only direct material and direct labor costs through the factory cost centers and into the cost of goods sold.
A)True B)False
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