Business Accounting Review
Questions
Course Introduction
Business Accounting is an essential course that introduces students to the foundational principles and practices of accounting within a business context. The course covers key topics such as financial statement preparation and analysis, recording business transactions, understanding the accounting cycle, managing assets and liabilities, and interpreting accounting information for decision-making. Students will learn to apply accounting concepts to various business scenarios, ensuring accurate financial reporting and compliance with relevant standards. By the end of the course, students will have developed the skills needed to analyze financial data, support effective business management, and understand the financial health of organizations.
Recommended Textbook
Fundamental Managerial Accounting Concepts 8th Edition by Thomas P Edmonds
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14 Chapters
2016 Verified Questions
2016 Flashcards
Source URL: https://quizplus.com/study-set/3029
Page 2
Chapter 1: Management Accounting and Corporate Governance
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/60238
Sample Questions
Q1) Benchmarking involves the identification of the best practices used by world-class competitors.Discuss the following widely recognized best practices: activity-based management and just in time inventory.
Answer: Answers will vary
Many companies have come to the conclusion that activities drive costs.To control or lower costs,companies must focus on activities.Activity-based management seeks to manage the value chain in order to create new or refine existing value-added activities.A value chain is the sequence of activities through which an organization provides products and services to its customers.A value-added activity is an activity that customers are willing to pay for.Companies should try to reduce or eliminate non-value-added activities.Just in time inventory seeks to reduce inventory holding costs and other hidden inventory-related costs such as diminished motivation,sloppy work,and increased production time.In a JIT manufacturer,no units are produced until customer orders are received.
Q2) The four Standards of Ethical Conduct for Management Accountants relate to competence,confidentiality,integrity,and objectivity.
A)True
B)False
Answer: True
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Chapter 2: Cost Behavior, Operating Leverage, and Profitability Analysis
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Assume that the management of Dairy Deli wants to expand operations. To help evaluate the risks involved in opening an additional store, the company president wants to know the amount of fixed cost a new store will likely incur. Management uses the regression method to analyze the companys mixed costs. In terms of interpreting the results:
A)a low R<sup>2</sup> statistic suggests that the independent value (units sold) more strongly influences the dependent variable (total cost).
B)the R<sup>2</sup> statistic represents the percentage of change in the independent variable (units sold) that is explained by a change in the independent variable (total cost).
C)the R<sup>2</sup> statistic represents the percentage of change in the dependent variable (total cost) that is explained by a change in the independent variable (units sold).
D)the R<sup>2</sup> statistic is not a good measures of reliability. Answer: C
Q2) How does total fixed cost behave when volume increases?
Answer: Answers will vary
Total fixed cost is constant (does not change)when volume increases.
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Chapter 3: Analysis of Cost,Volume,and Pricing to Increase Profitability
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Which of the following statements regarding cost-volume-profit analysis is incorrect?
A) Cost-volume-profit analysis assumes that fixed cost per unit is constant.
B) Cost-volume-profit analysis assumes that the selling price cost per unit is constant.
C) An increase in inventory during a period will affect cost-volume-profit relationships.
D) Although cost-volume-profit analysis is based on assumptions that seldom will be perfectly achieved,the technique is still useful to managers.
Answer: A
Q2) The following information is for a product of Lanier Company: Last year,the variable cost per unit was $25.Total fixed costs were $800,000.At a volume of 170,000 units,the company achieved a profit of $50,000. Required:
What was the unit sales price for the product last year?
Answer: Unit contribution margin = $850,000 ÷ 170,000 = $5 Sales price = $25 + $5 = $30
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Page 5
Chapter 4: Cost Accumulation,Tracing,and Allocation
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Burke Company has 160 employees,88 of whom are in Department 1 and 72 in Department 2.The company expects to incur $166,000 of office supplies costs during the current year.How much of this cost should be allocated to Department 1?
Q2) During the current year,Kemp Cons
A) Number of homes built during the month.
B) Number of months in the year.
C) Number of homes built during the year.
D) Size of the home.
Q3) Indicate whether each of the following statements is
Q4) Joint costs are irrelevant in a decision to sell a joint product at the split-off point or process it further.
A)True
B)False
Q5) In an organization,departments that provide support to operating departments are called:
A) service departments.
B) primary departments.
C) operating departments.
D) strategic departments.
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Chapter 5: Cost Management in an Automated Business
Environment: ABC, ABM, and TQM
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) Farber Company produces its product in three departments,Prepping,Machining,and Finishing.A customer recently returned a defective product that had not been machined properly.The company's accountant would classify the repair cost as an internal failure cost.
A)True
B)False
Q2) Which of the following is an appropriate cost driver for issuance of purchase orders?
A) Number of units
B) Number of purchase orders
C) Number of set ups
D) Either A or Bnumber of units or number of purchase orders would be appropriate
If you wanted to follow format used previously,Either number of units or number of purchase orders would be appropriate.Instead of A or B
Agree.Change made.JMF
If you wanted to follow format used previously,Either number of units or number of purchase orders would be appropriate.Instead of A or B
Agree.Change made.JMF
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Chapter 6: Relevant Information for Special Decisions
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) The practice of relaxing constraints is likely to increase a business's profitability.
A)True
B)False
Q2) The book value of equipment generally is one of the most important factors to consider in deciding to replace the equipment.
A)True
B)False
Q3) Direct labor is an example of a product-level cost.
A)True
B)False
Q4) Which of the following costs is an example of a product-level cost?
A) Machine setup costs
B) Patent filing costs
C) Materials and labor costs
D) Shipping and handling costs
Q5) What is a segment elimination decision? Under what conditions should a company decide to eliminate a segment?
Q6) How can a manager's time horizon affect his/her decision making?
Q7) What are constraints? Provide an example.
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Chapter 7: Planning for Profit and Cost Control
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) Which of the following would not be included in the cash budget?
A) Receipts from customers
B) Ending cash balance
C) Interest expense
D) Depreciation expense
Q2) Which of the following is a benefit associated with budgeting?
A) Promotes planning and coordination
B) The ability to take corrective action to improve performance
C) Enhances performance measurement
D) All of the answers are correct
Q3) Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:
A) capital budgeting.
B) operations budgeting.
C) facilities planning.
D) strategic planning.
Q4) Would you recommend that a business employ a participative approach to budgeting? Why or why not?
Q5) How can participative budgeting improve the effectiveness of a company's budgeting process?
9
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Chapter 8: Performance Evaluation
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) Under all circumstances,unfavorable variances are bad;favorable variances are good.
A)True
B)False
Q2) Ick Manufacturing Company established the following standard price and cost information: \(\begin{array}{|l|r|}
\hline \text { Sales price } & \$ 50 \text { per unit } \\
\hline \text { Variable manufacturing cost } & 32 \text { per unit } \\
\hline \text { Fixed manufacturing cost } & \$ 100,000 \text { total } \\
\hline \text { Fixed selling and administrative cost } & \$ 40,000 \text { total } \\
\hline
\end{array}\) Ick expected to produce and sell 20,000 units.Actual production and sales amounted to 21,500 units.
Required:
(a)Prepare the pro forma income statement in contribution format that would appear in Ick's master budget for the year.
(b)Prepare the income statement in contribution format that would appear in Ick's flexible budget.
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Page 10
Chapter 9: Responsibility Accounting
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118 Verified Questions
118 Flashcards
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Sample
Questions
Q1) One of the divisions of Phoenix Corporation is the Motor Division.This division currently is designing a new,energy-efficient motor that would require a specialized filter.An outside company has offered to provide the 40,000 filters needed each year at $12.50 each.Phoenix is considering setting up a separate division,the Filter Division,to make the filters.The variable cost per unit would be $4,and total fixed costs incurred by the Filter Division would be $240,000.
Required:
1)If the Filter Division is established,Phoenix would need to determine the basis (market-based or other basis)to use in setting the transfer price.What basis would you recommend in this case?
2)What is the maximum transfer price that the Motor Division should be willing to pay for the filters?
3)What is the minimum transfer price that Filter Division should be willing to accept for the filters?
4)Should the transfer be made? What effect would the transfer have on the profits of Phoenix Corporation?
Q2) Indicate whether each of the following statements is
Q3) Indicate whether each of the following statements about transfer pricing is
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Chapter 10: Planning for Capital Investments
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Morrisey Company has two investment opportunities.Both investments cost $5,500 and will provide the same total future cash inflows.The cash receipt schedule for each investment is given below: \(\begin{array}{|l|r|r|}
\hline & \underline{\text { Investment I }} &\underline{ \text { Investment II }} \\
\hline \text { Period 1 } & \$ 1,000 & \$ 1,000 \\
\hline \text { Period 2 } & 1,000 & 2,000 \\
\hline \text { Period 3 } & 2,000 & 3,000 \\
\hline \text { Period 4 } & \underline{4,000} & \underline{2,000} \\
\hline \text { Total } & \underline{\$ 8,000} & \underline{\$ 8,000} \\
\hline & & \\
\hline
\end{array}\) What is the net present value of Investment II assuming an 8% minimum rate of return? (Do not round your intermediate calculations.Round your answer to nearest whole dollar. )
A) $6,492
B) $992
C) $5,880
D) $380
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Page 12
Chapter 11: Product Costing in Service and Manufacturing
Entities
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139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/60228
Sample Questions
Q1) In which account is the actual amount of costs such as factory utilities and maintenance initially recorded?
A) Work in Process Inventory
B) Manufacturing Overhead
C) Raw Materials Inventory
D) Supplies Inventory
Q2) Ringgold Company had beginning finished goods of $36,000.During the period,the company produced goods that cost $150,000.If the ending balance in the Finished Goods Inventory account was $24,000,the amount of cost of goods sold was:
A) $162,000.
B) $150,000.
C) $138,000.
D) none of these.
Q3) Describe the flow of costs in a manufacturing company,starting with raw materials inventory.What accounts do the costs flow through?
Q4) Describe the schedule of cost of goods manufactured and sold.What information does it include,and how is it used?
Q5) Why does a service company need cost information about the services it provides?
Page 13
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Chapter 12: Job-Order, Process, and Hybrid Costing Systems
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) The 10,000 units in Department B that are 30% complete are equivalent to 3,000 whole units.
A)True
B)False
Q2) When manufacturing overhead is applied to production in a job order cost system,the accounting records would reflect an increase in which of the following accounts?
A) Work in Pprocess Inventory
B) Cost of Ggoods Ssold
C) Finished Ggoods Inventoryinventory
D) Raw Mmaterials inventory Inventory
Q3) In process cost systems,product costs flow through the same accounts as in a job-order cost system.
A)True
B)False
Q4) Recognition of revenue from sale of finished goods is:
A) An asset use transaction.
B) An asset exchange transaction.
C) An asset source transaction.
D) A claims exchange transaction.
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Chapter 13: Financial Statement Analysis
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Describe the factors involved in communicating useful financial information.
Q2) In vertical analysis,each item is expressed as a percentage of:
A) Total expenses on the income statement.
B) Net income on the income statement.
C) Sales on the income statement.
D) None of these answers is correct.
Q3) As of December 31,Year 1,Gant Corporation had a current ratio of 1.29,quick ratio of 1.05,and working capital of $18,000.The company uses a perpetual inventory system and sells merchandise for more than it cost.On January 1,Year 2 Gant paid $3,600 on accounts payable.Which of the following statements is incorrect?
A) Gant's quick ratio will increase and its current ratio will decrease.
B) Gant's quick ratio will increase.
C) Gant's working capital will remain the same.
D) Gant's current ratio will increase.
Q4) Indicate whether each of the following statements about financial statement analysis is
Q5) Indicate whether each of the following statements about financial statement analysis is
Q6) The following information applies to Acorn Cons
Page 15
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Chapter 14: Statement of Cash Flows
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Under the direct method,which of the following would not be included in the operating section of the cash flow statement?
A) Cash payments for income taxes
B) Cash payments to purchase insurance
C) Cash payments to purchase long-term equipment
D) Cash receipts from customers
Q2) Cash payments for interest expense on a bond payable would be classified as a financing activity.
A)True
B)False
Q3) Which of the following would be shown as a deduction from net income when calculating net cash flow from operating activities using the indirect method?
A) Decrease in accounts payableAccounts Payable for inventory purchases
B) Loss on the sale of equipment
C) Decrease in accounts receivableAccounts Receivable
D) Increase in salaries payable
Q4) What types of accounts are reconciled to determine cash flows from operating activities?
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