Business Accounting
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Course Introduction
Business Accounting is an essential course that introduces students to the fundamental principles and practices of accounting within a business context. The course covers key concepts such as the accounting cycle, recording and analyzing financial transactions, preparing financial statements, and understanding the role of accounting in decision-making. Students will gain practical skills in managing accounts, interpreting financial data, and using accounting information to support organizational planning and control. Emphasis is placed on the ethical considerations and regulatory frameworks governing business accounting, equipping students with the knowledge needed to contribute effectively to the financial health of businesses.
Recommended Textbook Managerial Accounting 12th Edition by
Carl S. Warren
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Page 2
Chapter 2: Job Order Costing
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Sample Questions
Q1) The entries to record cost and sale of a finished good on account is:
A) debit Cost of Goods Sold, credit Finished Goods
B) debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales
C) debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable
D) debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit Sales
Answer: B
Q2) During the period, labor costs incurred on account amounted to $275,000 including $200,000 for production orders and $75,000 for general factory use. In addition, factory overhead applied to production was $32,000. From the following, select the entry to record the actual factory overhead costs incurred.
A) Accounts Payable 75,000 Factory Overhead 75,000
B) Factory Overhead 32,000 Accounts Payable 32,000
C) Work in Process 75,000 Wages Payable 75,000
D) Factory Overhead 75,000 Wages Payable 75,000
Answer: D
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3
Chapter 3: Process Cost Systems
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Sample Questions
Q1) Amos Company's molding department opened on October 1, 2012. During October, 35,000 units were completed and transferred out to the next department. On October 31, 2012, the 9,000 units which remained in inventory were 40% complete with respect to conversion costs and 100% complete with respect to materials.
Required:
How many equivalent units of work did the molding department complete during October for materials and conversion costs?
Answer: 11ea8e07_02a0_a8f8_b636_293c23a348dd_TB2143_00
Q2) In a process costing system, indirect materials are charged to Work in Process.
A)True
B)False
Answer: False
Q3) Companies recognizing the need to simultaneously produce products with high quality, low cost, and instant availability have adopted a just-in-time processing philosophy.
A)True
B)False
Answer: True
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) If direct materials cost per unit increases, the break-even point will increase.
A)True
B)False
Q2) Variable costs are costs that vary in total in direct proportion to changes in the activity level.
A)True
B)False
Q3) The fixed cost per unit varies with changes in the level of activity.
A)True
B)False
Q4) Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed costs are $75,000. Determine the (a) break-even point in sales units, and (b) break-even point in sales units if the selling price increased to $100 per unit.
Q5) Which of the following activity bases would be the most appropriate for food costs of a hospital?
A) Number of cooks scheduled to work
B) Number of x-rays taken
C) Number of patients who stay in the hospital
D) Number of scheduled surgeries
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Chapter 5: Variable Costing for Management Analysis
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Sample Questions
Q1) What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?
A) Standard costing
B) Variable costing
C) Absorption costing
D) Marginal costing
Q2) In the variable costing income statement, deduction of variable selling and administrative expenses from manufacturing margin yields:
A) differential margin
B) contribution margin
C) gross profit
D) marginal expenses
Q3) The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:
A) exceed units sold
B) equal units sold
C) are less than units sold
D) are equal to or greater than units sold
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Page 6
Chapter 6: Budgeting
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Sample Questions
Q1) The objectives of budgeting are (1) establishing specific goals for future operations, (2) executing plans to achieve the goals, and (3) periodically comparing actual results with these goals.
A)True
B)False
Q2) Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $260,000, $375,000, and $400,000, respectively, for September, October, and November. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections in November from accounts receivable are:
A) $280,000
B) $316,400
C) $295,200
D) $276,500
Q3) A budget can be an effective means of communicating management's plans to the employees of a business.
A)True
B)False
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Page 7
Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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Sample Questions
Q1) Variances from standard costs are usually reported to:
A) suppliers
B) stockholders
C) management
D) creditors
Q2) If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed a:
A) variable variance
B) controllable variance
C) price variance
D) volume variance
Q3) The use of standards for nonmanufacturing expenses is:
A) not as common as it is for manufacturing costs
B) as common as it is for manufacturing costs
C) not useful
D) impossible
Q4) Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) A factor in determining the rate of return on investment--the ratio of sales to invested assets--is called:
A) profit margin
B) indirect margin
C) investment turnover
D) cost ratio
Q2) The DuPont formula uses financial information to measure the performance of a business.
A)True
B)False
Q3) The amount of detail presented in a budget performance report for a cost center depends upon the level of management to which the report is directed.
A)True
B)False
Q4) Developing and retaining quality managers is an advantage of decentralization.
A)True
B)False
Q5) The sales, income from operations, and invested assets for each division of Marcus Company are as follows:
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Chapter 9: Differential Analysis and Product Pricing
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Sample Questions
Q1) The Swan Company produces their product at a total cost of $43 per unit. Of this amount $8 per unit is selling and administrative costs. The total variable cost is $30 per unit The desired profit is $20 per unit. Determine the mark up percentage on total cost.
A) 100%
B) 110%
C) 80%
D) 46.5%
Q2) The lowest contribution margin per scarce resource is the most profitable.
A)True
B)False
Q3) When using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup?
A) Total costs plus desired profit
B) Desired profit
C) Total selling and administrative expenses plus desired profit
D) Total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
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Chapter 10: Capital Investment Analysis
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Sample Questions
Q1) Assume in analyzing alternative proposals that Proposal F has a useful life of six years and Proposal J has a useful life of nine years. What is one widely used method that makes the proposals comparable?
A) Ignore the fact that Proposal F has a useful life of six years and treat it as if it has a useful life of nine years.
B) Adjust the life of Proposal J to a time period that is equal to that of Proposal F by estimating a residual value at the end of year six.
C) Ignore the useful lives of six and nine years and find an average (7 1/2 years).
D) Ignore the useful lives of six and nine years and compute the average rate of return.
Q2) Which method for evaluating capital investment proposals reduces the expected future net cash flows originating from the proposals to their present values and computes a net present value?
A) Net present value
B) Average rate of return
C) Internal rate of return
D) Cash payback
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Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) Tibet Company sells glasses, fine china, and everyday dinnerware. They use activity-based costing to determine the cost of the shipping and handling activity. The shipping and handling activity has an activity rate of $7 per pound. A box of glasses weighs 2 lbs, the box of china weighs 4 lbs, and a box of everyday dinnerware weighs 6 lbs. (a) Determine the shipping and handling activity for each product and (b) determine the total shipping and receiving costs for the china if 3,500 boxes are shipped.
Q2) If the activities causing overhead costs are different across different departments and products, use of a plantwide factory overhead rate will cause distorted product costs.
A)True B)False
Q3) Common allocation bases are
A) direct labor dollars, direct labor hours, direct material dollars
B) direct labor dollars, direct labor hours, machine hours
C) direct labor dollars, direct labor hours, machine dollars D) machine dollars, direct labor dollars, machine hours
Q4) Product costing consists of only direct materials and direct labor.
A)True B)False
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Chapter 12: Cost Management for Just-In-Time
Environments
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Sample Questions
Q1) Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a just-in-time cell for each customer. The following information relates only to one customer's just-in-time cell for the coming year. Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. From the foregoing information, determine the budgeted cell conversion cost per unit.
A) $240.00
B) $268.00
C) $296.00
D) $1,842.50
Q2) The budgeted cell conversion cost rate includes which of the following?
A) only factory overhead
B) only direct labor and direct materials
C) direct labor, direct materials, and factory overhead
D) only direct labor and factory overhead
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Page 13
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?
A) issuance of bonds payable
B) issuance of capital stock
C) purchase of treasury stock
D) purchase of noncurrent assets
Q2) Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends.
A)True
B)False
Q3) Cash flows from investing activities, as part of the statement of cash flows, include payments for the acquisition of fixed assets.
A)True
B)False
Q4) Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) An extraordinary item results from
A) a segment of the business being sold.
B) corporate income tax being paid.
C) a change from one accounting method to another acceptable accounting method.
D) a transaction or event that is unusual and occurs infrequently.
Q2) In performing a vertical analysis, the base for cost of goods sold is
A) total selling expenses.
B) net sales.
C) total expenses.
D) gross profit.
Q3) When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement.
A)True
B)False
Q4) In horizontal analysis, the current year is the base year.
A)True
B)False
Q5) Define solvency and profitability. How are they alike?
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Chapter 15: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) Product costs
A) appear only on the balance sheet
B) appear only on the income statement
C) are expensed as costs are incurred for direct labor, direct material and factory overhead
D) appear on both the income statement and balance sheet
Q2) In most business organizations, the chief accountant is called the treasurer.
A)True
B)False
Q3) Depreciation on factory plant and equipment is an example of factory overhead cost.
A)True
B)False
Q4) Another term often used to refer to factory overhead is:
A) surplus
B) period cost
C) supervisory cost
D) factory burden
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Q5) Differentiate between financial and managerial accounting, addressing such issues as what reports are generated, when, and for whom.