Intermediate Accounting
Exam Materials
Course Introduction
Intermediate Accounting is a comprehensive course designed to deepen students understanding of financial accounting theory and practice beyond the introductory level. Focusing on the detailed recognition, measurement, and reporting of assets, liabilities, equity, revenues, and expenses, the course explores the application of generally accepted accounting principles (GAAP) to complex accounting issues. Topics include income measurement, preparation of financial statements, accounting for current and long-term assets and liabilities, accounting for income taxes, pensions, leases, and changes in accounting principles. Through case studies and problem-solving, students develop analytical skills and learn to interpret and apply financial reporting standards in various business contexts.
Recommended Textbook
Cost Accounting A Managerial Emphasis 7th Canadian Edition by Charles T. Horngren
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22 Chapters
3533 Verified Questions
3533 Flashcards
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Page 2
Chapter 1: The Accountants Vital Role in Decision Making
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) The key to a company's success is always to be the low cost producer in a particular industry.
A)True
B)False
Answer: False
Q2) Which of the following elements is contained within the Implement the Decision,Evaluate Performance,and Learn category in the Five-Step Decision-Making Process?
A)Identify the problem and uncertainties.
B)Obtain information.
C)Make predictions about the future.
D)Provide feedback.
E)Make decisions by choosing among alternatives.
Answer: D
Q3) An accountant,as a member of a professional organization,must follow only those ethical requirements as are prescribed by the organization they belong to,such as the Chartered Professional Accountants of Canada.
A)True
B)False
Answer: False
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Chapter 2: An Introduction to Cost Terms and Purposes
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171 Verified Questions
171 Flashcards
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Sample Questions
Q1) Operating income does not include interest expense and income taxes.
A)True
B)False
Answer: True
Q2) Which of the following formulas determine cost of goods sold in a manufacturing entity?
A)Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold
B)Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold
C)Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold
D)Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold
E)Beginning work-in-process inventory - Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold
Answer: D
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4
Chapter 3: Cost-Volume-Profit Analysis
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Capital intensive companies have less risk because their relatively lower operating leverage suggests that they have already made large investments in capital assets.
A)True
B)False
Answer: False
Q2) In cost-volume-profit analysis (CVP)it is assumed that both the product mix and the volume sold are dynamic variables.
A)True
B)False
Answer: False
Q3) How many units would have to be sold to yield a target operating income of $22,000,assuming variable costs are $15 per unit,total fixed costs are $2,000,and the unit selling price is $20?
A)4,800 units
B)4,400 units
C)4,000 units
D)3,600 units
E)1,600 units
Answer: A
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Page 5
Chapter 4: Job Costing
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145 Flashcards
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Sample Questions
Q1) Cost pools are defined as groupings of individual cost items which can range from broad,company-wide categories to very narrow categories.
A)True
B)False
Q2) The manufacturing overhead control account and the manufacturing overhead allocated account both have zero balances at the end of each year after all adjustments are recorded.
A)True
B)False
Q3) What is the budgeted indirect cost allocation rate for Department 1?
A)$3.45 per hour
B)$3.75 per hour
C)$6.90 per hour
D)$7.50 per hour
E)$8.00 per hour
Q4) For each cost pool,the indirect cost rate equals the indirect cost pool divided by the cost allocation base.
A)True B)False
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Chapter 5: Activity-Based Costing and Management
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) The new manager of the insurance division does not understand how the company can have so many overhead rates for assigning costs to the activities of the company's life insurance underwriters.There is one rate schedule for average assignable costs when agents write standard policies.There is another rate schedule which the agents must complete when they write special policies,and these policies are costed out differently from those that are categorized as standard policies.
Required:
a.Why might the company have different costing systems with different overhead rates for the standard and specialized policies?
b.Which rate (standard or specialized)would cross-subsidize the other if the company used only one set of overhead rates for costing its policies?
Q2) Compute the billing to each major client for the month.
A)School Board,$134,440.00;City Gov't,$7,050.50
B)School Board,$8,090.00;City Gov't,$134,440.00
C)School Board,$134,440.00;City Gov't,$4,323.50
D)School Board,$7,050.50;City Gov't,$7,685.00
E)School Board,$8,090.00;City Gov't,$7,050.50
Q3) Explain how a top-selling product may actually result in losses for the company.
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Chapter 6: Master Budget and Responsibility Accounting
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) Responsibility accounting is a budgeting system that measures the plans and objectives of managers.
A)True
B)False
Q2) How many barbells need to be produced in 2016?
A)11,050
B)9,850
C)10,000
D)10,050
E)9,950
Q3) On the 2016 budgeted income statement,what amount will be reported for cost of goods sold?
A)$296,000
B)$280,000
C)$276,000
D)$290,000
E)$292,000
Q4) A rolling budget encourages management to be thinking about the next 12 months. A)True
B)False
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Chapter 7: Flexible Budgets,variances,and Management
Control: I
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Video Producers manufactures two types of videos: regular and CD.The regular tapes require 5 units of direct material X at a standard price of $2 per unit.The CDs require 2 units of direct material Y at a standard price of $3.
During January the company purchased 9,000 units of X for $2.10 each and 3,600 units of Y at $3.20 each.January production used 8,800 units of X and 3,400 units of Y.Outputs of finished tapes was 1,750 of each type.
Required:
Compute the price and efficiency variances for each material. For the rate variances use two different responsibility assumptions.First assume that rate variances are isolated at the time of purchase;second assume that the rate variances are isolated as materials are placed into production. The efficiency variances for each material are determined during production.
Q2) September's direct labour rate variance is
A)$75.00 unfavourable.
B)$75.00 favourable.
C)$70.00 unfavourable.
D)$70.00 favourable.
E)$90.00 unfavourable.
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Chapter 8: Flexible Budgets,variances,and Management
Control: II
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) A fixed manufacturing overhead cost pool can never incur an efficiency variance. A)True
B)False
Q2) What is Regal Company's budgeted fixed overhead rate per output unit?
A)$28.17 per unit
B)$39.44 per unit
C)$40.40 per unit
D)$56.56 per unit
E)$65.17 per unit
Q3) An unfavourable variable overhead rate variance can be the result of paying lower prices than budgeted for variable overhead items such as energy.
A)True
B)False
Q4) What is the amount of fixed overhead allocated to production?
A)$120,000
B)$122,000
C)$123,000
D)$125,000
E)$130,000
10
Q5) Explain why sales-volume variance could be helpful to managers.
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Chapter 9: Income Effects of Denominator Level on Inventory Valuation
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171 Verified Questions
171 Flashcards
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Sample Questions
Q1) What will be the break-even point if variable costing is used?
A)1,334 units
B)1,000 units
C)1,125 units
D)563 units
E)438 units
Q2) Direct costing is not truly synonymous with variable costing since variable costing does not include all direct costs as inventoriable costs.
A)True
B)False
Q3) The gross-margin format of the income statement highlights the lump sum of fixed manufacturing costs.
A)True
B)False
Q4) Explain the difference between the gross margin format and the contribution margin format for the income statement.What information is highlighted with each?
Q5) Unused capacity is considered wasted resources and the result of poor planning.
A)True
B)False
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Chapter 10: Analysis of Cost Behaviour
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) Which cost estimation method would be described as a formal method to fit linear cost functions to past data observations?
A)the account analysis method
B)the conference method
C)the industrial-engineering method
D)the quantitative analysis method
E)the departmental analysis method
Q2) What is the tool crib cycle time for an order?
A)2 minutes per tool
B)3 minutes per tool
C)5 minutes per tool
D)7 minutes per tool
E)4 minutes per tool
Q3) What is the estimated total cost at an operating level of 8,000 hours?
A)$39,115
B)$36,670
C)$44,711
D)$43,470
E)$37,125
Q4) Describe the two assumptions upon which managers often estimate cost functions.
Page 12
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Chapter 11: Decision Making and Relevant Information
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) If management takes a multiple-year view in the decision model and judges success according to the current year's results,a problem will occur in the A)decision model.
B)performance evaluation model.
C)production evaluation model.
D)year-end review model.
E)responsibility centre allocation.
Q2) An item's book value is the historical cost plus accumulated amortization.
A)True
B)False
Q3) Based on the above information only,should Day Star make or buy the product or rent its facilities out?
A)buy
B)make
C)either make or buy - indifferent
D)rent the facilities to the subsidiary
E)either make or rent - indifferent
Q4) Explain why sunk costs are not considered relevant when choosing among alternatives.
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Chapter 12: Pricing Decisions, product Profitability
Decisions, and Cost Management
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) Peak-load pricing focuses on direct costs when setting prices for peak and nonpeak periods.
A)True
B)False
Q2) Which of the following is TRUE of alternative long-run pricing approaches?
A)A market-based approach only considers how customers will react.
B)A cost-based approach only considers how customers will react.
C)A market-based approach only considers costs.
D)A market-based approach is more logical in a competitive market.
E)In cost-plus pricing,selling price ignores market forces when setting the markup.
Q3) Under cost-plus pricing,what is the required selling price to achieve a 15% markup?
A)$285
B)$6300
C)$310
D)$315
E)$322
Q4) What is the primary reason a firm would adopt target costing?
Q5) List three advantages for including unitized fixed costs for pricing decisions.
Page 14
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Chapter 13: Strategy,balanced Scorecard,and Profitability
Analysis
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) Which of the following statements is TRUE concerning productivity measures?
A)Both the partial productivity and total factor productivity measures have the same weaknesses,but each has different strengths as a measure.
B)Both the partial productivity and total factor productivity measures have the same strengths,but each has different weaknesses as a measure.
C)Both the partial productivity and total factor productivity measures have the same strengths,and the same weaknesses as a measure.
D)The weaknesses of the partial productivity measure are the strengths of the total factor productivity measure.
E)The strengths and weakness in the measurements of the partial productivity measure are the strengths of the total factor productivity measures are completely unrelated to each other.
Q2) Required:
What is the amount of the productivity component?
Q3) Required:
a.What is the operating income for Year 1?
b.What is the operating income in Year 2?
c.What is the change in operating income from Year 1 to Year 2?
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Chapter 14: Period Cost Allocation
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) Which purpose of cost allocation is used to decide on the selling price for a customized product or service?
A)to provide information for economic decisions
B)to motivate managers and other employees
C)to justify costs
D)to measure income and assets for reporting to external parties
E)to compute reimbursement
Q2) Two entities,Cooper Company and Magic Company,share a common warehouse facility.Total costs for the facility are budgeted at $2,000,000.Accountants have estimated that if Cooper Company did not use the facility the cost incurred would be reduced by 30 percent.What amount of the budgeted cost should be allocated,respectively,to Cooper and Magic if the incremental allocation method is used? Assume that Magic is he primary party.
A)$0;$1,400,000
B)$0;$2,000,000
C)$1,400,000;$600,000
D)$700,000;$1,300,000
E)$600,000;$1,400,000
Q3) Should a company allocate its corporate costs to divisions?
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Page 16
Chapter 15: Cost Allocation: Joint Products and Byproducts
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167 Verified Questions
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Sample Questions
Q1) The decision of whether to process products beyond the splitoff process should be based on which of the following?
A)revenue analysis
B)relevant cost analysis
C)production cost analysis
D)gross margin analysis
E)incremental operating income attainable beyond the splitoff point
Q2) In rate regulation settings,which method is usually preferred over the sales value method?
A)constant gross margin percentage NRV method
B)estimated net realizable method
C)physical measure method
D)sales value at splitoff method
E)rate regulation method
Q3) What are the two methods to account for byproducts.Which is the more appropriate method to use and why?
Q4) All separable costs in joint cost allocations are always incremental costs.
A)True
B)False
Q5) How should toxic waste be accounted for?
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Chapter 16: Revenue and Customer Profitability Analysis
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Which of the following statements is TRUE?
A)The two main classes of revenue allocation methods are the step-up method and the incremental method.
B)The stand-alone revenue allocation method ranks the individual products in a bundle and then uses this ranking to allocate the bundled revenues to these individual products.
C)A bundled product is a package of two or more products or services,sold for multiple prices.
D)The issues discussed with revenue tracing and sales returns apply to cost tracing. E)The two main classes of revenue allocation methods are the stand-alone method and the incremental method.
Q2) What is the total sales-volume variance in terms of the contribution margin?
A)$216,000 unfavorable
B)$216,000 favorable
C)$556,000 favorable
D)$896,000 favorable
Q3) What actions might be taken with an unprofitable customer?
Q4) Why would a manager perform customer-profitability analysis?
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18
Chapter 17: Process Costing
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Sample Questions
Q1) What is the balance in ending work-in-process inventory?
A)$82,000
B)$120,000
C)$200,000
D)$170,000
E)$174,000
Q2) Examples of industries that would use process costing include the pharmaceutical and semiconductor industry.
A)True
B)False
Q3) How many units were completed and transferred out of the Assembly Department during March?
A)200 units
B)1,200 units
C)1,400 units
D)1,600 units
E)1,720 units
Q4) List and describe the five steps in process costing.
Q5) Discuss some typical products which would likely use process costing.
Q6) Compare and contrast process costing and job order costing.
Page 19
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Chapter 18: Spoilage, rework, and Scrap
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Sample Questions
Q1) Bluefish Machine Shop is a manufacturer of motorized cars for golf clubs.Leona Pez,the plant manager of Bluefish,obtained the following information for Job #99 in July 2015.A total of 50 units were started,and 3 spoiled units were detected and rejected at final inspection.The spoiled units were considered to be normal spoilage.Costs prior to the inspection point are $1,200 per unit.The current disposal price of the spoiled units is $600 per unit.When spoilage is detected,the spoiled units are inventoried at $600 per unit.
Required:
1.Prepare journal entries to record the normal spoilage,assuming:
a.The spoilage is related to a specific job.
b.The spoilage is common to all jobs.
c.The spoilage is considered to be abnormal spoilage.
2.Assume that 2 spoiled units can be reworked for a total cost of $800.A total cost of $2,400 associated with these units has already been assigned to job #99 before the rework.Prepare journal entries for the rework assuming:
a.The rework is related to a specific job.
b.The rework is common to all jobs.
c.The rework is considered to be abnormal.
Q2) What are the objectives in accounting for spoilage?
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Page 20
Chapter 19: Inventory Cost Management Strategies
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) The reorder point is simplest to compute when either demand or lead time is certain.
A)True
B)False
Q2) Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.
A)True
B)False
Q3) Factors that are relevant in a JIT system,but not for the EOQ model,include
A)quality of materials.
B)timeliness of deliveries.
C)stockout costs.
D)carrying costs.
E)quality of materials,timeliness of deliveries,and stockout costs.
Q4) Backflush costing is an example of sequential tracking.
A)True
B)False
Q5) What are five features of a just-in-time manufacturing system?
Q6) What are the principles of lean accounting? Are there any limitations? Discuss.
21
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Chapter 20: Capital Budgeting: Methods of Investment Analysis
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187 Flashcards
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Sample Questions
Q1) Which of the following is false concerning the payback method of capital budgeting?
A)It uses the accrual accounting rate of return.
B)The payback method highlights liquidity.
C)Its major strength is that it that it is easy to use.
D)It does not consider cash flows after the recovery of the initial investment.
E)Shorter payback periods give an organization more flexibility.
Q2) Windpower Systems Maintenance Ltd.purchased a CCA Class 10 (CCA rate of 30%)vehicle for $360,000.The vehicle was the only item in the Class 10 capital cost allowance pool.The vehicle is expected to generate net cash income,excluding any tax effects,in the amount of $70,000 per year.The company uses straight-line depreciation,estimates a 6 year useful life with a $40,000 salvage value for the new vehicle at the end of year 6.The marginal tax rate is 35% and the company's average tax rate is 25%.Management requires a rate of return of 15.0%.Assume that cash flows occur at the end of the year.
Required:
a.What is the unamortized capital cost at the beginning of year 2 if the maximum capital cost allowance that is allowed is taken in the first year?
b.What is the net present value of the investment in the vehicle?
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Chapter 21: Transfer Pricing and Multinational Management Control Systems
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157 Flashcards
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Sample Questions
Q1) What is the market-based transfer price per pair of soles from the Sole Division to the Assembly Division?
A)$9
B)$10
C)$20
D)$16
E)$27
Q2) A Canadian company has subsidiaries in France,England,Canada,and in the USA.The company is somewhat vertically-integrated in that the Canadian subsidiary sells some of its output to the USA subsidiary which further processes the material.If the market is fully-competitive,which price is best for goal congruence?
A)market-based price
B)full cost no markup
C)negotiated price
D)distress price
E)either market-based or full cost
Q3) Transfer prices among divisions within Canada are irrelevant.Do you agree with this statement? Explain.
Q4) Provide a complete definition of a management control system.
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Chapter 22: Multinational Performance Measurement and Compensation
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156 Flashcards
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Sample Questions
Q1) Good performance measures do not change significantly with the manager's performance but change with factors that are beyond the manager's control.
A)True B)False
Q2) What are Wheels's and Assembly's return on investment based on current values,respectively?
A)0.21;0.25
B)0.25;0.21
C)0.14;0.29
D)0.29;0.14
E)0.33;0.23
Q3) Current cost is the cost of purchasing an asset today identical to the one currently held.
A)True B)False
Q4) Return on investment is also called the accrual accounting rate of return. A)True B)False
24
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