Intermediate Accounting
Final Test Solutions
Course Introduction
Intermediate Accounting delves into the comprehensive study of financial accounting principles and practices beyond the introductory level. Students explore complex topics such as revenue recognition, financial statement presentation, asset and liability measurement, and equity accounting. The course emphasizes the application of generally accepted accounting principles (GAAP), with a focus on problem-solving, critical thinking, and real-world scenarios. Through detailed analysis of accounting standards and financial reporting requirements, students develop the skills necessary to interpret and prepare financial statements, laying a strong foundation for advanced accounting coursework and professional certification.
Recommended Textbook Managerial Accounting 12th Edition by Carl
S. Warren
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14 Chapters
2382 Verified Questions
2382 Flashcards
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Page 2
Chapter 2: Job Order Costing
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Period costs are costs that are incurred for the production requirements of a certain period.
A)True
B)False
Answer: False
Q2) The cost of production of completed and finished goods during the period amounted to $450,000, and the finished products shipped to customers had total production costs of $357,000. From the following, select the entry to record the transfer of costs from finished goods to cost of goods sold.
A) Finished Goods 450,000 Cost of Goods Sold 450,000
B) Finished Goods 357,000 Cost of Goods Sold 357,000
C) Cost of Goods Sold 357,000 Finished Goods 357,000
D) Cost of Goods Sold 450,000 Finished Goods 450,000
Answer: C
Q3) A job order cost system would be appropriate for a crude oil refining business.
A)True
B)False
Answer: False
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3
Chapter 3: Process Cost Systems
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178 Verified Questions
178 Flashcards
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Sample Questions
Q1) In a process costing system, a separate work in process inventory account is maintained for each customer's job.
A)True
B)False
Answer: False
Q2) Department S had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900. The total conversion costs for the period were:
A) $59,400
B) $49,500
C) $143,400
D) $9,900
Answer: A
Q3) In a process costing system, indirect materials are charged to Work in Process.
A)True
B)False
Answer: False
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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215 Verified Questions
215 Flashcards
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Sample Questions
Q1) The range of activity over which changes in cost are of interest to management is called the relevant range.
A)True
B)False
Q2) Explain how variable costing net income will be different than absorption costing net income under the following situations:
(1) A company had no beginning or ending inventory. During the year they produced and sold 10,000 units.
(2) A company had no beginning inventory. During the year they produced 10,000 units and sold 8,000 units.
(3) A company had 2,000 units in beginning inventory. During the year they produced 10,000 units and sold 12,000 units.
Q3) Total variable costs change as the level of activity changes. A)True B)False
Q4) Total fixed costs change as the level of activity changes. A)True
B)False
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Chapter 5: Variable Costing for Management Analysis
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154 Flashcards
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Sample Questions
Q1) Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because
A) by using the absorption costing method, income could appear to be higher by producing more inventory.
B) by using the absorption method, more sales will be generated.
C) by using the variable costing method, the cost of goods sold will be higher as more units are manufactured and sales remain the same.
D) by using the variable costing method, all fixed and variable costs are included in the unit cost of the product manufactured.
Q2) Companies prepare contribution margin reports by market segments and product segments because products contribute to profitability in various ways.
A)True
B)False
Q3) On the variable costing income statement, deduction of the variable cost of goods sold from sales yields manufacturing margin.
A)True
B)False
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Chapter 6: Budgeting
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185 Flashcards
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Sample Questions
Q1) Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.
A)True
B)False
Q2) Manicotti Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 lb. per unit @ $ .60 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of direct material A used in production during the year is:
A) $186,600
B) $181,200
C) $240,000
D) $210,600
Q3) The first budget to be prepared is usually the sales budget.
A)True
B)False
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Page 7
Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) Standards are more widely used for nonmanufacturing expenses than for manufacturing costs.
A)True
B)False
Q2) If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 unfavorable.
A)True
B)False
Q3) The formula to compute direct labor rate variance is to calculate the difference between
A) actual costs + (actual hours * standard rate)
B) actual costs - standard cost
C) (actual hours * standard rate) - standard costs
D) actual costs - (actual hours * standard rate)
Q4) An example of a nonfinancial measure is the number of customer complaints. A)True B)False
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Q5) Define nonfinancial performance measures. What are they used for and what are some common examples?
Chapter 8: Performance Evaluation for Decentralized Operations
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) Three measures of investment center performance are income from operations, rate of return on investment, and residual income.
A)True
B)False
Q2) The major shortcoming of income from operations as an investment center performance measure is that it ignores the amount of revenues earned by the center.
A)True
B)False
Q3) If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.
A)True
B)False
Q4) In a profit center, the manager has responsibility and authority for making decisions that affect:
A) liabilities
B) assets
C) investments
D) costs
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Chapter 9: Differential Analysis and Product Pricing
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) When estimated costs are used in applying the cost-plus approach to product pricing, the estimates should be based upon ideal levels of performance.
A)True
B)False
Q2) Ptarmigan Company produces two products. Product A has a contribution margin of $20 and requires 4 machine hours. Product B has a contribution margin of $18 and requires 3 machine hours. Determine the most profitable product assuming the machine hours are the constraint.
Q3) In using the total cost concept of applying the cost-plus approach to product pricing, selling expenses, administrative expenses, and profit are covered in the markup. A)True
B)False
Q4) The Bitterns Company produces their product at a total cost of $89 per unit. Of this amount $14 per unit is selling and administrative costs. The total variable cost is $58 per unit. The desired profit is $25 per unit. Determine the mark up percentage on (a) total cost, (b) product cost and (c) variable cost concepts.
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Page 10
Chapter 10: Capital Investment Analysis
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178 Flashcards
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Sample Questions
Q1) Methods that ignore present value in capital investment analysis include the internal rate of return method.
A)True
B)False
Q2) If in evaluating a proposal by use of the net present value method there is a deficiency of the present value of future cash inflows over the amount to be invested, the proposal should be accepted.
A)True
B)False
Q3) Which of the following are two methods of analyzing capital investment proposals that both ignore present value?
A) Internal rate of return and average rate of return
B) Net present value and average rate of return
C) Internal rate of return and net present value
D) Average rate of return and cash payback method
Q4) Briefly describe the time value of money. Why is the time value of money important in capital investment analysis?
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Chapter 11: Cost Allocation and Activity-Based Costing
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.
A)True
B)False
Q2) Activity-based costing is much easier to apply than single plantwide factory overhead allocation.
A)True
B)False
Q3) Using multiple department factory overhead rates instead of a single plantwide factory overhead rate:
A) results in more accurate product costs
B) results in distorted product costs
C) is simpler and less expensive than a plantwide rate
D) applies overhead costs to all departments equally
Q4) Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.
A)True
B)False
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Chapter 12: Cost Management for Just-In-Time
Environments
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Which of the following is an example of a non-financial measure?
A) lead time
B) setup time
C) units scrapped
D) all of the above
Q2) In a pull manufacturing system, raw materials are released to production based on actual customer orders.
A)True
B)False
Q3) It is easier to quantify costs of controlling quality than the costs of failing to control quality.
A)True
B)False
Q4) In a just-in-time (JIT) environment, the journal entry to record conversion costs would include a debit to the manufacturing overhead control account.
A)True
B)False
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Chapter 13: Statement of Cash Flows
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161 Flashcards
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Sample Questions
Q1) A cash flow per share amount should be reported on the statement of cash flows.
A)True
B)False
Q2) Rarely would the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.
A)True
B)False
Q3) On the basis of the following data for Grant Co. for 2011 and the preceding year ended December 31, 2010, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $56,000 and cash dividends declared of $18,000.
Q4) If $475,000 of bonds payable are sold at 101, $475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.
A)True
B)False
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Page 14
Chapter 14: Financial Statement Analysis
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192 Flashcards
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Sample Questions
Q1) Unusual items affecting the current period's income statement consist of changes in accounting principles and discontinued operations.
A)True
B)False
Q2) A loss on disposal of a segment would be reported in the income statement as a(n)
A) administrative expense
B) other expense
C) deduction from income from continuing operations
D) selling expense
Q3) Gallant Company reported net income of $2,500,000. The income statement included one extraordinary item: a $500,000 gain from condemnation of land and a $200,000 loss on discontinued operations, both after applicable income tax. There were 100,000 shares of $10 par common stock and 40,000 shares 4% preferred stock of $100 par outstanding throughout the current year.
Required: Prepare the earnings per share section of Gallant Company's income statement.
Q4) Define solvency and profitability. How are they alike?
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15
Chapter 15: Managerial Accounting Concepts and Principles
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) A product cost is:
A) expensed in the period in which it is incurred
B) shown with current liabilities on the balance sheet
C) shown on the income statement with the operating expenses
D) expensed in the period the product is sold
Q2) Cost of goods manufactured is equal to:
A) total manufacturing costs plus ending materials inventory less beginning materials inventory
B) cost of goods sold plus beginning work in process inventory less ending work in process inventory
C) total manufacturing costs plus ending work in process inventory less beginning work in process inventory
D) total manufacturing costs plus beginning work in process inventory less ending work in process inventory
Q3) The vice presidents of production and sales and the controller hold line positions in most large organizations.
A)True
B)False
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