Multiple Choice Answers

1) Balance sheet accounts are considered to be __________. A. nominal accounts B. permanent accounts C. temporary stockholders’ accounts D. capital accounts 2) The major reporting standard for management accounts is __________. A. generally accepted accounting principles B. the Sarbanes-Oxley Act of 2002 C. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management D. relevance to decisions 3) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers? A. It should sell an equal quantity of both B. Wine C. Beer D. Selling either results in the same additional income for the company 4) What is the preparation of reports for each level of responsibility in the company’s organization chart called? A. Master budgeting analysis B. Responsibility reporting C. Static reporting D. Exception reporting 5) These are selected account balances on December 31, 2008. Land (location of the corporation’s office building) $100,000 Land (held for future use) 150,000 Corporate Office Building 600,000 Inventory 200,000 Equipment 450,000 Office Furniture 100,000 Accumulated Depreciation 300,000 What is the net amount of property, plant, and equipment that will appear on the balance sheet? A. $950,000 B. $1,100,000 C. $1,300,000 D. $1,600,000 6) Of the following companies, which one would not likely employ the specific identification method for inventory costing? A. Hardware store B. Farm implement dealership C. Music store specializing in organ sales D. Antique shop 7) The cost of an asset and its fair market value are __________. A. the same on the date of acquisition B. the same when the asset is sold C. never the same D. irrelevant when the asset is used by the business in its operations 8) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____. A. $50 B. $75 C. $65 D. $60 9) The primary purpose of the statement of cash flows is to __________. A. facilitate banking relationships B. prove that revenues exceed expenses if there is a net income C. provide information about the investing and financing activities during a period D. provide information about the cash receipts and cash payments during a period 10) Which list below best describes the major services performed by public accountants? A. Cost accounting, production scheduling, recruiting B. Employee training, auditing, bookkeeping C. Bookkeeping, mergers, budgets D. Auditing, taxation, management consulting 11) The standards and rules that are recognized as a general guide for financial reporting are called __________. A. standards of financial reporting B. generally accepted accounting principles C. generally accepted accounting standards D. operating guidelines 12) If a company reports a net loss, it __________. A. will not be able to make capital expenditures B. will not be able to pay cash dividends C. may still have a net increase in cash D. will not be able to get a loan 13) What exists when budgeted costs exceed actual results? A. An excess profit B. A favorable difference C. A budgeting error D. An unfavorable difference 14) One of Astro Company’s activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers? A. $90,000 B. $60,000 C. $150,000 D. $75,000 15) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________. A. plus the cost of tuition, equals the opportunity cost of going to college B. should be counted only to the extent that they are more expensive at college than elsewhere C. should be counted in full, regardless of the costs of eating and sleeping elsewhere D. usually exceed the opportunity cost of going to college 16) If a binding price ceiling were imposed in the computer market, __________. A. the quality of computers would increase B. the supply of computers would decrease C. the demand for computers would increase D. a shortage of computers would develop