Test bank for managerial accounting 2nd edition by whitecotton

False An indirect cost can be readily traced to a cost object while a direct cost is traced only to manufacturing costs... Information is reported for the company as a whole.Which of th

Test Bank for Managerial Accounting 2nd Edition by Whitecotton

Financial accounting information is generally used exclusively by internal parties such as managers

1. True

2. False

Financial accounting information is prepared according to generally accepted accounting principles

The planning function is the arranging of the necessary resources to carry out the plan

1. True

2. False

Since hospitals, universities, and charitable organizations do not exist strictly to earn profit for shareholders, managerial accounting

information is not vital to their operations

1. True

2. False

The Sarbanes-Oxley Act of 2002 places full responsibility on the board

of directors for the accuracy of the reporting system

Although there are numerous ways to categorize costs, each individual cost will only be classified in one particular way

1. True

2. False

Costs can be sorted or categorized in a number of ways including

relevant or irrelevant costs

Whether a cost is treated as direct or indirect depends on whether

tracing the cost is either possible or feasible

1. True

2. False

An indirect cost can be readily traced to a cost object while a direct cost

is traced only to manufacturing costs

Fixed costs stay the same, in total, as activity level changes

What is the primary goal of accounting?

1. A To set long-term goals and objectives

2. B To arrange for the necessary resources to achieve a plan

3. C To provide information for decision making

4. D To motivate others to work towards a plan's success

Accounting is primarily intended to facilitate

1. A starting a business

2. B decision making

3. C ethics investigations

4. D cost tracing.

Which of the following is not a characteristic of financial

accounting?

1. A Financial reports are prepared according to GAAP

2. B Information is used by external parties

3. C Information is subjective, relevant and future-oriented

4. D Reports are prepared periodically

Which of the following is not a characteristic of financial

accounting?

1. A Information is reported at the decision making level

2. B Information is used by external parties

3. C Information is objective, reliable and historical

4. D Reports are prepared periodically

Which of the following is not a characteristic of financial

accounting?

1. A Financial reports are prepared according to GAAP

2. B Information is used primarily by internal parties

3. C Information is objective, reliable and historical

4. D Reports are prepared periodically.

Which of the following is not a characteristic of managerial accounting?

1. A Information is used by internal parties

2. B Information is subjective, relevant, future-oriented

3. C Reports are prepared as needed

4. D Reports are prepared according to GAAP

Which of the following is not a characteristic of managerial accounting?

1. A Information is used by external parties

2. B Information is subjective, relevant, future-oriented

3. C Reports are prepared as needed

4. D Information is reported at the decision making level

Which of the following is not a characteristic of managerial accounting?

1. A Information is used by internal parties

2. B Information is subjective, relevant, future-oriented

3. C Reports are prepared as needed

4. D Information is reported for the company as a whole.

Which of the following types of reports is more characteristic of

managerial accounting than financial accounting?

1. A An internal report used by management

2. B An external report used by investors

4. D A report prepared periodically (monthly, quarterly, annually)

Which of the following types of organizations purchases raw materials from suppliers and uses them to create a finished product?

Which of the following functions of management involves taking actions

to implement the plan?

1. A Planning - Organizing - Control - Directing/Leading

2. B Planning - Directing/Leading - Organizing - Control

3. C Planning - Organizing - Directing/Leading - Control

4. D Organizing - Directing/Leading - Planning - Control

Which of the following describes the Planning function of

management?

1. A Setting short and long-term objectives

2. B Comparing actual to budgeted results and taking corrective action

3. C Taking actions to implement the plan

4. D Arranging the necessary resources to carry out the plan

Which of the following describes the Control function of

management?

1. A Setting short and long-term objectives

2. B Comparing actual to budgeted results and taking corrective action

3. C Taking actions to implement the plan

4. D Arranging the necessary resources to carry out the plan

Which of the following describes the Organizing function of

management?

1. A Setting short and long-term objectives

2. B Comparing actual to budgeted results and taking corrective action if needed

3. C Taking actions to implement the plan

4. D Arranging the necessary resources to carry out the plan

Which of the following describes one of the Directing/Leading functions

of management?

1. A Setting short and long-term objectives

2. B Comparing actual to budgeted results and taking corrective action

3. C Taking actions to implement the plan

4. D Arranging the necessary resources to carry out the plan

Which of the following does the term "ethics" not refer to?

1. A The standards of conduct for judging fair from unfair

2. B The standards of conduct for judging right from wrong

3. C The standards of conduct for judging opportunity from

incentives

4. D The standards of conduct for judging honest from dishonest

Which of the following is not one of the factors affecting the accounting reporting environment focused on by the Sarbanes-Oxley Act?

Which of the following is not a provision of the Sarbanes-Oxley Act?

1. A Executives can avoid penalties for fraud by declaring personal bankruptcy

2. B Stiffer penalties for fraud in terms of monetary fines and jail time

3. C Public companies must adopt a code of ethics for senior

1. A It provides for stiffer monetary penalties

2. B It increases the maximum jail sentence for fraudulent reporting

3. C It removes legal protection from whistleblowers

4. D It provides that violators must repay any money obtained via fraud plus pay fines

The Sarbanes-Oxley Act places responsibility for the accuracy of the reporting system on

2. B Code of ethics

3. C Stronger oversight by directors

4. D Internal control audit by external auditors

Which of the following changes introduced by the Sarbanes-Oxley Act is not one intended to encourage good character?

2. B Whistle-blower protection

3. C Code of ethics

4. D Stiffer fines and prison terms

Which of the following changes introduced by the Sarbanes-Oxley Act is intended to counteract incentives for fraud?

1. A Stronger oversight by directors

2. B Code of ethics

3. C Stiffer fines and prison terms

Which of the following is not true about how the Sarbanes-Oxley Act emphasizes the importance of the character of managers and

employees?

1. A It requires that ethics be embedded in the organizational culture

2. B It requires that audit committees establish anonymous tip lines.

3. C It provides protection for whistle-blowers

4. D It requires that public companies adopt a code of ethics for senior financial officers

Which of the following is not one of the categories used to sort costs in managerial accounting?

1. A Relevant or irrelevant

2. B Variable or fixed

3. C Out-of-pocket or opportunity

4. D Direct or indirect

Which of the following statements concerning costs is incorrect?

1. A Costs are treated differently depending on how the information will be used

2. B Out-of-pocket costs include the costs associated with not taking

a particular course of action

3. C Any single cost can be classified in more than one way

4. D Costs can be categorized on the basis of relevant or irrelevant costs

The cost of not doing something is a(n)

1. A the foregone benefit of the path not taken

2. B an actual outlay of cash

3. C the initial investment required to pursue an opportunity

4. D a cost that cannot be traced to a specific cost object

An out-of-pocket cost involves which of the following?

1. A Choosing to do one thing instead of another

2. B Tracing the cost directly to a cost object

3. C An actual outlay of cash

4. D Determining how the cost changes with a change in activity level

To earn summer money, Joe could mow lawns in his neighborhood, or

he could work at a local grocery store Which of the following is an opportunity cost of mowing lawns?

1. A Cash paid for gas to run the lawnmower

3. C The wages he could have earned working at the grocery store

To earn summer money, Joe could mow lawns in his neighborhood, or

he could work at a local grocery store Which of the following is an of-pocket cost of mowing lawns?

out-1. A The use of his father's truck to get to job sites

2. B The wages he could have earned working at the grocery store

4. D Cash paid for gas to run the lawnmower.

Which of the following cannot be an out-of-pocket cost?

A direct cost is one which

1. A involves an actual outlay of cash for a specific cost object

2. B can be traced to a specific cost object

3. C cannot be traced to a specific cost object

4. D is not worth the effort of tracing to a specific cost object

What determines the difference between a direct and an indirect

cost?

1. A Whether it changes when activity levels change

2. B Whether it is relevant to a particular decision

3. C Whether it can be traced to a specific cost object

4. D Whether it is related to manufacturing or nonmanufacturing activities

Which of the following is an indirect cost of manufacturing a table made

of wood and glass, for a firm that manufactures furniture?

1. A The cost of the wood in the table

2. B The cost of the labor used to assemble the table

3. C The cost of the glass in the table

4. D The cost of rent on the factory where the table is manufactured

Which of the following is a direct cost of manufacturing a table made of wood and glass, for a firm that manufactures furniture?

1. A The cost of the wood in the table

2. B The cost of rent on the factory where the table is manufactured

3. C The salary of the supervisor who oversees all production for the firm

4. D Depreciation on the tools used to manufacture the table

A cost object is

1. A an item for which managers are trying to determine the cost

2. B an item to which managers must directly trace costs

3. C an item to which it is not worth the effort of tracing costs

4. D an item for sale by a business

Indirect costs are

1. A costs that are not worth the effort to trace to a specific cost object

2. B costs that change, in total, in direct proportion to changes in activity levels

3. C always irrelevant

4. D costs that remain constant no matter the activity level

Variable costs are

1. A costs that are not worth the effort to trace to a specific cost object

2. B costs that change, in total, in direct proportion to changes in activity levels

3. C always irrelevant

4. D costs that remain constant no matter the activity level

Variable costs are

1. A costs that stay the same, in total, regardless of activity level

2. B costs that vary inversely, per unit, with the number of units produced

3. C costs that vary inversely, in total, with the number of units produced

4. D costs that change, in total, in direct proportion to changes in activity levels

A cost is $50,000 when 25,000 units are produced, and $100,000 when 50,000 units are produced This is an example of a(n)

1. A fixed cost

2. B direct cost

3. C variable cost

What determines the difference between a variable and a fixed cost?

1. A Whether the total cost changes when activity levels change

2. B Whether the total cost is relevant to a particular decision

3. C Whether the total cost can be traced to a specific cost object

4. D Whether the total cost is related to manufacturing or

nonmanufacturing activities

Which of the following is an example of a variable cost for a

manufacturing firm?

1. A The cost of rent on the factory

2. B The cost of factory supervision

3. C The cost of raw materials

4. D The cost of depreciation on equipment.

Fixed costs are

1. A costs that are not worth the effort to trace to a specific cost object

2. B costs that change, in total, in direct proportion to changes in activity levels

3. C always irrelevant

4. D costs that remain constant, in total, no matter the activity level

A fixed cost

1. A goes up in total when activity increases

2. B goes up per unit when activity increases

3. C goes down in total when activity increases

4. D goes down per unit when activity increases

A relevant cost is a cost that

1. A has the potential to influence a decision

2. B changes in direct proportion to changes in activity level

3. C can be traced to a specific cost object

4. D is used for control purposes.

An irrelevant cost

1. A is also called a differential cost

2. B must differ between decision alternatives

3. C must be incurred in the future rather than in the past

4. D will not influence a decision

For a cost to be relevant, it must

1. A differ between decision alternatives

2. B have already been incurred

3. C not influence a decision

4. D not be a differential cost

A cost that has already been incurred is called a(n) _ cost

1. A indirect

2. B sunk

3. C relevant

4. D opportunity

You are to receive five gold coins from your great uncle as an incentive

to study hard The coins were originally purchased in 1982.Your great uncle will deliver the coins the week after finals (assuming your grades are "acceptable") The amount your great uncle paid for the coins is a(n)

1. A It must not differ between the decision alternatives and it must

be incurred in the future rather than in the past

2. B It must differ between the decision alternatives and it must be incurred in the future rather than in the past

3. C It must not differ between the decision alternatives and it must have occurred in the past rather than in the future

4. D It must differ between the decision alternatives and it must haveoccurred in the past rather than in the future

For a cost to be relevant, it must be

1. A a differential cost and a sunk cost

2. B a differential cost, but not a sunk cost.

3. C a sunk cost, but not a differential cost

4. D neither a differential cost nor a sunk cost

Which of the following costs is not relevant to the decision whether to replace an old computer with a new one?

1. A The cost of the new computer

2. B The cost of the old computer

3. C The cost of a service plan on the new computer

4. D The cost to repair the old computer if a new computer is not purchased

Manufacturing costs are generally classified into which of the following categories?

1. A relevant costs and irrelevant costs

2. B direct materials, direct labor, and manufacturing overhead

3. C prime costs and conversion costs

4. D conversion costs, marketing costs, and administrative costs

Prime costs are defined as

1. A Manufacturing costs plus non-manufacturing costs