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ACG 3331 Test 1
Exam 1- Concepts
10
Accounting
Undergraduate 4
09/10/2009

Additional Accounting Flashcards

 


 

Cards

Term

An employee accidentally overstated the year’s advertising expense by $50,000.  Which of the   following correctly depicts the effect of this error?

      a.   Cost of goods manufactured will be overstated by $50,000.

      b.   Cost of goods sold will be overstated by $50,000.

      c.   Both cost of goods manufactured and cost of goods sold will be overstated by $50,000.

      d.   Cost of goods sold will be overstated by $50,000, and cost of goods manufactured will be understated by $50,000.

      e.   None of the above.

Definition
   e.   None of the above.
Term

The final step in recognizing the completion of production requires a company to:

       a.    increase Finished-Goods Inventory and reduce Work-in Process Inventory.

       b.    increase Work-in-Process Inventory and reduce Finished-Goods Inventory.

       c.    add direct labor to Work-in-Process Inventory.

       d.   add direct materials, direct labor, and manufacturing overhead to Work-in-Process Inventory.

       e.   add direct materials to Finished-Goods Inventory.

Definition
     a.    increase Finished-Goods Inventory and reduce Work-in Process Inventory.
Term

Which of the following statements is not correct regarding work in process?

       a.   Work in process is partially completed inventory.

       b.   Work in process consists of direct labor, direct material, and manufacturing overhead.

       c.   Work-in-Process Inventory is increased to record direct material used and direct labor incurred.

       d.   Work-in-Process Inventory appears on the year-end balance sheet.

       e.   Work-in-Process Inventory is reduced when goods are sold.

Definition
  e.   Work-in-Process Inventory is reduced when goods are sold. 
Term

Fog Company uses a pre-determined overhead rate and uses labor hours to apply overhead to manufacturing.  Fog may have increased amounts of under-applied overhead at year-end if:

         a.   suppliers of direct materials have an across-the-board price increase.

         b.   an accountant failed to record the period’s charges for plant maintenance and security.

         c.   employees are hit hard with a widespread outbreak of the flu.

         d.   direct laborers are granted a wage increase.

         e.   outlays for advertising expenditures are increased.

 

 

Definition
   c.   employees are hit hard with a widespread outbreak of the flu.
Term

.   Which of the following would most likely not be included as manufacturing overhead in a furniture factory?

         a.   glue in a chair

         b.   the amount paid to the individual who stains a chair

         c.   the factory utilities of the department in which production occurs

         d.   property taxes paid on the factory building

Definition
    b.   the amount paid to the individual who stains a chair
Term

Assume inventory levels raised during the year.  If the salaries of the sales staff of a manufacturing company are improperly recorded as a product cost, what will be the effect on net income of the period in which the event occurs?

         a.   Net income will be overstated.

         b.   Net income will be understated.

         c.   Net income will be unaffected.

         d.   Impossible to determine the effect on net income.

Definition
       a.   Net income will be overstated.
Term

 Which of the following industries would most likely not use a job-order costing system?

         a.   a consulting firm

         b.   a manufacturer of microwave ovens

         c.   a custom furniture maker

         d.   a manufacturer of large commercial ships

Definition
  b.   a manufacturer of microwave ovens
Term

When direct materials that were bought and paid for in a previous period are placed into the production process, what is the effect on the income statement and the balance sheet?

 

          Net Income          Assets           Liabilities              Equity

         a.        no effect           no effect          no effect          no effect

         b.       decrease            decrease           no effect        decrease

         c.        no effect           decrease           no effect        decrease

         d.        increase             increase           no effect         increase

Definition

              Net Income          Assets           Liabilities          Equity

         a.        no effect           no effect          no effect          no effect

Term

   Period costs are:

        a.    initially considered as part of inventory.

        b.   expensed when incurred.

        c.   the same as manufacturing costs.

        d.   treated in the same manner as product costs.  

Definition
        b.   expensed when incurred.
Term

Activity-based costing systems:

        a.   use a single, volume-based cost driver.

        b.   assign overhead to products based on the products’ relative usage of direct labor.

        c.   often reveal products that were under- or overcosted by traditional costing systems.

        d.   typically use fewer cost drivers than more traditional costing systems.

        e.    have a tendency to distort product costs.

Definition
 c.   often reveal products that were under- or overcosted by traditional costing systems.
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