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ACC 561 FREE Final Exam Review with answer key

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1. )he statement o" cash "lows is use! "or *****.
A. showin the relationshi& o" net income to chanes in current assets
B. !eterminin a com&any+s acce&table level o" !ebt "inancin
C. revealin commitments that may restrict "uture courses o" action
[D. evaluating the creditworthiness of the organization]
,. -on./&eratin items on the income statement *****.
A. appear only on corporate income statements
B. appear on the income statement immediately after gross proft
C. are revenues and expenses arising from adjusting entries
[D. refect the efects of fnancial management decisions]
0. )he !i""erence between a sinle.ste& an! multi&le.ste& income statement is that a
sinle.ste& income statement *****.
A. [groups all revenues together and all expenses together,
whereas a multiple- income statement separates certain
revenues and expenses from each other and presents
subtotals]
B. calculates net income using one method, whereas a multiple-
step income statement calculates net income using two or more
methods
C. calculates gross proft and operating income, whereas a
multiple-step income statement does not
D. shows only year!s net income, whereas a multiple-step
income statement shows multiple years! net income
1. $hich one o" the "ollowin statements is true2
A. )he statement o" cash "lows re&orts the cash recei&ts but not cash &ayments o"
an entity over a &erio! o" time.
B. Both the statement o" cash "lows an! the income statement !etermine the net
income "or a com&any.
C. )ransactions a""ectin the sale an! the &urchase or &ro!uction o" oo!s an!
services are re&orte! in the "inancin activities section o" the statement o" cash
"lows.
[D. Investing activities in the statement of cash flows include acquiring and
selling long-term assets.]
5. )he ***** accountin convention uses the ac3uisition cost minus !e&reciation in
valuin an asset on the balance sheet.
[A. continuity]
B. conservatism
C. cost.bene"it
4. materiality
6. A new cor&oration issuin a common# no.&ar value stock "or cash woul! inclu!e a
5ournal entry a !ebit to *****.
A. &ai!.in ca&ital an! a cre!it to retaine! earnins.
B. [cash and a credit to common stock.]
C. retaine! earnins an! a cre!it to cash.
D. cash an! a cre!it to retaine! income.
6. $hich ty&e o" orani7ation woul! most likely have work.in.&rocess inventory2
A. A retail store
[B. A manufacturing coman!]
C. A service orani7ation
4. A real.estate investment trust
8. """"" is a measure of income or proft divided #y the investment
re$uired to o#tain that income or proft.
A. %eturn on sales
B. [Return on investment ]
C. %esidual income
D. Capital turnover
(. &he following information is availa#le for the 'eter Company( )ales
*+,,,,, -nvested Capital +.,/+, %0- ,1 &he return on sales is
""""".
A. ,.,,1
B. ./.+,1
C. [10.4! ]
D. none of these answers is correct
19. )he "ollowin in"ormation is available "or the :eter Com&any;
%ales; <599#999
Investe! ca&ital; <01,#599
R/I; 19=
)he return on sales is *****.
A. 19.99=
[B. ".#$%&]
C. 1.999=
4. 6,.59=
11. )peedo Company!s revenues are *2,, on invested capital of */3,.
4xpenses are currently 5,1 of sales. -f Angelo Company can reduce its
invested capital #y /,1, return on investment will #e """"".
A. 5+1
B. 6.5+1
C. 72.5+1
D. [46.88%]
1,. $hen the variable costin metho! is use!# "ixe! "actory overhea! a&&ears on the
income statement as a *****.
A. com&onent o" cost o" oo!s sol!
[B. fixed expense]
C. &ro!uction.volume variance
4. com&onent o" ross &ro"it
10. -n a#sorption costing, costs are separated into the major categories
of""""".
A. fxed and varia#le
B. manufacturing and fxed
C. [manufacturing and nonmanufacturing 8
D. varia#le and nonmanufacturing
11. ***** is another term "or variable costin.
A. Full costin
[B. Direct costing]
C. )ra!itional costin
4. Absor&tion costin
15. The use of budgeted service department cost rates protects using departments from
_____.
A. all of these answers are correct
B. service outages
C. [price fluctuations]
D. service department efficiencies
16. ***** is an exam&le o" the external "inancial.re&ortin &ur&ose o" the cost
manaement systems.
A. )he cost o" a manu"acturin &rocess
B. )he &ro!uct mix to o&timi7e &ro"itability
[C. The amount of inventory that should appear on the balance sheet]
4. Bu!et re&ortin
16. )he level o" sales at which revenues e3ual ex&enses an! net income is 7ero is
calle! the *****.
A. marin o" sa"ety
B. contribution marin
[C. 'reak-even oint]
4. marinal income &oint
18. 0utput measures of #oth resources and activities are """"".
[". cost drivers]
B. stages of production
C. fxed activities
D. varia#le activities
1(. &he #rea9-even point is where """"".
A. total sales revenue e$uals total cost plus desired proft.
B. the contri#ution margin e$uals net income plus fxed costs.
[#. total sales revenue e$uals total cost.]
D. the varia#le cost e$uals total cost.
,9. """"" #udgeting is when #udgets are formulated with the active
participation of all a:ected employees.
A. ;inancial
B. &eam
[#. %articipative]
D. )hared
,1. """"" is the logical integration of management accounting tools to
gather and report data and to evaluate performance.
A. An internal control system
B. A $uality control system
C. A fnancial-reporting system
[&. " management control s'stem]
,,. """"" are components of a master #udget.
A. A strategic plan and an operating #udget
[(. "n operating budget and a capital budget]
C. A continuous #udget and a static #udget
D. A cash #udget and an activity #udget
,0. -mportant factors considered #y sales forecasters include all of the
following except """"".
A. past patterns of sales
B. [competitors' activities ]
C. the desired level of sales
D. mar9eting research studies
,1. _____ models are mathematical models of the master budget that can react to any set
of assumption about sales, costs, and product mix.
A. Futuring
B. Accounting
C. Budgeting analysis
D. [Financial planning]
,5. <hich of the following is an o#jective of #udgeting=
[". (udgeting provides benchmar)s against which
performance can be measured.]
B. Budgeting provides a fxed fscal plan that should not #e changed
during the year.
C. Budgeting helps managers #uild favora#le variances into the
performance-evaluation process.
D. Budgeting is done exclusively #y the chief fscal o>cer for control
purposes
,6. An organi?ation!s #udget program should #e used
A. to have power over employees.
B. to assign #lame to managers that do not meet #udgetary goals.
[#. to help managers plan and control the organi*ation+s
performance.]
D. to help the chief fscal o>cer to allocate resources to the favored
projects of the executives.
,6. &he activity-#ased costing may reveal """"""""", whereas traditional
costing cannot.
[". high-volume products are overcosted]
B. low-volume products are overcosted
C. #oth high- and low-volume products are overcosted
D. #oth high- and low-volume products are undercosted
,8. """"" is a method of approximating cost functions.
A. Cost-driver analysis
B. &ransaction analysis
C. 'roduct analysis
[D. ccount anal!sis]
,(. -n relation to a cost function, the term relia#ility refers to """"".
A. whether the costs and activities can #e easily o#served
B. whether the cost function conforms to a given mathematical model
C. how well the cost function predicts future costs
[&. how well the cost function explains past cost behavior]
09. 0ne of the simplest methods to measure a linear cost function from
past data is the """"".
A. regression analysis method
[(. high,low method]
C. least s$uares regression method
D. visual-ft method
"#$%& '%(
. D
/. B
2. A
3. D
+. A
.. B
5. B
6. C
7. B
,.B
.D
/.B
2.A
3.B
+.B
..C
5.C
6.A
7.C
/,.C
/.D
//.B
/2.C
/3.B
/+.A
/..C
/5.A
/6.D
/7.D
2,.B