Solved by verified expert :Multiple Choice Question 49
Which of the following is an advantage of corporations
relative to partnerships and sole proprietorships?

Harder to transfer ownership.
Lower taxes.
Most common form of organization.
Reduced legal liability for
investors.

Multiple Choice Question 64
The group of users of accounting information charged with
achieving the goals of the business is its

creditors.
investors.
managers.
auditors.

Multiple Choice Question 110
Which of the following financial statements is concerned
with the company at a point in time?

Balance sheet.
Income statement.
Retained Earnings statement.
Statement of cash flows.

Multiple Choice Question 112
An income statement

presents the revenues and
expenses for a specific period of time.
summarizes the changes in
retained earnings for a specific period of time.
reports the assets, liabilities,
and stockholders’ equity at a specific date.
reports the changes in assets,
liabilities, and stockholders’ equity over a period of time.

Multiple Choice Question 118
The most important information needed to determine if
companies can pay their current obligations is the

projected net income for next
year.
net income for this year.
relationship between current
assets and current liabilities.
relationship between short-term
and long-term liabilities.

Multiple Choice Question 124
A liquidity ratio measures the

income or operating success of a
company over a period of time.
percentage of total financing
provided by creditors.
ability of a company to survive
over a long period of time.
short-term ability of a company
to pay its maturing obligations and to meet unexpected needs for cash.

Multiple Choice Question 165
The convention of consistency refers to consistent use of
accounting principles
throughout the accounting
periods.
within industries.
among accounting periods.
among firms.
Multiple Choice Question 90
Horizontal analysis is also known as

vertical analysis.
trend analysis.
common size analysis.
linear analysis

Multiple Choice Question 92
Horizontal analysis is a technique for evaluating a series
of financial statement data over a period of time

that has been arranged from the
highest number to the lowest number.
to determine the amount and/or
percentage increase or decrease that has taken place.
to determine which items are in
error.
that has been arranged from the
lowest number to the highest number.

Multiple Choice Question 111
Vertical analysis is a technique that expresses each item in
a financial statement

as a percent of the item in the
previous year.
in dollars and cents.
as a percent of a base amount.
starting with the highest value
down to the lowest value.

Multiple Choice Question 41
Process costing is used when

production is aimed at filling a
specific customer order.
costs are to be assigned to specific
jobs.
the production process is
continuous.
dissimilar products are involved.

Multiple Choice Question 43
An important feature of a job order cost system is that each
job

has its own distinguishing
characteristics.
must be similar to previous jobs
completed.
consists of one unit of output.
must be completed before a new
job is accepted.

Multiple Choice Question 49
In a process cost system, product costs are summarized:

after each unit is produced.
on production cost reports.
when the products are sold.
on job cost sheets.

Multiple Choice Question 33
An activity that has a direct cause-effect relationship with
the resources consumed is a(n)
cost pool.
cost driver.
overhead rate.
product activity.

Multiple Choice Question 40
Activity-based costing

accumulates overhead in one cost
pool, then assigns the overhead to products and services by means of a cost
driver.
allocates overhead directly to
products and services based on activity levels.
assigns activity cost pools to
products and services, then allocates overhead back to the activity cost pools.
allocates overhead to multiple
activity cost pools, and it then assigns the activity cost pools to products
and services by means of cost drivers.

Multiple Choice Question 40
A cost which remains constant per unit at various levels of
activity is a

mixed cost.
variable cost.
fixed cost.
manufacturing cost.

Multiple Choice Question 105
The break-even point is where

total variable costs equal total
fixed costs.
total sales equal total variable
costs.
contribution margin equals total
fixed costs.
total sales equal total fixed
costs.

Multiple Choice Question 109
Fixed costs are $600,000 and the contribution margin per
unit is $150. What is the break-even point?

4,000 units
$1,500,000
$4,000,000
1,500 units

Multiple Choice Question 94
When a company assigns the costs of direct materials, direct
labor, and both variable and fixed manufacturing overhead to products, that
company is using

product costing.
operations costing.
absorption costing.
variable costing.

Multiple Choice Question 122
If a division manager’s compensation is based upon the
division’s net income, the manager may decide to meet the net income targets by
increasing production when using

absorption costing, in order to
increase net income.
variable costing, in order to
decrease net income.
absorption costing, in order to
decrease net income.
variable costing, in order to
increase net income.

Multiple Choice Question 50
An unrealistic budget is more likely to result when it

has been developed by all levels
of management.
is developed with performance
appraisal usages in mind.
has been developed in a top down
fashion.
has been developed in a bottom up
fashion.

Multiple Choice Question 39
A major element in budgetary control is

the comparison of actual results
with planned objectives.
the valuation of inventories.
approval of the budget by the
stockholders.
the preparation of long-term
plans.

Multiple Choice Question 43
The purpose of the sales budget report is to

control sales commissions.
control selling expenses.
determine whether sales goals are
being met.
determine whether income
objectives are being met.

Multiple Choice Question 89
The accumulation of accounting data on the basis of the
individual manager who has the authority to make day-to-day decisions about
activities in an area is called
static reporting.
master budgeting.
flexible accounting.
responsibility accounting

Multiple Choice Question 142
Variance reports are

(a) external financial reports.
(b) SEC financial reports.
(c) internal reports for
management.
(d) all of these.

Multiple Choice Question 40
Internal reports that review the actual impact of decisions
are prepared by

factory workers.
the controller.
management accountants.
department heads.

Multiple Choice Question 42
The process of evaluating financial data that change under
alternative courses of action is called

cost-benefit analysis.
double entry analysis.
contribution margin analysis.
incremental analysis.

Multiple Choice Question 54
Seasons Manufacturing manufactures a product with a unit
variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs
were $480,000 when 10,000 units were produced and sold. The company has a
one-time opportunity to sell an additional 1,000 units at $140 each in a
foreign market which would not affect its present sales. If the company has
sufficient capacity to produce the additional units, acceptance of the special
order would affect net income as follows:

Income would decrease by $8,000.
Income would increase by $8,000.
Income would increase by
$140,000.
Income would increase by $40,000.

Multiple Choice Question 70
Carter, Inc. can make 100 units of a necessary component
part with the following costs:
Direct Materials $120,000
Direct Labor 20,000
Variable Overhead 60,000
Fixed Overhead 40,000

If Carter can purchase the component externally for $220,000
and only $10,000 of the fixed costs can be avoided, what is the correct
make-or-buy decision?

Buy and save $10,000
Make and save $30,000
Make and save $10,000
Buy and save $30,000

Multiple Choice Question 84
A company has a process that results in 15,000 pounds of
Product A that can be sold for $16 per pound. An alternative would be to
process Product A further at a cost of $200,000 and then sell it for $28 per
pound. Should management sell Product A now or should Product A be processed
further and then sold? What is the effect of the action?

Sell now, the company will be
better off by $200,000.
Process further, the company will
be better off by $180,000.
Sell now, the company will be
better off by $20,000.
Process further, the company will
be better off by $20,000.

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