49.Which of the
following is an advantage of corporations relative to partnerships and sole
proprietorships?
·
Lower taxes.
·
Harder to transfer
ownership.
·
Most common form of
organization.
·
Reduced legal liability
for investors.
64. The group of users
of accounting information charged with achieving the goals of the business is
its
·
auditors.
·
creditors.
·
managers.
·
investors.
110. Which of the
following financial statements is concerned with the company at a point in
time?
·
Income statement.
·
Balance sheet.
·
Retained Earnings
statement.
·
Statement of cash flows.
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.
118. The most important
information needed to determine if companies can pay their current obligations
is the
·
net income for this
year.
·
relationship between
current assets and current liabilities.
·
projected net income for
next year.
·
relationship between
short-term and long-term liabilities.
124. A liquidity ratio
measures the
·
short-term ability of a
company to pay its maturing obligations and to meet unexpected needs for cash.
·
percentage of total
financing provided by creditors.
·
income or operating
success of a company over a period of time.
·
ability of a company to
survive over a long period of time.
165. The convention of
consistency refers to consistent use of accounting principles
·
throughout the
accounting periods.
·
among firms.
·
within industries.
·
among accounting
periods.
90.Horizontal analysis
is also known as
·
common size analysis.
·
linear analysis.
·
vertical analysis.
·
trend analysis.
92. Horizontal analysis
is a technique for evaluating a series of financial statement data over a
period of time
·
to determine which items
are in error.
·
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.
·
that has been arranged
from the lowest number to the highest number.
111. Vertical analysis
is a technique that expresses each item in a financial statement
·
as a percent of a base
amount.
·
in dollars and cents.
·
starting with the
highest value down to the lowest value.
·
as a percent of the item
in the previous year.
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41. Process costing is
used when
·
the production process
is continuous.
·
costs are to be assigned
to specific jobs.
·
production is aimed at
filling a specific customer order.
·
dissimilar products are
involved.
43. An important feature
of a job order cost system is that each job
·
must be similar to
previous jobs completed.
·
has its own
distinguishing characteristics.
·
must be completed before
a new job is accepted.
·
consists of one unit of
output.
49. In a process cost
system, product costs are summarized:
·
on job cost sheets.
·
on production cost
reports.
·
when the products are
sold.
·
after each unit is
produced.
33. An activity that has
a direct cause-effect relationship with the resources consumed is a(n)
·
overhead rate.
·
product activity.
·
cost driver.
·
cost pool.
105. The break-even
point is where
·
total sales equal total
variable costs.
·
total variable costs
equal total fixed costs.
40. Activity-based
costing
·
allocates overhead to
multiple activity cost pools, and it then assigns the activity cost pools to
products and services by means of cost drivers.
·
assigns activity cost
pools to products and services, then allocates overhead back to the activity
cost pools.
·
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.
40. A cost which remains
constant per unit at various levels of activity is a
·
mixed cost.
·
fixed cost.
·
manufacturing cost.
·
variable cost.
·
total sales equal total
fixed costs.
·
contribution margin
equals total fixed costs.
109. Fixed costs are
$600,000 and the contribution margin per unit is $150. What is the break-even
point?
·
$1,500,000
·
$4,000,000
·
1,500 units
·
4,000 units
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.
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
·
variable costing, in
order to increase net income.
·
variable costing, in
order to decrease net income.
·
absorption costing, in
order to increase net income.
·
absorption costing, in order
to decrease net income.
50. An unrealistic
budget is more likely to result when it
·
has been developed by
all levels of management.
·
has been developed in a
bottom up fashion.
·
has been developed in a
top down fashion.
·
is developed with
performance appraisal usages in mind.
39. A major element in
budgetary control is
·
the valuation of
inventories.
·
the preparation of
long-term plans.
·
approval of the budget
by the stockholders.
·
the comparison of actual
results with planned objectives.
43. The purpose of the
sales budget report is to
·
control sales
commissions.
·
control selling
expenses.
·
determine whether income
objectives are being met.
·
determine whether sales
goals are being met.
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
·
flexible accounting.
·
static reporting.
·
responsibility
accounting.
·
master budgeting.
142. Variance reports
are
·
external financial
reports.
·
SEC financial reports.
·
internal reports for
management.
·
all of these.
40. Internal reports
that review the actual impact of decisions are prepared by
·
the controller.
·
management accountants.
·
factory workers.
·
department heads.
42. The process of
evaluating financial data that change under alternative courses of action is
called
·
cost-benefit analysis.
·
contribution margin
analysis.
·
incremental analysis.
·
double entry analysis.
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 increase by
$40,000.
·
Income would decrease by
$8,000.
·
Income would increase by
$140,000.
·
Income would increase by
$8,000.
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 $30,000
·
Make and save $10,000
·
Buy and save $10,000
·
Make and save $30,000
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 $20,000.
·
Sell now, the company
will be better off by $200,000.
·
Process further, the
company will be better off by $180,000.
·
Process further, the
company will be better off by $20,000.
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