ACCT 2320 001 Test 1 Winter 2023

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Douglas College *

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Accounting

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Apr 3, 2024

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1 ACCT 2320 001 Test 1 Winter 2023 30 Minutes Name: ___________________________________ Student Number: _____________________ Multiple Choice. Select the one best option (20) 1) Which one of the following costs would be included in the manufacturing overhead of a lawn mower manufacturer? A) the wages earned by motor assemblers B) the cost of the wheels C) the cost of the fuel lines that run from the motor to the gas tank D) depreciation on the testing equipment 2) Which of the following would be accounted for using a job-order cost system? A) the production of cans of paint B) the production of toothpaste C) the legal representation of a client D) the production of paper clips 3) Which of the following is not part of managerial accounting? A) reporting financial information to the shareholders B) calculating product costs C) determining if planned goals have been met D) controlling costs 4) Why do most manufacturers use a perpetual inventory system? A) It is a generally accepted accounting principle. B) It is required for all manufacturers. C) It is a characteristic of a proper cost accounting system. D) It is a requirement of the Canada Revenue Agency for all Canadian companies. 5) For 2022, Sparkman Company has cost of goods manufactured of $500,000, beginning finished goods inventory of $25,000, and ending finished goods inventory of $20,000. How much is cost of goods sold? A) $545,000 B) $495,000 C) $455,000 D) $505,000 6) Which of the following is true? A) The raw materials account only reflects direct materials. B) The acquisition of raw materials causes the Work in Process Inventory account to increase. C) When raw materials are purchased, the Raw Materials Inventory account is credited. D) The Raw Materials Inventory account is used to recognize all raw materials purchases, purchase returns and allowances, and freight costs related to materials.

2 7) What broad functions do the management of an organization perform? A) planning, directing, and controlling B) planning, directing, and selling C) directing, manufacturing, and controlling D) planning, manufacturing, and controlling 8) When a job or goods are completed, A) its cost is removed from the Work in Process Inventory account and added to Cost of Goods Sold. B) the Cost of Goods Sold account is debited and the Work in Process Inventory account is credited. C) the Finished Goods Inventory account is debited, and the Work in Process Inventory account is credited. D) its costs are removed from the Finished Goods Inventory account and added to Cost of Goods Sold. 9) Which one of the following is never a manufacturing cost? A) advertising costs B) manufacturing overhead C) direct materials D) cost of goods sold 10) What is "balanced" in the balanced scorecard approach? A) the amount of costs allocated to products B) the number of defects found on each product C) the number of products produced D) the emphasis on financial and non-financial performance measurements 11) When manufacturing labour costs are incurred, to what account are they debited? A) Factory Wages Expense B) Factory Labour C) Work in Process Inventory D) Factory Wages Payable 12) Variable costs A) vary on a per unit basis as activity varies. B) vary in total as activity varies. C) are unpredictable. D) all of the above. 13) In Canada, which of the following professional accounting organizations play an important role in promoting high standards of ethics in the accounting profession? A) The Canadian Institute of Financial Planning (CIFP) B) The Financial Planning Standards Council (FPSC) C) Chartered Professional Accountants of Canada (CPA Canada) D) all of the above

3 14) Where there is a linear relationship between two variables, A) there is seldom a linear relationship between two variables. B) the change in the dependent variable yields a predictable, constant change in the independent variable. C) a change in the "Y" variable yields a predictable, constant change in the "X" variable. D) the change in the independent variable yields a predictable, constant change in the dependent variable. 15) Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion? A) just-in-time inventory B) activity-based costing C) theory of constraints D) total-quality management 16) Which of the following statements is true? A) In recent decades, the Canadian economy in general has shifted toward an emphasis on providing goods rather than services. This trend has reduced the importance of managerial accounting. B) In recent decades, the Canadian economy in general has shifted toward an emphasis on providing goods rather than services. This trend has not reduced the importance of managerial accounting. C) In recent decades, the Canadian economy in general has shifted toward an emphasis on providing services rather than goods. This trend has not reduced the importance of managerial accounting. D) In recent decades, the Canadian economy in general has shifted toward an emphasis on providing services rather than goods. This trend has reduced the importance of managerial accounting. 17) Which one of the following is a procedure that is part of assigning manufacturing costs in a job-order cost system? A) transferring the costs of completed goods out of Finished Goods Inventory B) adding manufacturing overhead costs to Work in Process Inventory as they are incurred C) adding actual manufacturing overhead costs to jobs D) adding direct materials costs to Work in Process Inventory as the materials are used

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4 Use the following information for the questions below. # Machine Maintenance Month Hours (X) Costs (Y) Jan 3,000 $440 Feb 4,500 $690 Mar 8,000 $510 Apr 7,000 $600 May 6,000 $550 Jun 9,000 $980 Jul 3,500 $840 Aug 5,500 $600 18) What is the equation of the line using the high-low method and this data? A) Y = $170 + (0.09 × 9,000) B) $980 = 170 + (0.09X) C) Y = 170 + ($0.09 X) D) X = 170 + ($0. 09 Y) 19) How is the cost of goods manufactured calculated? A) beginning WIP + direct materials used + direct labour + manufacturing overhead + ending WIP B) beginning WIP + direct materials used + direct labour + manufacturing overhead — ending WIP C) direct materials used + direct labour + manufacturing overhead — beginning WIP + ending WIP D) direct materials used + direct labour + manufacturing overhead — ending WIP — beginning WIP 20) To which control account do job cost sheets represent in the subsidiary ledger? A) Work in Process Inventory B) Finished Goods Inventory C) Cost of Goods Manufactured D) Cost of Goods Sold

5 ACCT 2320 001 Test 1 Winter 2023 - Solution Ch 1) D 3 2) C 3 3) A 1 4) C 2 5) D 3 6) D 3 7) A 1 8) C 3 9) A 3 10) D 1 11) B 3 12) B 2 13) C 1 14) D 2 15) B 1 16) C 1 17) D 3 18) C 2 19) B 3 20) A 3