Which of the following statements are true? 1. The costs attached to products that have not been sold are included in ending inventory on the balance sheet. 2. In absorption costing, nonmanufacturing costs are assigned to units of product. 3. Most countries require some form of absorption costing for external reports. Statements I and III are true. Only statement II is true. Only statement I is true. All of the statements are true.

Which of the following statements are true? 1. The costs attached to products that have not been sold are included in ending inventory on the balance sheet. 2. In absorption costing, nonmanufacturing costs are assigned to units of product. 3. Most countries require some form of absorption costing for external reports. Statements I and III are true. Only statement II is true. Only statement I is true. All of the statements are true.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ch Which of the following statements is true? Multiple Choice Product costs and variable costs are synonyms. Product costs are excluded from the calculation of gross margin. Product costs are included in inventory as reported on the balance sheet. Product costs include sales commissions and advertising.
TRUE OR FALSE STATEMENT 1: If the ending inventory of finished goods is understated, net income will be overstated. STATEMENT 2: Manufacturing overhead combined with direct materials is known as conversion cost.
S1: When reconciling variable costing and absorption costing net operating income, fixed overhead costs deferred in inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income. S2: When the number of units in inventories decrease between the beginning and end of the period, net operating income under absorption costing will typically be greater than under variable costing. a. both are true b. both are false c. S1 is true d. S2 is true
Which of the following statements is true? Multiple Cholce Product costs and varlable costs are synonyms. Product costs are excluded from the calculation of gross margin. O Product costs are Included in Inventory as reported on the balance sheet. Product costs Include sales commisslons and advertising.
Why is variable costing not in compliance with generally accepted accounting principles?a. Fixed manufacturing costs are assumed to be period costs.b. Variable costing procedures are not well known in industry.c. Net earnings are always overstated when using variable costing.d. Variable costing ignores the concept of lower of cost or market when valuing inventory.
21. Which of the following statements is correct? a. In a variable costing income statement, sales revenue is typically higher than in absorption costing income statement. b. When production is not equal to sales, income under absorption costing differs from income under variable costing due to the difference in treatment (product cost and period cost) of the fixed overhead cost under the two costing methods. c. In a variable costing system, fixed overhead cost is included as part of the cost of inventory. d. In an absorption costing system, fixed overhead cost is treated as a period cost
Statement 1: Mixed cost are included in the cost of goods sold in the income statement only. Statement 2: The high-low method uses the highest and lowest costs regardless of whether they are from the data points with the highest and lowest activity levels O Statement 1 is true None of the statements are true. O Statement 2 is true Both Statements are true
Which of the following statements is false? Multiple Choice Examples of selling costs include shipping, sales commissions, and costs of finished goods warehouses. Discretionary fixed costs may be altered in the short term by current managerial decisions. A particular cost may be direct or indirect depending on the cost object. All sunk costs should be ignored in making a decision. Some of the conversion costs are period costs.
26) Cost of abnormal wastage is. a. Charged to the product cost b. Charged the costing profit and loss account c. Not charged at all d. Charged partly to the product and profit and loss account
Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.
Which of the following is NOT true regarding an income statement organized according to thecontribution margin approach? Question 6 options: The contribution margin income statement is organized by cost behavior. Operating income will always be the same as operating income in a traditional income statement regardless of changes in inventory levels. All fixed costs, including fixed MOH, are expensed below the contribution margin line. The contribution margin is equal to sales revenue minus variable expenses.
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