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Accounting 102 Chapter 1

Accounting 102 Chapter 1 - Chapter 1 Out of 25 questions...

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Chapter 1 Out of 25 questions, you answered 19 correctly, for a final grade of 76%. 19 correct (76%) 6 incorrect (24%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a . 1 CORRECT A major difference between financial accounting and managerial accounting relates to differences in the users. Related to Smith Manufacturing Company, which of the following best describes a user of managerial accounting information? A) Credit Manager of a vendor for Smith Manufacturing B) Purchasing manager for Smith Manufacturing C) Bank manager reviewing a loan application from Smith Manufacturing D) IRS divisional manager reviewing the tax return of Smith Manufacturing Feedback: The purchasing manager of Smith Manufacturing would be an internal user of information and would be concerned with production reports and estimates. The other individuals are all external to the company and would expect financial accounting information prepared in accordance with GAAP. LO 1 2 INCORRECT When comparing managerial accounting information with financial accounting information it is expected that managerial accounting information would A) be based upon GAAP. B) emphasize information on the company as a whole. C) present estimates of future financial operations. D) include an analysis of historical cost. Feedback: Managerial accounting includes estimates. Financial accounting looks at the company as a whole based upon GAAP, including analysis of historical costs. LO 1 3 CORRECT Alex Company spent $2,500 cash to build 10 desks: $940 for materials, $1,270 for a carpenter’s labor, and $290 for tools used to make the desks. None of the desks have been sold. What is the amount of Alex Company’s expense? A) $0 B) $1,27 0 C) $1,56 0 D) $2,50 0
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Feedback: The cash payments were all asset exchange transactions. Alex Company will not recognize any expense until the desks are sold. LO 2 4 CORRECT Which of the following is not considered to be a product cost? A) Cost of wood used in making a table top B) Cost of labor to assemble a table C) Cost of company president’s salary D) Cost of electricity to operate a machine used to sand wood for a table Feedback: The company president’s salary is a general, selling and administrative cost and not a product cost. The other costs are examples of the product cost classifications of direct material, direct labor, and overhead. LO 2 5 CORRECT The costs of building a chair are accumulated in what account until the chair is sold? A) Materials B) Labor C) Finished goods inventory D) Cost of goods sold Feedback: The costs incurred to build a chair are not recognized as an expense until the chair is sold. In the meantime, the cost of the chair is held in an asset account called finished goods inventory. LO 2 6 CORRECT Which of the following costs are product costs?
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