ch2 - ch2 Student:

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Unformatted text preview: ch2 Student: ___________________________________________________________________________ 1. The cost of an item is the sacrifice made to acquire it. True False 2. An expense is an expired cost matched with revenues in a specific accounting period. True False 3. An asset is a cost matched with revenues in a future accounting period. True False 4. Accounting systems typically record opportunity costs as assets and treat them as intangible items on the financial statements. True False 5. Total cost of goods purchased minus beginning merchandise inventory plus ending merchandise inventory equals cost of goods sold. True False 6. Cost of goods sold includes the actual costs of the goods sold and the cost of selling them to the customer. True False 7. Period costs are those costs assigned to units of production in the period in which they are incurred. True False 8. Only direct costs can be classified as product costs; indirect costs are classified as period costs. True False 9. The three categories of product costs are direct materials, direct labor, and manufacturing overhead. True False 10. The first step in determining whether a cost is direct or indirect is to specify the cost allocation rule. True False 11. Total work-in-process during the period is the sum of the beginning work-in-process inventory and the total manufacturing costs incurred during the period. True False 12. Cost of goods sold plus the ending finished goods inventory minus the beginning finished goods inventory equals the cost of goods manufactured. True False 13. If the cost of goods manufactured during the period exceeds the cost of goods sold, the balance of the Finished Goods Inventory account increased. True False 14. Total variable costs change inversely with changes in the volume of activity. True False 15. Fixed costs per unit change inversely with changes in the volume of activity. True False 16. The range within which fixed costs remain constant as volume of activity varies is known as the relevant range. True False 17. The term full cost refers to the cost of manufacturing and selling a unit of product and includes both fixed and variable costs. True False 18. Variable marketing and administrative costs are included in determining full absorption costs. True False 19. Revenue minus cost of goods sold equals contribution margin. True False 20. The primary goal of the cost accounting system is to provide managers with information to prepare their annual financial statements. True False 21. Which of the following statements is (are) true? (1). An asset is a cost that will be matched with revenues in a future accounting period. (2). Opportunity costs are recorded as intangible assets in the current accounting period. A. Only (1) is true. B. Only (2) is true. C. Both (1) and (2) are true. D. Neither (1) nor (2) are true. 22. Which of the following statements is (are) false?...
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This note was uploaded on 07/10/2011 for the course ECON 1001 taught by Professor Cock during the Spring '11 term at Virginia Tech.

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ch2 - ch2 Student:

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