Fall_2008_Test_I_w_answers - Multiple Choice Questions 1....

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Multiple Choice Questions 1. Management accounting focuses primarily on providing data for: A) internal uses by managers. B) external uses by stockholders and creditors. C) external uses by the Internal Revenue Service. D) external uses by the Securities and Exchange Commission. Answer: A Level: Easy LO: 1 2. Managerial accounting: A) is more future oriented than financial accounting. B) tends to summarize information more than financial accounting C) is primarily concerned with providing information to external users. D) is more concerned with precision than timeliness. Answer: A Level: Easy LO: 1 3. The Standards of Ethical Conduct for Management Accountants developed by the Institute of Management Accountants contain a policy regarding confidentiality that requires management accountants to refrain from disclosing confidential information acquired in the course of their work: A) except when authorized by management. B) in all situations. C) except when authorized by management, unless legally obligated to do so. D) in all cases not prohibited by law. Answer: C Level: Hard LO: 4 4. The salary paid to the president of King Company would be classified on the income statement as a(n): A) administrative expense. B) direct labor cost. C) manufacturing overhead cost. D) selling expense. Answer: A Level: Easy LO: 1 5. Property taxes on a company's factory building would be classified as a(n): A) product cost. B) opportunity cost. C) period cost. D) variable cost. Answer: A Level: Easy LO: 2,5,7
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Fixed costs expressed on a per unit basis: A) will increase with increases in activity. B) will decrease with increases in activity. C) are not affected by activity. D) should be ignored in making decisions since they cannot change. Answer: B Level: Medium LO: 5 7. A cost incurred in the past that is not relevant to any current decision is classified as a(n): A) period cost. B) opportunity cost. C) sunk cost. D) differential cost. Answer: C Level: Easy LO: 7 8. Fab Co. manufactures textiles. Fab's manufacturing costs last year included the following salaries and wages: Loom operators. ......................... $120,000 Factory foremen. ........................ $45,000 Machinery repairmen. ................ $30,000 What is the amount of direct labor included in this list? A) $195,000 B) $165,000 C) $150,000 D) $120,000 Answer: D Level: Medium LO: 1 Source: CPA, adapted 9. A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $3,000 and is paid at the beginning of the first year. Three-fourths of the premium applies to factory operations and one-fourth applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage? Product
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Fall_2008_Test_I_w_answers - Multiple Choice Questions 1....

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