,Fundamental Managerial Accounting Concepts, 10e (Edmonds) Ch )# )# )# )# )# )#
apter 1 Management Accounting and Corporate Governance
)# ) # )# )# )# )#
1) Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
the following kinds of information would she be interested in?
)# )# )# )# )# )# )# )# )# )#
A) Economic data )#
B) Financial data )#
C) Nonfinancial data )#
D) Financial, economic, and nonfinancial data )# )# )# )#
2) All of the following are features of managerial accounting except:
)# )# )# )# )# )# )# )# )#
A) information is provided primarily to insiders such as managers. )# )# )# )# )# )# )# )#
B) information includes economic and non-financial data as well as financial data.
)# )# )# )# )# )# )# )# )# )#
C) information is characterized by objectivity, reliability, consistency, and accuracy.
)# )# )# )# )# )# )# )#
D) information is reported continuously with a present or future orientation.
)# )# )# )# )# )# )# )# )#
3) Choose the answer that is not a distinguishing characteristic of financial accounting
)# )# )# )# )# )# )# )# )# )# )#
information.
)#
A) It is global information that reflects the performance of the whole company.
)# )# )# )# )# )# )# )# )# )# )#
B) It is focused primarily on the future.
)# )# )# )# )# )#
C) It is more concerned with financial data than physical or economic data.
)# )# )# )# )# )# )# )# )# )# )#
D) It is more highly regulated than managerial accounting information.
)# )# )# )# )# )# )# )#
4) Managerial accounting information is limited or restricted by which of the following
)# )# )# )# )# )# )# )# )# )# )#
authorities or principles?
)# )# )#
A) Securities and Exchange Commission )# )# )#
B) Generally Accepted Accounting Principles )# )# )#
C) Managerial Accounting Standards Board )# )# )#
D) Value-Added Principle )#
5) Select the incorrect statement regarding the relationship between type of user and type of
)# )# )# )# )# )# )# )# )# )# )# )# )#
information.
)#
A) Middle managers need more nonfinancial, or operational data than do senior executives.
)# )# )# )# )# )# )# )# )# )# )#
B) Assembly line supervisors need more immediate feedback on performance than do senior
)# )# )# )# )# )# )# )# )# )# )#
executives.
)#
C) Senior executives need less aggregated information than do lower-level managers.
)# )# )# )# )# )# )# )# )#
D) Senior executives use general economic information as well as financial information.
)# )# )# )# )# )# )# )# )# )#
6) Select the correct statement regarding managerial and financial accounting.
)# )# )# )# )# )# )# )#
A) Users of managerial accounting information desire greater aggregation than do users of
)# )# )# )# )# )# )# )# )# )# )#
financial accounting information.
)# )# )#
B) Both managerial and financial accounting use economic and physical data in addition to
)# )# )# )# )# )# )# )# )# )# )# )#
financial data.
)# )#
C) Financial accounting is more highly regulated than managerial accounting.
)# )# )# )# )# )# )# )#
D) Timeliness is more important in financial accounting than in managerial accounting.
)# )# )# )# )# )# )# )# )# )#
1
Copyright 2020 © McGraw- )# )# )#
Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGra
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
w-Hill Education. )#
,7) Which of the following most exemplifies the value-added principle?
)# )# )# )# )# )# )# )#
A) An ongoing process where continuous improvement is the goal.
)# )# )# )# )# )# )# )#
B) A competitive management program that emphasizes quality.
)# )# )# )# )# )#
C) Information gathering and reporting activities should be restricted to those activities that add
)# )# )# )# )# )# )# )# )# )# )# )#
value in excess of their cost.
)# )# )# )# )# )#
D) Managerial accounting information is measured in economic, physical, and financial terms.
)# )# )# )# )# )# )# )# )# )#
8) Which of the following costs would be classified as a direct cost for a company that produce
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
s motorcycles?
)#
A) Rent of manufacturing facility that produces motorcycles.
)# )# )# )# )# )#
B) Seats used in the motorcycles. )# )# )# )#
C) Wages of motorcycle assembly workers. )# )# )# )#
D) Both seats used in the motorcycles and wages of motorcycle assembly workers are correct.
)# )# )# )# )# )# )# )# )# )# )# )# )#
9) Which of the following is a product cost for a construction company?
)# )# )# )# )# )# )# )# )# )# )#
A) Cost of transporting raw materials to the job site
)# )# )# )# )# )# )# )#
B) Wages paid to the company's payroll clerk )# )# )# )# )# )#
C) Rent of the company's main office)# )# )# )# )#
D) All of these. )# )#
10) For a manufacturing company, product costs include all of the following except:
)# )# )# )# )# )# )# )# )# )# )#
A) indirect material costs. )# )#
B) warehousing costs of finished goods. )# )# )# )#
C) direct labor costs. )# )#
D) All of these are product costs.
)# )# )# )# )#
11) During its first year of operations, Connor Company paid $50,000 for direct materials and
)# )# )# )# )# )# )# )# )# )# )# )# )#
$36,000 in wages for production workers. Lease payments and utilities on the production facilit
)# )# )# )# )# )# )# )# )# )# )# )# )#
ies amounted to $14,000. General, selling, and administrative expenses were $16,000. The comp
)# )# )# )# )# )# )# )# )# )# )# )#
any produced 5,000 units and sold 4,000 units for $30.00 a unit. The average cost to produce o
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
ne unit is which of the following amounts?
)# )# )# )# )# )# )#
A) $20.00
B) $16.00
C) $18.40
D) $25.00
12) During its first year of operations, Forrest Company paid $30,000 for direct materials and
)# )# )# )# )# )# )# )# )# )# )# )# )#
$50,000 in wages for production workers. Lease payments, utility costs, and depreciation on fa
)# )# )# )# )# )# )# )# )# )# )# )# )#
ctory equipment totaled $15,000. General, selling, and administrative expenses were $20,000. T
)# )# )# )# )# )# )# )# )# )# )#
he average cost to produce one unit was $2.50. How many units were produced during the peri
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
od?
A) 40,000
B) 46,000
C) 38,000
D) None of these. )# )#
2
Copyright 2020 © McGraw- )# )# )#
Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGra
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
w-Hill Education. )#
, 13) Why do accountants normally calculate cost per unit as an average?
)# )# )# )# )# )# )# )# )# )#
A) Determining the exact cost of a product is virtually impossible. )# )# )# )# )# )# )# )# )#
B) Some manufacturing-related costs cannot be accurately traced to specific units of product.
)# )# )# )# )# )# )# )# )# )# )#
C) Even when producing multiple units of the same product, normal variations occur in the
)# )# )# )# )# )# )# )# )# )# )# )# )#
amount of materials and labor used.
)# )# )# )# )# )#
D) All of these are justifications for computing average unit costs.
)# )# )# )# )# )# )# )# )#
14) Which of the following costs is not considered a period cost?
)# )# )# )# )# )# )# )# )# )#
A) Warehousing costs )#
B) Depreciation of delivery vehicles )# )# )#
C) Salaries paid to company executives )# )# )# )#
D) Freight paid on a purchase of raw materials
)# )# )# )# )# )# )#
15) Select the incorrect statement regarding costs and expenses.
)# )# )# )# )# )# )#
A) Some costs are initially recorded as expenses while others are initially recorded as assets.
)# )# )# )# )# )# )# )# )# )# )# )# )#
B) Expenses are incurred when assets are used to generate revenue.
)# )# )# )# )# )# )# )# )#
C) Manufacturing-related costs are initially recorded as expenses. )# )# )# )# )# )#
D) Non-manufacturing costs should be expensed in the period in which they are incurred. )# )# )# )# )# )# )# )# )# )# )# )#
16) Which of the following costs should be recorded as an expense?
)# )# )# )# )# )# )# )# )# )#
A) Salary of administrative employee
)# )# )#
B) Depreciation of manufacturing equipment )# )# )#
C) Insurance for the factory building )# )# )# )#
D) All of these are expenses.
)# )# )# )#
17) Which of the following costs should not be recorded as an expense?
)# )# )# )# )# )# )# )# )# )# )#
A) Insurance on factory building )# )# )#
B) Sales commissions )#
C) Product shipping costs )# )#
D) Product advertising )#
18) Which of the following transactions would cause net income for the period to decrease?
)# )# )# )# )# )# )# )# )# )# )# )# )#
A) Paid $2,500 cash for raw material cost
)# )# )# )# )# )#
B) Purchased $8,000 of merchandise inventory )# )# )# )#
C) Recorded $5,000 of depreciation on production equipment
)# )# )# )# )# )#
D) Used $2,000 of office supplies
)# )# )# )#
19) Which of the following statements is true with regard to product costs versus general, selling,
)# )# )# )# )# )# )# )# )# )# )# )# )# )#
and administrative costs?
)# )# )#
A) Product costs associated with unsold units appear on the income statement as general
)# )# )# )# )# )# )# )# )# )# )# )#
expenses.
)#
B) General, selling, and administrative costs appear on the balance sheet.
)# )# )# )# )# )# )# )# )#
C) Product costs associated with units sold appear on the income statement as cost of goods sold.
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
D) None of these are true.
)# )# )# )#
3
Copyright 2020 © McGraw- )# )# )#
Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGra
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
w-Hill Education. )#
apter 1 Management Accounting and Corporate Governance
)# ) # )# )# )# )#
1) Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
the following kinds of information would she be interested in?
)# )# )# )# )# )# )# )# )# )#
A) Economic data )#
B) Financial data )#
C) Nonfinancial data )#
D) Financial, economic, and nonfinancial data )# )# )# )#
2) All of the following are features of managerial accounting except:
)# )# )# )# )# )# )# )# )#
A) information is provided primarily to insiders such as managers. )# )# )# )# )# )# )# )#
B) information includes economic and non-financial data as well as financial data.
)# )# )# )# )# )# )# )# )# )#
C) information is characterized by objectivity, reliability, consistency, and accuracy.
)# )# )# )# )# )# )# )#
D) information is reported continuously with a present or future orientation.
)# )# )# )# )# )# )# )# )#
3) Choose the answer that is not a distinguishing characteristic of financial accounting
)# )# )# )# )# )# )# )# )# )# )#
information.
)#
A) It is global information that reflects the performance of the whole company.
)# )# )# )# )# )# )# )# )# )# )#
B) It is focused primarily on the future.
)# )# )# )# )# )#
C) It is more concerned with financial data than physical or economic data.
)# )# )# )# )# )# )# )# )# )# )#
D) It is more highly regulated than managerial accounting information.
)# )# )# )# )# )# )# )#
4) Managerial accounting information is limited or restricted by which of the following
)# )# )# )# )# )# )# )# )# )# )#
authorities or principles?
)# )# )#
A) Securities and Exchange Commission )# )# )#
B) Generally Accepted Accounting Principles )# )# )#
C) Managerial Accounting Standards Board )# )# )#
D) Value-Added Principle )#
5) Select the incorrect statement regarding the relationship between type of user and type of
)# )# )# )# )# )# )# )# )# )# )# )# )#
information.
)#
A) Middle managers need more nonfinancial, or operational data than do senior executives.
)# )# )# )# )# )# )# )# )# )# )#
B) Assembly line supervisors need more immediate feedback on performance than do senior
)# )# )# )# )# )# )# )# )# )# )#
executives.
)#
C) Senior executives need less aggregated information than do lower-level managers.
)# )# )# )# )# )# )# )# )#
D) Senior executives use general economic information as well as financial information.
)# )# )# )# )# )# )# )# )# )#
6) Select the correct statement regarding managerial and financial accounting.
)# )# )# )# )# )# )# )#
A) Users of managerial accounting information desire greater aggregation than do users of
)# )# )# )# )# )# )# )# )# )# )#
financial accounting information.
)# )# )#
B) Both managerial and financial accounting use economic and physical data in addition to
)# )# )# )# )# )# )# )# )# )# )# )#
financial data.
)# )#
C) Financial accounting is more highly regulated than managerial accounting.
)# )# )# )# )# )# )# )#
D) Timeliness is more important in financial accounting than in managerial accounting.
)# )# )# )# )# )# )# )# )# )#
1
Copyright 2020 © McGraw- )# )# )#
Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGra
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
w-Hill Education. )#
,7) Which of the following most exemplifies the value-added principle?
)# )# )# )# )# )# )# )#
A) An ongoing process where continuous improvement is the goal.
)# )# )# )# )# )# )# )#
B) A competitive management program that emphasizes quality.
)# )# )# )# )# )#
C) Information gathering and reporting activities should be restricted to those activities that add
)# )# )# )# )# )# )# )# )# )# )# )#
value in excess of their cost.
)# )# )# )# )# )#
D) Managerial accounting information is measured in economic, physical, and financial terms.
)# )# )# )# )# )# )# )# )# )#
8) Which of the following costs would be classified as a direct cost for a company that produce
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
s motorcycles?
)#
A) Rent of manufacturing facility that produces motorcycles.
)# )# )# )# )# )#
B) Seats used in the motorcycles. )# )# )# )#
C) Wages of motorcycle assembly workers. )# )# )# )#
D) Both seats used in the motorcycles and wages of motorcycle assembly workers are correct.
)# )# )# )# )# )# )# )# )# )# )# )# )#
9) Which of the following is a product cost for a construction company?
)# )# )# )# )# )# )# )# )# )# )#
A) Cost of transporting raw materials to the job site
)# )# )# )# )# )# )# )#
B) Wages paid to the company's payroll clerk )# )# )# )# )# )#
C) Rent of the company's main office)# )# )# )# )#
D) All of these. )# )#
10) For a manufacturing company, product costs include all of the following except:
)# )# )# )# )# )# )# )# )# )# )#
A) indirect material costs. )# )#
B) warehousing costs of finished goods. )# )# )# )#
C) direct labor costs. )# )#
D) All of these are product costs.
)# )# )# )# )#
11) During its first year of operations, Connor Company paid $50,000 for direct materials and
)# )# )# )# )# )# )# )# )# )# )# )# )#
$36,000 in wages for production workers. Lease payments and utilities on the production facilit
)# )# )# )# )# )# )# )# )# )# )# )# )#
ies amounted to $14,000. General, selling, and administrative expenses were $16,000. The comp
)# )# )# )# )# )# )# )# )# )# )# )#
any produced 5,000 units and sold 4,000 units for $30.00 a unit. The average cost to produce o
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
ne unit is which of the following amounts?
)# )# )# )# )# )# )#
A) $20.00
B) $16.00
C) $18.40
D) $25.00
12) During its first year of operations, Forrest Company paid $30,000 for direct materials and
)# )# )# )# )# )# )# )# )# )# )# )# )#
$50,000 in wages for production workers. Lease payments, utility costs, and depreciation on fa
)# )# )# )# )# )# )# )# )# )# )# )# )#
ctory equipment totaled $15,000. General, selling, and administrative expenses were $20,000. T
)# )# )# )# )# )# )# )# )# )# )#
he average cost to produce one unit was $2.50. How many units were produced during the peri
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
od?
A) 40,000
B) 46,000
C) 38,000
D) None of these. )# )#
2
Copyright 2020 © McGraw- )# )# )#
Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGra
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
w-Hill Education. )#
, 13) Why do accountants normally calculate cost per unit as an average?
)# )# )# )# )# )# )# )# )# )#
A) Determining the exact cost of a product is virtually impossible. )# )# )# )# )# )# )# )# )#
B) Some manufacturing-related costs cannot be accurately traced to specific units of product.
)# )# )# )# )# )# )# )# )# )# )#
C) Even when producing multiple units of the same product, normal variations occur in the
)# )# )# )# )# )# )# )# )# )# )# )# )#
amount of materials and labor used.
)# )# )# )# )# )#
D) All of these are justifications for computing average unit costs.
)# )# )# )# )# )# )# )# )#
14) Which of the following costs is not considered a period cost?
)# )# )# )# )# )# )# )# )# )#
A) Warehousing costs )#
B) Depreciation of delivery vehicles )# )# )#
C) Salaries paid to company executives )# )# )# )#
D) Freight paid on a purchase of raw materials
)# )# )# )# )# )# )#
15) Select the incorrect statement regarding costs and expenses.
)# )# )# )# )# )# )#
A) Some costs are initially recorded as expenses while others are initially recorded as assets.
)# )# )# )# )# )# )# )# )# )# )# )# )#
B) Expenses are incurred when assets are used to generate revenue.
)# )# )# )# )# )# )# )# )#
C) Manufacturing-related costs are initially recorded as expenses. )# )# )# )# )# )#
D) Non-manufacturing costs should be expensed in the period in which they are incurred. )# )# )# )# )# )# )# )# )# )# )# )#
16) Which of the following costs should be recorded as an expense?
)# )# )# )# )# )# )# )# )# )#
A) Salary of administrative employee
)# )# )#
B) Depreciation of manufacturing equipment )# )# )#
C) Insurance for the factory building )# )# )# )#
D) All of these are expenses.
)# )# )# )#
17) Which of the following costs should not be recorded as an expense?
)# )# )# )# )# )# )# )# )# )# )#
A) Insurance on factory building )# )# )#
B) Sales commissions )#
C) Product shipping costs )# )#
D) Product advertising )#
18) Which of the following transactions would cause net income for the period to decrease?
)# )# )# )# )# )# )# )# )# )# )# )# )#
A) Paid $2,500 cash for raw material cost
)# )# )# )# )# )#
B) Purchased $8,000 of merchandise inventory )# )# )# )#
C) Recorded $5,000 of depreciation on production equipment
)# )# )# )# )# )#
D) Used $2,000 of office supplies
)# )# )# )#
19) Which of the following statements is true with regard to product costs versus general, selling,
)# )# )# )# )# )# )# )# )# )# )# )# )# )#
and administrative costs?
)# )# )#
A) Product costs associated with unsold units appear on the income statement as general
)# )# )# )# )# )# )# )# )# )# )# )#
expenses.
)#
B) General, selling, and administrative costs appear on the balance sheet.
)# )# )# )# )# )# )# )# )#
C) Product costs associated with units sold appear on the income statement as cost of goods sold.
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
D) None of these are true.
)# )# )# )#
3
Copyright 2020 © McGraw- )# )# )#
Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGra
)# )# )# )# )# )# )# )# )# )# )# )# )# )# )#
w-Hill Education. )#
