Eco 365 final exam

1. ACC 561Final Exam
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1. The statement of cash flows is used for _____.
A. showing the relationship of net income to changes in current assets
B. determining a company’s acceptable level of debt financing
C. revealing commitments that may restrict future courses of action
D. evaluating the creditworthiness of the organization
____________________________________________________________________________________
2. Nonoperating items on the income statement _____.
A. appearonlyoncorporate income statements
B. appearon the income statementimmediatelyaftergrossprofit
C. are revenuesandexpensesarisingfromadjustingentries
D. reflectthe effectsoffinancial management decisions
____________________________________________________________________________________
3. The difference between a single-step and multiple-step income statement is that a
single-step income statement _____.
A. groupsall revenues together and all expenses together, whereas a multiple-
step income statement separatescertain revenues andexpenses from each
other and presents subtotals
B. calculatesnetincome usingone method,whereasamultiple-stepincome
statementcalculatesnetincome usingtwoormore methods
C. calculatesgrossprofitandoperatingincome,whereasamultiple-stepincome
statementdoesnot
D. showsonly1 year's netincome,whereasamultiple-stepincome statement
showsmultiple years'netincome
____________________________________________________________________________________

2. 4. Which one of the following statements is true?
A. The statement of cash flows reports the cash receipts but not cash payments of
an entity over a period of time.
B. Both the statement of cash flows and the income statement determine the net
5. income for a company.
C. Transactions affecting the sale and the purchase or production of goods and
services are reported in the financing activities section of the statement of cash
flows.
D. Investing activities in the statement of cash flows include acquiring and
selling long-term assets.
____________________________________________________________________________________
6. The _____ accounting convention uses the acquisition cost minus depreciation in
valuing an asset on the balance sheet.
A. continuity
B. conservatism
C. cost-benefit
D. materiality
____________________________________________________________________________________
7. A new corporation issuing a common, no-par value stock for cash would include a
journal entry a debit to _____.
A. paid-in capital and a credit to retained earnings.
B. cash and a credit to common stock.
C. retained earnings and a credit to cash.
D. cash and a credit to retained income.
____________________________________________________________________________________
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8. Which type of organization would most likely have work-in-process inventory?
A. A retail store
B. A manufacturing company
C. A service organization
D. A real-estate investment trust
____________________________________________________________________________________

3. 9. _____ isa measure of income orprofitdividedbythe investmentrequiredtoobtain
that income orprofit.
A. Returnon sales
B. Return oninvestment
C. Residual income
D. Capital turnover
____________________________________________________________________________________
10. The followinginformationisavailable forthe PeterCompany:Sales$150,000 Invested
Capital 156,250 ROI 10% The returnon salesis_____.
A. 10.00%
B. 62.50%
C. 10.42%
D. none of these answersiscorrect
____________________________________________________________________________________
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11. The following information is available for the Peter Company:
Sales: $500,000
Invested capital: $312,500
ROI: 10%
The return on sales is _____.
A. 10.00%
B. 6.250%
C. 1.000%
D. 62.50%
____________________________________________________________________________________
12. SpeedoCompany'srevenuesare $300 on investedcapital of $240. Expensesare
currently70% of sales.If AngeloCompanycanreduce itsinvestedcapital by20%,return
on investmentwillbe _____.
A. 75%

4. B. 18.75%
C. 93.75%
D. 46.88%
____________________________________________________________________________________
13. When the variable costing method is used, fixed factory overhead appears on the
income statement as a _____.
A. component of cost of goods sold
B. fixed expense
C. production-volume variance
D. component of gross profit
____________________________________________________________________________________
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14. In absorptioncosting,costsare separatedintothe majorcategoriesof_____.
A. fixedandvariable
B. manufacturingandfixed
C. manufacturing and nonmanufacturing
D. variable andnonmanufacturing
______________________________________________________________________________
15. _____ is another term for variable costing.
A. Full costing
B. Direct costing
C. Traditional costing
D. Absorption costing
________________________________________________________________________
16. The use of budgeted service department cost rates protects using departments from
_____.
A. all of these answers are correct
B. service outages
C. price fluctuations
D. service department efficiencies

5. ________________________________________________________________________
17. _____ is an example of the external financial-reporting purpose of the cost
management systems.
A. The cost of a manufacturing process
B. The product mix to optimize profitability
C. The amount of inventory that should appear on the balance sheet
D. Budget reporting
________________________________________________________________________
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18. The level of sales at which revenues equal expenses and net income is zero is
called the _____.
A. margin of safety
B. contribution margin
C. break-even point
D. marginal income point
________________________________________________________________________
19. Outputmeasuresof bothresourcesandactivitiesare _____.
A. cost drivers
B. stagesof production
C. fixedactivities
D. variable activities
________________________________________________________________________
20. The break-evenpointiswhere_____.
A. total salesrevenue equalstotal costplusdesiredprofit.
B. the contributionmarginequalsnetincome plusfixedcosts.

6. C. total sales revenue equalstotal cost.
D. the variable costequalstotal cost.
________________________________________________________________________
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21. _____ budgetingiswhenbudgetsare formulatedwiththe active participationof all
affectedemployees.
A. Financial
B. Team
C. Participative
D. Shared
________________________________________________________________________
22. _____ isthe logical integrationof managementaccountingtoolstogatherandreport
data and to evaluate performance.
A. Aninternal control system
B. A qualitycontrol system
C. A financial-reportingsystem
D. A managementcontrol system
________________________________________________________________________
________________________________________________________________________
23. _____ are componentsof amasterbudget.
A. A strategicplanand an operatingbudget
B. An operating budgetand a capital budget
C. A continuousbudgetandastatic budget
D. A cash budgetandan activitybudget
________________________________________________________________________
24. Importantfactorsconsideredbysalesforecastersincludeall of the followingexcept
_____.
A. past patternsof sales

7. B. competitors' activities
C. the desiredlevel of sales
D. marketingresearchstudies
________________________________________________________________________
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25. _____ models are mathematical models of the master budget that can react to any set
of assumption about sales, costs, and product mix.
A. Futuring
B. Accounting
C. Budgeting analysis
D. Financial planning
________________________________________________________________________
26. Whichof the followingisanobjective of budgeting?
A. Budgetingprovidesbenchmarks againstwhichperformancecan be measured.
B. Budgetingprovidesafixedfiscal planthatshouldnotbe changedduringthe year.
C. Budgetinghelpsmanagersbuildfavorable variancesintothe performance-evaluation
process.
D. Budgetingisdone exclusivelybythe chief fiscal officerforcontrol purposes
________________________________________________________________________
27. An organization'sbudgetprogramshould be used
A. tohave poweroveremployees.
B. to assignblame tomanagersthat do notmeetbudgetarygoals.
C. to help managersplanand control the organization’sperformance.
D. to helpthe chief fiscal officertoallocate resourcestothe favoredprojects of the
executives.
________________________________________________________________________
28. The activity-basedcostingmayreveal _________, whereastraditional costingcannot.
A. high-volumeproductsare overcosted
B. low-volume productsare overcosted

8. C. bothhigh- and low-volumeproductsare overcosted
D. bothhigh- and low-volume productsare undercosted
________________________________________________________________________
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29. _____ isa methodof approximatingcostfunctions.
A. Cost-driveranalysis
B. Transactionanalysis
C. Productanalysis
D. Account analysis
________________________________________________________________________
30. In relationtoa cost function,the termreliability refersto_____.
A. whetherthe costsandactivitiescanbe easilyobserved
B. whetherthe costfunctionconformstoa givenmathematical model
C. howwell the costfunctionpredictsfuture costs
D. how well the cost functionexplainspastcost behavior
________________________________________________________________________
31. One of the simplestmethodstomeasure alinearcostfunctionfrompastdata isthe
_____.
A. regressionanalysismethod
B. high–lowmethod
C. leastsquaresregressionmethod
D. visual-fitmethod
________________________________________________________________________
ANSWER KEY
1. D
2. B
3. A
4. D
5. A

9. 6. B
7. B
8. C
9. B
10. B
11. D
12. B
13. A
14. B
15. B
16. C
17. C
18. A
19. C
20. C
21. D
22. B
23. C
24. B
25. A
26. C
27. A
28. D
29. D
30. B