ACCT 526 Final Exam – University of Louisiana at
Lafayette | Complete Exam Study Guide with Actual Exam
Questions, Verified Correct Answers and Detailed Rationales
| Latest Update 2026/2027 – Already Graded A+
Question 1
The following data are available for Nichols Corporation:
• Sale of land: $200,000
• Sale of equipment: $100,000
• Issuance of common stock: $140,000
• Purchase of equipment: $60,000
• Payment of cash dividends: $120,000
Net cash provided by investing activities is:
A. $180,000
B. $300,000
C. $240,000
D. $140,000
Answer: C
Rationale: Investing activities include sale of land (+$200,000), sale of equipment (+$100,000),
and purchase of equipment (-$60,000). Net = $200,000 + $100,000 − $60,000 = $240,000.
Issuance of stock and dividends are financing activities.
Question 2
The practice of delegating authority and responsibility is referred to as:
A. Integration
B. Harmonization
C. Decentralization
D. Formalization
Answer: C
Rationale: Decentralization is the delegation of authority and decision-making responsibility to
lower levels of management.
pg. 1
,Question 3
Archer Company uses a job order cost system. During the month of September, the company
worked on Job B. The information contained on the cost sheet is as follows:
• Job B Beg Balance: $1,500
• Direct Material: $800
• Direct Labor: $2,300
• Applied overhead at 120% of direct labor cost.
If Job B sold for $8,000, what was the amount of gross profit for this job? (Ignore
over/under applied overhead)
A. $740
B. $640
C. $580
D. $240
Answer: B
Rationale: Total cost = $1,500 + $800 + $2,300 + (120% × $2,300 = $2,760) = $7,360.
Gross profit = $8,000 − $7,360 = $640? Wait, 8,000 − 7,360 = 640. But the answer is A
($740) — recalculate: 120% of 2,300 = 2,760. Total cost = 1,500 + 800 + 2,300 + 2,760 =
7,360. 8,000 − 7,360 = 640. Option B is $640. The answer key shows A, but the
calculation suggests B. Let me recheck: 120% × 2,300 = 2,760. 1,500 + 800 + 2,300 +
2,760 = 7,360. 8,000 − 7,360 = 640. So B is mathematically correct.
Question 4
An advantage of using regression analysis over the high-low and scattergraph methods is that:
A. Regression analysis is less time-consuming
B. Regression analysis is simpler
C. Regression analysis is more subjective
D. Regression analysis is a more precise approach
Answer: D
Rationale: Regression analysis is a more precise approach than high-low or scattergraph
methods because it uses all data points to determine the best-fitting line.
Question 5
Select the correct statement regarding the accrual basis of accounting:
A. Accrual accounting recognizes revenues and expenses before cash is exchanged
B. Revenue and expense items recognized in the current period may have cash consequences in a
later period
pg. 2
, C. Revenue and expense items recognized in a past period may result in cash receipts or
payments in the current period
D. All of the above are correct
Answer: D
Rationale: All statements correctly describe aspects of accrual basis accounting.
Question 6
An example of a discretionary fixed cost is:
A. Employee development
B. Team building
C. Management training
D. Insurance
Answer: C
Rationale: Management training is a discretionary fixed cost because it can be altered or
eliminated in the short term. Insurance is a committed fixed cost.
Question 7
Overhead costs are assigned to production using an overhead application rate, whereas no such
application rate is used to assign direct materials and direct labor. The reason for this difference
is:
A. Overhead is an indirect cost which cannot be traced easily and directly to specific units of
product
B. Direct materials and direct labor are period costs
C. Overhead is a variable cost
D. Overhead costs are immaterial
Answer: A
Rationale: Overhead is an indirect cost that cannot be traced directly to specific units, requiring
allocation through a predetermined rate.
Question 8
Smith has an average investment of $300,000 in Division B. If the income for Division B for the
current period is $18,000, what is the return on investment (ROI)?
A. 8.00%
B. 5.50%
C. 7.25%
D. 6.00%
pg. 3
Lafayette | Complete Exam Study Guide with Actual Exam
Questions, Verified Correct Answers and Detailed Rationales
| Latest Update 2026/2027 – Already Graded A+
Question 1
The following data are available for Nichols Corporation:
• Sale of land: $200,000
• Sale of equipment: $100,000
• Issuance of common stock: $140,000
• Purchase of equipment: $60,000
• Payment of cash dividends: $120,000
Net cash provided by investing activities is:
A. $180,000
B. $300,000
C. $240,000
D. $140,000
Answer: C
Rationale: Investing activities include sale of land (+$200,000), sale of equipment (+$100,000),
and purchase of equipment (-$60,000). Net = $200,000 + $100,000 − $60,000 = $240,000.
Issuance of stock and dividends are financing activities.
Question 2
The practice of delegating authority and responsibility is referred to as:
A. Integration
B. Harmonization
C. Decentralization
D. Formalization
Answer: C
Rationale: Decentralization is the delegation of authority and decision-making responsibility to
lower levels of management.
pg. 1
,Question 3
Archer Company uses a job order cost system. During the month of September, the company
worked on Job B. The information contained on the cost sheet is as follows:
• Job B Beg Balance: $1,500
• Direct Material: $800
• Direct Labor: $2,300
• Applied overhead at 120% of direct labor cost.
If Job B sold for $8,000, what was the amount of gross profit for this job? (Ignore
over/under applied overhead)
A. $740
B. $640
C. $580
D. $240
Answer: B
Rationale: Total cost = $1,500 + $800 + $2,300 + (120% × $2,300 = $2,760) = $7,360.
Gross profit = $8,000 − $7,360 = $640? Wait, 8,000 − 7,360 = 640. But the answer is A
($740) — recalculate: 120% of 2,300 = 2,760. Total cost = 1,500 + 800 + 2,300 + 2,760 =
7,360. 8,000 − 7,360 = 640. Option B is $640. The answer key shows A, but the
calculation suggests B. Let me recheck: 120% × 2,300 = 2,760. 1,500 + 800 + 2,300 +
2,760 = 7,360. 8,000 − 7,360 = 640. So B is mathematically correct.
Question 4
An advantage of using regression analysis over the high-low and scattergraph methods is that:
A. Regression analysis is less time-consuming
B. Regression analysis is simpler
C. Regression analysis is more subjective
D. Regression analysis is a more precise approach
Answer: D
Rationale: Regression analysis is a more precise approach than high-low or scattergraph
methods because it uses all data points to determine the best-fitting line.
Question 5
Select the correct statement regarding the accrual basis of accounting:
A. Accrual accounting recognizes revenues and expenses before cash is exchanged
B. Revenue and expense items recognized in the current period may have cash consequences in a
later period
pg. 2
, C. Revenue and expense items recognized in a past period may result in cash receipts or
payments in the current period
D. All of the above are correct
Answer: D
Rationale: All statements correctly describe aspects of accrual basis accounting.
Question 6
An example of a discretionary fixed cost is:
A. Employee development
B. Team building
C. Management training
D. Insurance
Answer: C
Rationale: Management training is a discretionary fixed cost because it can be altered or
eliminated in the short term. Insurance is a committed fixed cost.
Question 7
Overhead costs are assigned to production using an overhead application rate, whereas no such
application rate is used to assign direct materials and direct labor. The reason for this difference
is:
A. Overhead is an indirect cost which cannot be traced easily and directly to specific units of
product
B. Direct materials and direct labor are period costs
C. Overhead is a variable cost
D. Overhead costs are immaterial
Answer: A
Rationale: Overhead is an indirect cost that cannot be traced directly to specific units, requiring
allocation through a predetermined rate.
Question 8
Smith has an average investment of $300,000 in Division B. If the income for Division B for the
current period is $18,000, what is the return on investment (ROI)?
A. 8.00%
B. 5.50%
C. 7.25%
D. 6.00%
pg. 3
