Test Bank - for Fundamentals of Cost Accounting, 7th Edition by Lanen Maher All Chapters 1-17 Complete Guide A+

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FundamentalsgofgCostgAccounting,g6eg(Lanen
)gChapterg2 CostgConceptsgandgBehavior

1) Thegcostgofgangitemgisgthegsacrificegofgresourcesgmadegtogacquiregit.

Answer: TRUE
Explanation:
Thisgstatementgisgtrue.gThisgstatementgisgthegdefinitiongofgcost
.gDifficulty:g1gEasy
Topic: WhatgisgagCost?
LearninggObjective: 02-
01gExplaingthegbasicgconceptgofg"cost."gBloom's: Remember
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

2) Angexpensegisgagcostgchargedgagainstgrevenuegingangaccountinggperiod.

Answer: TRUE
Explanation:
Thisgstatementgisgthegdefinitiongofgangexpense
.gDifficulty:g1gEasy
Topic: WhatgisgagCost?
LearninggObjective: 02-
01gExplaingthegbasicgconceptgofg"cost."gBloom's: Remember
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

3) Ifgagcostgisgrecordedgasgangassetg(forgexample,gprepaidgrentgforgangofficegbuilding),gitgbecom
esgangexpensegwhengthegassetghasgbeengconsumed.

Answer: TRUE
Explanation:
Thisgstatementgisgtrue.gThisgstatementgdescribesgthegappropriategtransitiongbetwee
ngassetsgandgexpenses.
Difficulty:g2gMediumgT
opic: WhatgisgagCost?
LearninggObjective: 02-
01gExplaingthegbasicgconceptgofg"cost."gBloom's: Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation




1
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4) Accountinggsystemsgtypicallygrecordgopportunitygcostsgasgassetsgandgtreatgthemgasgintangibl
egitemsgongthegfinancialgstatements.

Answer: FALSE
Explanation: Opportunitygcostsgaregnotgreflectedgingthegaccountinggsystem—
theygaregwhatgdidgnotghappen.
Difficulty:g2gMediumgT
opic: WhatgisgagCost?
LearninggObjective: 02-
01gExplaingthegbasicgconceptgofg"cost."gBloom's: Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

5) Totalgcostgofggoodsgpurchasedgminusgbeginninggmerchandiseginventorygplusgendin
ggmerchandiseginventorygequalsgcostgofggoodsgsold.

Answer: FALSE
Explanation:
Thisgstatementgisgfalse.gPurchasesgplusgbeginningginventorygminusgendin
gginventorygequalsgcostgofggoodsgsold.
Difficulty:g2gMedium
Topic: PresentationgofgCostsgingFinancialgStatements
LearninggObjective: 02-
02gExplainghowgcostsgaregpresentedgingfinancialgstatements.gBloom's: Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

6) Costgofggoodsgsoldgincludesgthegactualgcostsgofgtheggoodsgsoldgandgthegcostsgrequiredgtogse
llgthemgtogthegcustomer.

Answer: FALSE
Explanation:
Thisgstatementgisgfalse.gCostgofggoodsgsoldgdoesgnotgincludegsellinggcost
s.gDifficulty:g2gMedium
Topic: PresentationgofgCostsgingFinancialgStatements
LearninggObjective: 02-
02gExplainghowgcostsgaregpresentedgingfinancialgstatements.gBloom's: Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation




2
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HillgEducation.
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7) Periodgcostsgaregthosegcostsgassignedgtogunitsgofgproductiongingthegperiodgingwhichgtheyga
regincurred.

Answer: FALSE
Explanation:
Thisgstatementgisgfalse.gThisgstatementgdescribesgproductgcosts,gnotgperiodgcost
s.gDifficulty:g2gMedium
Topic: PresentationgofgCostsgingFinancialgStatements
LearninggObjective: 02-
02gExplainghowgcostsgaregpresentedgingfinancialgstatements.gBloom's: Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

8) Onlygdirectgcostsgcangbegclassifiedgasgproductgcosts;gindirectgcostsgaregclassifiedgasgperio
dgcosts.

Answer: FALSE
Explanation:
Thisgstatementgisgfalse.gProductgcostsgcangincludegbothgdirectgandgindirectgcost
s.gDifficulty:g2gMedium
Topic: PresentationgofgCostsgingFinancialgStatements
LearninggObjective: 02-
02gExplainghowgcostsgaregpresentedgingfinancialgstatements.gBloom's: Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

9) Thegthreegcategoriesgofgproductgcostsgaregdirectgmaterials,gdirectglabor,gandgmanufacturin
ggoverhead.

Answer: TRUE
Explanation:
Thisgstatementgisgtrue.gThisgstatementgisgthegdefinitiongofgproductgcos
t.gDifficulty:g1gEasy
Topic: PresentationgofgCostsgingFinancialgStatements
LearninggObjective: 02-
02gExplainghowgcostsgaregpresentedgingfinancialgstatements.gBloom's: Remember
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation




3
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NogreproductiongorgdistributiongwithoutgthegpriorgwrittengonsentgofgMcGraw-
HillgEducation.
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10) Thegfirstgstepgingdetermininggwhethergagcostgisgdirectgorgindirectgisgtogspecifygthegco
stgallocationgrule.

Answer: FALSE
Explanation:
Thegfirstgstepgingdetermininggwhethergagcostgisgdirectgorgindirectgisgdefininggth
egcostgobject.
Difficulty:g2gMediumgT
opic: CostgAllocation
LearninggObjective: 02-
03gExplaingthegprocessgofgcostgallocation.gBloom's:
Understand
AACSB:
AnalyticalgThinkinggAcce
ssibility: KeyboardgNavigation

11) Totalgwork-in-processgduringgthegperiodgisgthegsumgofgthegbeginninggwork-in-
processginventorygandgthegtotalgmanufacturinggcostsgincurredgduringgthegperiod.

Answer: TRUE
Explanation: Thisgstatementgisgtrue.gThisgisgthegcorrectgformulagforgtotalgwork-in-
process.gDifficulty:g2gMedium
Topic: HowgCostsgFlowgthroughgthegStatements
LearninggObjective: 02-
04gUnderstandghowgmaterial,glabor,gandgoverheadgcostsgaregaddedgtogagproductgatgeachgstagegof
gthegproductiongprocess.
Bloom's:
UnderstandgAACSB
:
gAnalyticalgThinkin
g
Accessibility: KeyboardgNavigation

12) Costgofggoodsgsoldgplusgthegendinggfinishedggoodsginventorygminusgthegbeginninggfinishe
dggoodsginventorygequalsgthegcostgofggoodsgmanufactured.

Answer: TRUE
Explanation:
Thisgstatementgisgtrue.gThisgstatementgworksgbackwardsgfromgcostgofggoodsgsoldgt
ogcostgofggoodsgmanufactured.
Difficulty:g2gMedium
Topic: HowgCostsgFlowgthroughgthegStatements
LearninggObjective: 02-
04gUnderstandghowgmaterial,glabor,gandgoverheadgcostsgaregaddedgtogagproductgatgeachgstagegof
gthegproductiongprocess.
Bloom's:
UnderstandgAACSB
4
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NogreproductiongorgdistributiongwithoutgthegpriorgwrittengonsentgofgMcGraw-
HillgEducation.
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