ACCT 311 CHAPTER 2 EXAM QUESTIONS AND ANSWERS ALREADY PASSED LATEST
UPDATE 2025-2026
The cost of an item is the sacrifice of resources made to acquire it. - Answers TRUE
An expense is a cost charged against revenue in an accounting period - Answers TRUE
If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an
expense when the asset has been consumed. - Answers TRUE
Accounting systems typically record opportunity costs as assets and treat them as intangible
items on the financial statements - Answers FALSE
Total cost of goods purchased minus beginning merchandise inventory plus ending
merchandise inventory equals cost of goods sold. - Answers FALSE
Cost of goods sold includes the actual costs of the goods sold and the costs required to sell
them to the customer. - Answers FALSE
Period costs are those costs assigned to units of production in the period in which they are
incurred. - Answers FALSE
Only direct costs can be classified as product costs; indirect costs are classified as period
costs. - Answers FALSE
The three categories of product costs are direct materials, direct labor, and manufacturing
overhead. - Answers TRUE
The first step in determining whether a cost is direct or indirect is to specify the cost allocation
rule. - Answers FALSE
Total work-in-process during the period is the sum of the beginning work-in-process inventory
and the total manufacturing costs incurred during the period. - Answers TRUE
Cost of goods sold plus the ending finished goods inventory minus the beginning finished
goods inventory equals the cost of goods manufactured. - Answers TRUE
If the cost of goods manufactured during the period exceeds the cost of goods sold, the ending
balance of Finished Goods Inventory account increased. - Answers TRUE
Total variable costs change inversely with changes in the volume of activity - Answers FALSE
Fixed costs per unit change inversely with changes in the volume of activity. - Answers TRUE
The range within which fixed costs remain constant as volume of activity varies is known as the
relevant range. - Answers TRUE
The term full cost refers to the cost of manufacturing and selling a unit of product and includes
UPDATE 2025-2026
The cost of an item is the sacrifice of resources made to acquire it. - Answers TRUE
An expense is a cost charged against revenue in an accounting period - Answers TRUE
If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an
expense when the asset has been consumed. - Answers TRUE
Accounting systems typically record opportunity costs as assets and treat them as intangible
items on the financial statements - Answers FALSE
Total cost of goods purchased minus beginning merchandise inventory plus ending
merchandise inventory equals cost of goods sold. - Answers FALSE
Cost of goods sold includes the actual costs of the goods sold and the costs required to sell
them to the customer. - Answers FALSE
Period costs are those costs assigned to units of production in the period in which they are
incurred. - Answers FALSE
Only direct costs can be classified as product costs; indirect costs are classified as period
costs. - Answers FALSE
The three categories of product costs are direct materials, direct labor, and manufacturing
overhead. - Answers TRUE
The first step in determining whether a cost is direct or indirect is to specify the cost allocation
rule. - Answers FALSE
Total work-in-process during the period is the sum of the beginning work-in-process inventory
and the total manufacturing costs incurred during the period. - Answers TRUE
Cost of goods sold plus the ending finished goods inventory minus the beginning finished
goods inventory equals the cost of goods manufactured. - Answers TRUE
If the cost of goods manufactured during the period exceeds the cost of goods sold, the ending
balance of Finished Goods Inventory account increased. - Answers TRUE
Total variable costs change inversely with changes in the volume of activity - Answers FALSE
Fixed costs per unit change inversely with changes in the volume of activity. - Answers TRUE
The range within which fixed costs remain constant as volume of activity varies is known as the
relevant range. - Answers TRUE
The term full cost refers to the cost of manufacturing and selling a unit of product and includes
