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