Test Bank for Accounting Principles Process Cost Accounting Updated Latest Comprehensive Exam Practice Resource with Solved Questions and Detailed Solutions for Student Success 2026–2027.

CHAPTER 21
PROCESS COST ACCOUNTING

SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMY
Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT
True-False Statements
sg
1. 1 K 9. 4 K 17. 6 K 25. 7 K 33. 3 C
sg
2. 1 K 10. 4 K 18. 6 C 26. 8 K 34. 4 K
sg
3. 1 C 11. 4 K 19. 6 K 27. 8 K 35. 5 K
sg
4. 2 C 12. 5 C 20. 6 K 28. 8 K 36. 6 K
sg
5. 2 K 13. 5 K 21. 6 C 29. 9 K 37. 9 K
a
6. 2 K 14. 5 K 22. 6 K 30. 10 K
sg
7. 2 K 15. 5 K 23. 7 K 31. 1 K
sg
8. 4 C 16. 5 AP 24. 7 K 32. 2 K
Multiple Choice Questions
38. 1 C 59. 5 AP 80. 6 AP 101. 6 C 123. 9 C
39. 1 C 60. 5 AP 81. 6 AP 102. 6 AP 124. 9 C
40. 1 K 61. 5 K 82. 6 AP 103. 6 AP 125. 9 C
41. 1 K 62. 5 AP 83. 6 AP 104. 6 AP 126. 9 K
42. 1 K 63. 5 AP 84. 6 AP 105. 6 AP 127. 9 K
a
43. 2 C 64. 5 AP 85. 6 AP 106. 6 AP 128. 10 K
a
44. 2 K 65. 5 C 86. 6 AP 107. 6 AP 129. 10 K
st
45. 2 C 66. 5 AP 87. 6 AP 108. 6 AP 130. 1 K
sg
46. 2 K 67. 5 AP 88. 6 AP 110. 6 AP 131. 2 K
st
47. 2 K 68. 5 AP 89. 6 AP 111. 6 AP 132. 2 K
sg
48. 2 C 69. 5 AP 90. 6 C 112. 6 AP 133. 5 K
sg
49. 2 K 70. 5 AP 91. 6 C 113. 6 AP 134. 5 K
st
50. 4 C 71. 5 AP 92. 6 AP 114. 7 K 135. 5 K
sg
51. 4 C 72. 5 AP 93. 6 K 115. 7 K 136. 6 AP
st
52. 4 C 73. 5 AP 94. 6 AP 116. 7 K 137. 6 K
sg
53. 4 C 74. 5 AP 95. 6 AP 117. 8 C 138. 6 C
sg
54. 4 K 75. 5 AP 96. 6 AP 118. 8 C 139. 6 AP
st
55. 4 C 76. 6 AP 97. 6 AP 119. 8 K 140. 6 K
sg
56. 5 AP 77. 6 AP 98. 6 AP 120. 8 C 141. 7 K
sg
57. 5 AP 78. 6 AP 99. 6 AP 121. 8 C 142. 8 K
58. 5 AP 79. 6 AP 100. 6 AP 122. 9 C
Brief Exercises
143. 5 AP 145. 5 AP 147. 6 AP 149. 6 AP 151. 6 AP
144. 5 AP 146. 6 AP 148. 6 AP 150. 6 AP 152. 6 AP
sg
This question also appears in the Study Guide.
st
This question also appears in a self-test at the student companion website.
a
This topic is dealt with in an Appendix to the chapter.

,21 - 2 Test Bank for Accounting Principles, Eighth Edition

SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMY
Exercises
153. 4 AP 158. 5 AP 163. 5,6 AP 168. 6 AP 173. 7 AP
154. 4 AP 159. 5 AP 164. 5,6 AP 169. 6 AP
155. 4 AP 160. 5,6 AP 165. 5,6 AP 170. 7 AP
156. 4 AP 161. 5,6 AN 166. 5,6 AP 171. 7 AP
157. 4 AP 162. 5,6 AP 167. 6 AP 172. 7 AP
Completion Statements
a
174. 1 K 177. 4 K 180. 6 AP 183. 8 K 186. 10 K
175. 2 K 178. 5 K 181. 6 K 184. 9 K
176. 2 K 179. 6 K 182. 7 K 185. 9 K



SUMMARY OF STUDY OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Study Objective 1
1. TF 3. TF 38. MC 40. MC 42. MC 174. C
2. TF 31. TF 39. MC 41. MC 130. MC
Study Objective 2
4. TF 7. TF 44. MC 47. MC 131. MC 176. C
5. TF 32. TF 45. MC 48. MC 132. MC
6. TF 43. MC 46. MC 49. MC 175. C
Study Objective 3
33. TF
Study Objective 4
8. TF 11. TF 51. MC 54. MC 153. Ex 156. Ex
9. TF 34. TF 52. MC 55. MC 154. Ex 157. Ex
10. TF 50. MC 53. MC 133. MC 155. Ex 177. C
Study Objective 5
12. TF 56. MC 62. MC 68. MC 74. MC 145. BE 163. Ex
13. TF 57. MC 63. MC 69. MC 75. MC 158. Ex 164. Ex
14. TF 58. MC 64. MC 70. MC 134. MC 159. Ex 165. Ex
15. TF 59. MC 65. MC 71. MC 135. MC 160. Ex 166. Ex
16. TF 60. MC 66. MC 72. MC 143. BE 161. Ex 178. C
35. TF 61. MC 67. MC 73. MC 144. BE 162. Ex
Study Objective 6
17. TF 79. MC 89. MC 99. MC 109. MC 146. BE 163. Ex
18. TF 80. MC 90. MC 100. MC 110. MC 147. BE 164. Ex
19. TF 81. MC 91. MC 101. MC 111. MC 148. BE 165. Ex
20. TF 82. MC 92. MC 102. MC 112. MC 149. BE 166. Ex
21. TF 83. MC 93. MC 103. MC 113. MC 150. BE 167. Ex
22. TF 84. MC 94. MC 104. MC 136. MC 151. BE 168. Ex
36. TF 85. MC 95. MC 105. MC 137. MC 152. BE 169. Ex
76. MC 86. MC 96. MC 106. MC 138. MC 160. Ex 179. C
77. MC 87. MC 97. MC 107. MC 139. MC 161. Ex 180. C
78. MC 88. MC 98. MC 108. MC 140. MC 162. Ex 181. C

, Process Cost Accounting 21 - 3

Study Objective 7
23. TF 25. TF 115. MC 141. MC 171. Ex 173. Ex
24. TF 114. MC 116. MC 170. Ex 172. Ex 182. C
Study Objective 8
26. TF 28. TF 118. MC 120. MC 142. MC
27. TF 117. MC 119. MC 121. MC 183. C
Study Objective 9
29. TF 122. MC 124. MC 126. MC 184. C
37. TF 123. MC 125. MC 127. MC 185. C
Study Objective a10
a a a
30. TF 128. MC 129. MC a186. C
Note: TF = True-False BE = Brief Exercise C = Completion
MC = Multiple Choice Ex = Exercise
The chapter also contains one set of ten Matching questions and four Short-Answer Essay
questions.



CHAPTER STUDY OBJECTIVES
1. Understand/ who/ uses/ process/ cost/ systems./ Process!/ cost!/ systems!/ are!/ used!/ by!/
companies!/ that!/ mass-produce!/ similar!/ products!/ in!/ a!/ continuous!/ fashion.!/ Once!/ production!/
begins,!/ it!/ continues!/ until!/ the!/ finished!/ product!/ emerges.!/ Each!/ unit!/ of!/ finished!/ product!/ is!/
indistinguishable!/ from!/ every!/ other!/ unit.

2. Explain!/ the!/ similarities!/ and!/ differences!/ between!/ job!/ order!/ cost!/ and!/ process!/ cost!/
systems.!/ Job!/ order!/ cost!/ systems!/ are!/ similar!/ to!/ process!/ cost!/ systems!/ in!/ three!/ ways:!/
(1)! / Both!/ systems!/ track!/ the!/ same!/ cost!/ elements—direct!/ materials,!/ direct!/ labor,!/ and!/
manufacturing!/ overhead.!/ (2)!/ Costs!/ are!/ accumulated!/ in!/ the!/ same!/ accounts—Raw!/
Materials!/ Inventory,!/ Factory!/ Labor,!/ and!/ Manufacturing!/ Overhead.!/ (3)!/ Accumulated!/ costs!/
are! / assigned!/ to!/ the!/ same!/ accounts—Work!/ in!/ Process,!/ Finished!/ Goods!/ Inventory,!/ and!/
Cost!/ of!/ Goods!/ Sold.!/ However,!/ the!/ method!/ of!/ assigning!/ costs!/ differs!/ significantly.
There!/ are!/ four!/ main!/ differences!/ between!/ the!/ two!/ cost!/ systems:!/ (1)!/ A!/ process!/ cost!/
system!/ uses!/ separate!/ accounts!/ for!/ each!/ production!/ process!/ department!/ or!/
manufacturing!/ process,!/ rather!/ than!/ only!/ one!/ work!/ in!/ process!/ account!/ used!/ in!/ a!/ job!/
order!/ cost!/ system.!/ (2)!/ In!/ a!/ process!/ cost!/ system,!/ costs!/ are!/ summarized!/ in!/ a!/ production!/
cost!/ report!/ for!/ each!/ department.!/ In!/ a!/ job!/ cost!/ system,!/ costs!/ are!/ charged!/ to!/ individual!/
jobs!/ and!/ summarized!/ in!/ a!/ job!/ cost!/ sheet.!/ (3)!/ Costs!/ are!/ totaled!/ at!/ the!/ end!/ of!/ a!/ time!/
period!/ in!/ a!/ process!/ cost!/ system,!/ but!/ at!/ the!/ completion!/ of!/ a!/ job!/ in!/ a!/ job!/ cost!/ system.!/ (4)!/
In!/ a!/ process!/ cost!/ system,!/ unit!/ cost!/ is!/ calculated!/ as:!/ Total!/ manufacturing!/ costs!/ for!/ the!/
period!/ ÷!/ Units!/ produced!/ during!/ the!/ period.!/ In!/ a!/ job! / cost!/ system,!/ unit!/ cost!/ is:!/ Total!/
cost!/ per!/ job!/ ÷!/ Units!/ produced.

3. Explain!/ the!/ flow!/ of!/ costs!/ in!/ a!/ process!/ cost!/ system.!/ Manufacturing!/ costs!/ for!/ raw!/
materials,!/ labor,!/ and!/ overhead!/ are!/ assigned!/ to!/ work!/ in!/ process!/ accounts!/ for!/ various!/
departments!/ or!/ manufacturing!/ processes.!/ The!/ costs!/ of!/ units!/ completed!/ are!/ transferred!/
from!/ one!/ department!/ to!/ another!/ as!/ those!/ units!/ move!/ through!/ the!/ manufacturing!/
process.!/ The!/ costs!/ of!/ completed!/ work!/ are!/ transferred!/ to!/ Finished!/ Goods!/ Inventory.!/
When!/ inventory!/ is!/ sold,!/ costs!/ are!/ transferred!/ to!/ Cost!/ of!/ Goods!/ Sold.

, 21 - 4 Test Bank for Accounting Principles, Eighth Edition

4. Make!/ the!/ journal!/ entries!/ to!/ assign!/ manufacturing!/ costs!/ in!/ a!/ process!/ cost!/ system.!/
Entries!/ to!/ assign!/ the!/ costs!/ of!/ raw!/ materials,!/ labor,!/ and!/ overhead!/ consist!/ of!/ a!/ credit!/ to!/
Raw!/ Materials!/ Inventory,!/ Factory!/ Labor,!/ and!/ Manufacturing!/ Overhead,!/ and!/ a!/ debit!/ to!/
Work!/ in!/ Process!/ for!/ each!/ department.!/ Entries!/ to!/ record!/ the!/ cost!/ of!/ good!/ transferred!/ to!/
another!/ department!/ are!/ a!/ credit!/ to!/ Work!/ in!/ Process!/ for!/ the!/ department!/ whose!/ work!/ is!/
finished!/ and!/ a!/ debit!/ to!/ the!/ department!/ to!/ which!/ the!/ goods!/ are!/ transferred.!/ The!/ entry!/ to!/
record!/ units!/ completed!/ and!/ transferred!/ to!/ the!/ warehouse!/ is!/ a!/ credit!/ for!/ the!/ department!/
whose!/ work!/ is!/ finished!/ and!/ a!/ debit!/ to!/ Finished!/ Goods!/ Inventory.!/ The!/ entry!/ to!/ record!/ the!/
sale!/ of!/ goods!/ is!/ a!/ credit!/ to!/ Finished!/ Goods!/ Inventory!/ and!/ a!/ debit!/ to!/ Cost!/ of!/ Goods!/ Sold.

5. Compute!/ equivalent!/ units.!/ Equivalent!/ units!/ of!/ production!/ measure!/ work!/ done!/ during!/ a!/
period,!/ expressed!/ in!/ fully!/ completed!/ units.!/ This!/ concept!/ is!/ used!/ to!/ determine!/ the!/ cost!/
per!/ unit!/ of!/ completed!/ product.!/ Equivalent!/ units!/ are!/ the!/ sum!/ of!/ the!/ units!/ completed!/ and!/
transferred!/ out!/ plus!/ equivalent!/ units!/ of!/ ending!/ work!/ in!/ process.

6. Explain!/ the!/ four!/ steps!/ necessary!/ to!/ prepare!/ a!/ production!/ cost!/ report.!/ The!/ four!/
steps!/ to!/ complete!/ a!/ production!/ cost!/ report!/ are:!/ (1)!/ Compute!/ the!/ physical!/ unit!/ flow—that!/
is,!/ the!/ total!/ units!/ to!/ be!/ accounted!/ for.!/ (2)!/ Compute!/ the!/ equivalent!/ units!/ of!/ production.!/
(3)!/ Compute!/ the!/ unit!/ production!/ costs,!/ expressed!/ in!/ terms!/ of!/ equivalent!/ units!/ of!/
production.!/ (4)!/ Prepare!/ a!/ cost!/ reconciliation!/ schedule,!/ which!/ shows!/ that!/ the!/ total!/ costs!/
accounted!/ for!/ equal!/ the!/ total!/ costs!/ to!/ be!/ accounted!/ for.

7. Prepare!/ a!/ production!/ cost!/ report.!/ The!/ production!/ cost!/ report!/ contains!/ both!/ quantity!/
and!/ cost!/ data!/ for!/ a!/ production!/ department.!/ There!/ are!/ four!/ sections!/ in!/ the!/ report:!/ (1)!/
number!/ of!/ physical!/ units,!/ (2)!/ equivalent!/ units!/ determination,!/ (3)!/ unit!/ costs,!/ and!/ (4)!/ cost!/
reconciliation!/ schedule.

8. Explain!/ just-in-time!/ (JIT)!/ processing.!/ JIT!/ is!/ a!/ manufacturing!/ technique!/ dedicated!/ to!/
producing!/ the!/ right!/ products!/ at!/ the!/ right!/ time!/ as!/ needed.!/ One!/ of!/ the!/ principal!/ accounting!/
effects!/ is!/ that!/ a!/ Raw!/ and!/ In-Process!/ Inventory!/ account!/ replaces!/ both!/ the!/ raw!/ materials!/
and!/ work!/ in!/ process!/ inventory!/ accounts.

9. Explain!/ activity-based!/ costing!/ (ABC).!/ ABC!/ is!/ a!/ method!/ of!/ product!/ costing!/ that!/ focuses!/
on!/ the!/ activities!/ performed!/ to!/ produce!/ products.!/ It!/ assigns!/ the!/ cost!/ of!/ the!/ activities!/ to!/
products!/ by!/ using!/ cost!/ drivers!/ that!/ measure!/ the!/ activities!/ performed.!/ The!/ primary!/
objective!/ of!/ ABC!/ is!/ accurate!/ and!/ meaningful!/ product!/ costs.
a
10.! / Apply!/ activity-based!/ costing!/ to!/ specific!/ company!/ data.!/ In!/ applying!/ ABC,!/ it!/ is!/
necessary!/ to!/ compute!/ the!/ overhead!/ rate!/ for!/ each!/ activity!/ by!/ dividing!/ total!/ expected!/
overhead!/ by!/ the!/ total!/ expected!/ usage!/ of!/ the!/ cost!/ driver.!/ The!/ overhead!/ cost!/ for!/ each!/
activity!/ is!/ then!/ assigned!/ to!/ products!/ on!/ the!/ basis!/ of!/ each!/ product’s!/ use!/ of!/ the!/ cost!/
driver.