ACCT 211 LIBERTY UNIVERSITY CHAPTER 1
TO 3 PRACTICE TEST BANK 2026 TESTED
QUESTIONS WITH ANSWERS GRADED A+
⩥ Why is this assumption important? Answer: allows costs to be
projected
⩥ How big or small is the relevant range? Answer: range of activity that
allows the relevant costs to be approximately linear
⩥ Six Principles of Internal Control Answer: Assignment of
responsibility
Segregation of duties
Documentation
Physical controls
Independent verification
Selection of people
⩥ FOB Answer: "Free on Board" (maritime reference)
point at which title transfers: FOB Plant, FOB destination
not to be confused with who ultimately pays the shipping cost
,⩥ Freight In Answer: part of inventory which is a current asset on B/S
cost of getting materials to the plant or warehouse
⩥ Freight Out Answer: part of SG&A - sales/marketing expense of
getting product to the customer; deduction from gross profit on I/S
⩥ Tax Expense Answer: - expense to company
-appears on income statement
- examples: income tax, employer payroll taxes, sales tax paid by
company on its purchases
⩥ Tax Pass Through Answer: - taxes collected on behalf of a
governmental entity and passed through to the entity
- neither a revenue nor an expense
- may appear on balance sheet as liability if not yet paid
-examples: sales taxes, excise taxes, employee payroll taxes
⩥ Product cost Answer: cost held in inventory (current asset on B/S)
until sold
⩥ Period cost Answer: expense in period on the income statement
⩥ Manufacturing Costs Answer: Direct Material, Direct Labor,
Overhead
, ⩥ Inventory accounts Answer: Raw Materials, WIP (Work in Process),
Finished Goods
⩥ Job cost vs process costing Answer: trace to specific job/product vs
average over a batch
⩥ Direct Answer: directly traceable & easily measured
⩥ Indirect Answer: not directly traceable or not easily measured
⩥ Manufacturing Overhead Answer: all indirect costs
⩥ Three cost elements (of any cost whether manufacturing or not)
Answer: Direct Materials
Direct Labor
Overhead
⩥ Cost of Goods Sold Answer: Definition: cost of what is not there
Formula: beginning inventory plus net purchases minus ending
inventory
TO 3 PRACTICE TEST BANK 2026 TESTED
QUESTIONS WITH ANSWERS GRADED A+
⩥ Why is this assumption important? Answer: allows costs to be
projected
⩥ How big or small is the relevant range? Answer: range of activity that
allows the relevant costs to be approximately linear
⩥ Six Principles of Internal Control Answer: Assignment of
responsibility
Segregation of duties
Documentation
Physical controls
Independent verification
Selection of people
⩥ FOB Answer: "Free on Board" (maritime reference)
point at which title transfers: FOB Plant, FOB destination
not to be confused with who ultimately pays the shipping cost
,⩥ Freight In Answer: part of inventory which is a current asset on B/S
cost of getting materials to the plant or warehouse
⩥ Freight Out Answer: part of SG&A - sales/marketing expense of
getting product to the customer; deduction from gross profit on I/S
⩥ Tax Expense Answer: - expense to company
-appears on income statement
- examples: income tax, employer payroll taxes, sales tax paid by
company on its purchases
⩥ Tax Pass Through Answer: - taxes collected on behalf of a
governmental entity and passed through to the entity
- neither a revenue nor an expense
- may appear on balance sheet as liability if not yet paid
-examples: sales taxes, excise taxes, employee payroll taxes
⩥ Product cost Answer: cost held in inventory (current asset on B/S)
until sold
⩥ Period cost Answer: expense in period on the income statement
⩥ Manufacturing Costs Answer: Direct Material, Direct Labor,
Overhead
, ⩥ Inventory accounts Answer: Raw Materials, WIP (Work in Process),
Finished Goods
⩥ Job cost vs process costing Answer: trace to specific job/product vs
average over a batch
⩥ Direct Answer: directly traceable & easily measured
⩥ Indirect Answer: not directly traceable or not easily measured
⩥ Manufacturing Overhead Answer: all indirect costs
⩥ Three cost elements (of any cost whether manufacturing or not)
Answer: Direct Materials
Direct Labor
Overhead
⩥ Cost of Goods Sold Answer: Definition: cost of what is not there
Formula: beginning inventory plus net purchases minus ending
inventory
