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