Final

Question 1

Assessment of the amounts, timing, and certainty of future cash flows best accomplished by

Answer 1

Statement of Cash Flows

Question 2

Short-term obligations expected to be refinanced should be reported as current liabilities unless the entity both plans to refinance and has the ability to refinance the debt

Answer 2

Long- term basis

Question 3

When the ending inventory of raw materials for the current year is understated, raw materials used, cost of goods produced, and cost of goods sold will be

Answer 3

Overstated

Question 4

Interest is_____ for assets constructed or produced for the entity’s own use, assets intended for sale/lease that are constructed as discrete projects, and certain equity-based investments.

Answer 4

Capitalized

Question 5

A long-lived asset is tested for recoverability whenever

Answer 5

events or changes in circumstances indicate that the carrying amount may not be recoverable (carrying amount exceeds the sum of undiscounted cash flows expected from use and disposition of the asset).

Question 6

_____ is not recorded as a long-term liability on the balance sheet, thus _____ result in off-balance-sheet financing

Answer 6

Operating Leases

Question 7

10. Advertising expense estimated for introduction of a new product is a _____ cost, which is a fixed cost not necessary to operate in the current period, with no clearly measurable relationship between costs and output

Answer 7

Discretionary

Question 8

______ costing treats fixed factory overhead as product cost, so inventory and COGS include fixed factory overhead

Answer 8

Full absorption

Question 9

______ costing is concerned with accumulating costs by specific job, appropriate when producing products when identifiable groupings are possible, such as custom-made for specific customers

Answer 9

Job-order

Question 10

An appropriate cost driver for the indirect costs of a distribution function would be _____ since a cause-and-effect relationship may exist between distribution costs and number of shipments.

Answer 10

Number of shipments

Question 11

______costing assumes the market price is given. Market price – target profit margin = long-term target cost

Answer 11

Target

Question 12

______ costing treats direct manufacturing costs and manufacturing overhead costs (variable and fixed) as inventoriable costs

Answer 12

Absorption

Question 13

In joint-product costing and analysis, ______ is relevant in deciding the point at which a product should be sold, since joint cost cannot be identified with a particular joint product and are thus irrelevant

Answer 13

separable cost after the split-off point

Question 14

The most realistic overhead application rate reflecting a manufacturing capacity focus will be based on _____

Answer 14

Practical capacity

Question 15

Some forms of internal control are properly eliminated when JIT systems are employed: for example, receiving departments are often eliminated, which ________ This is an _____ action, however, since it does not degrade the company’s system of internal controls

Answer 15

eliminates the need for hard copies of receiving reports, acceptable

Question 16

20. Outsourcing activities that can be performed more efficiently and at lower cost by outside providers can result in competitive advantage to a firm, because it allows the firm to concentrate its efforts on its ______

Answer 16

core competencies

Question 17

Theory of Constraints employs throughput costing, in which all costs are considered fixed in the short run, ______ which is the only cost considered to be variable in the short run

Answer 17

except for direct materials

Question 18

_______ is used to find an equation for the linear relationship among variables, and is often used to _______

Answer 18

Regression analysis, estimate a dependent variable when there is a known independent variable

Question 19

______reflect the increased rate at which people perform tasks as they gain experience, and assumes that as experience is gained, the time required per unit will decrease by a constant percentage rate

Answer 19

Learning curves

Question 20

The _____of an action is determined by multiplying the probability of each possible outcome by its payoff and summing the products, and is thus determined by the _____

Answer 20

expected value, weighted average of probable outcomes

Question 21

Because the ____ for a company lays out the means by which the firm expects to fulfill its stated mission, no specific operational budgeting can begin until the strategic plan is completed. It has to be the ____ task in budgeting and planning

Answer 21

strategic plan, first

Question 22

_____ are often determined by _____, are usually set for ___ year, and are often applied during the manufacturing process as if they were actual costs. They can be used at the ____ or any level of aggregation above, and although they are not the same as budgeted costs, they express what the company considers a benchmark for costs

Answer 22

Standard costs, time and motion studies, one, unit level

Question 23

The _____ is calculated based on ______. The production budget is used to prepare materials purchases, direct labor and factory overhead budgets

Answer 23

production budget, sales forecasts adjusted by beginning and ending inventory requirements

Question 24

28. Variance analysis examines the deviation of actual results from expected results. Because variances may comprise a variety of “sub-variances”, the astute analyst will investigate all significant variances, whether favorable or unfavorable, to determine the core condition causing the variance

Answer 24

Unfavorable is not considered

Question 25

A _____ allows adjustment of the budget to the actual (multiple) level of activity before comparing the budgeted activity with actual results. A _____ provides costs for only one level of activity

Answer 25

flexible budget, static budget

Question 26

A _____indicates less than standard price paid for materials. An _____ indicates an excessive quantity of materials was used. When these two variances exist, the most likely cause is _____.

Answer 26

favorable materials price variance, unfavorable materials usage variance, purchase of inferior materials

Question 27

Under FIFO, the most ______ purchases are used

Answer 27

recent

Question 28

Under LIFO, the _____purchases are used

Answer 28

oldest

Question 29

Under weighted average, the ____cost will be used

Answer 29

continuous average