Accounting For Managers and Micro Economics

1) Which of the following is a characteristic of management accounting?
It must follow generally accepted accounting principles.
It is used primarily by internal users.
It is concerned primarily with reporting past performance.
It uses historical costs as the sole measurement unit.

2) An example of a period cost is:
advertising costs.
indirect materials.
product design costs.
direct materials.

3) Which of the following is not an objective of product costing systems?
To provide information for cost planning
To assist in the preparation of the income statement
To determine the optimal amount of products to manufacture
To provide information for product pricing

4) Which of the following entities probably would use a process costing system?
An oil refinery
A yacht builder
A custom furniture company
A custom screw manufacturer

5) Activity-based management includes all of the following except identifying:
customer satisfaction with a product or service.
the resources that are consumed by each activity.
activities as value-adding.
how resources are consumed by each activity.

6) An insurance company pays its employees a commission of 6 percent on each sale. What is the proper classification of the cost of sales commissions?
Constant cost
Variable cost
Mixed cost
Fixed cost

7) Which type of budgeting utilizes employees at all levels of the company?
Group budgeting
Selective budgeting
Target budgeting
Participative budgeting

8) Standard costs are useful for all but which of the following?
Determining actual costs
Preparing budgets and forecasts
Evaluating the performance of workers and management
Helping to develop appropriate selling prices

9) An example of a pricing objective is to:
ignore long-term pricing strategies in favor of short-term profits.
increase market share irrespective of the cost of a product.
maintain a price that is always under that of the competition.
maintain a minimum rate of return.

10) The overall objective of controlling the costs of quality is to eliminate:
appraisal costs.
costs of nonconformance.
costs of conformance.
the costs of quality.

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1) There is a negative relationship between two variables if:
they move in opposite directions.
they move in the same direction.
one variable changes and the other does not.
neither variable moves.

2) A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50 percent. Which of the following is the most likely explanation of this finding?
The principle of opportunity cost
The principle of diminishing returns
The marginal principle
The spillover principle

3) The price of iPhones has fallen dramatically. Which of the following is likely to happen?
The quantity of iPhones supplied will decrease.
The quantity of iPhones supplied will increase.
The supply of iPhones will decrease.
The supply of iPhones will increase.

4) If the demand for school ball caps is inelastic, an increase in price will result in:
a decrease in profits.
an increase in total revenue.
a decrease in total revenue.
an increase in the quantity demanded.

5) An electrician licensing program in the state of North Carolina requires each electrician to obtain a license and renew it each year. Which of the following is a result of having the licensing program in North Carolina?
A decrease in total surplus
Excess demand for electrical service
An increase in the quality of electrician
All of the above are a result of the licensing program.

6) The self-interest theory of government was suggested by:
James Buchanan.
Charles M. Tiebout.
bureaucrats.
the European Union.

7) Suppose that the only input used in the generation of solar energy is sunlight, which has a zero cost. The average total cost of producing electricity is:
zero.
equal to the marginal cost.
equal to the average fixed cost.
immeasurably high.

8) When a firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is __________ and the firm is experiencing __________ .
horizontal; constant returns to scale
downward sloping; constant returns to scale
upward sloping; diseconomies of scale
downward sloping; economies of scale

9) Limit pricing occurs when a firm sets price:
equal to marginal cost.
equal to average cost.
at different amounts for different groups of consumers.
so low that other firms are prevented from entering the market.

10) Which of the following statements about featherbedding is correct?
It could increase production costs, resulting in higher prices for products.
The quantity of labor demanded by firms could actually decrease.
It could lead to a lower wage and smaller employment in the long run.
All of the above.

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A covering memorandum should be attached to formal reports that are sent to

1. A covering memorandum should be attached to formal reports
that are sent to
A. customers.
B. the federal government.
C. shareholders.
D. someone within the company.
2. One advantage of topic outlines is that they provide
A. topic sentences for your paragraphs.
B. new ideas for your outline.
C. internal headings for your document.
D. more precise ideas.
4. Business and technical writers use abbreviations for
A. days of the week and months of the year.
B. the title of a person if it appears before the person’s name.
C. any sign and symbol used in the body of a report.
D. technical words used only occasionally in a report.
5. Reports that are very large in both size and scope usually take the form of a/an
A. formal report. C. interoffice memorandum.
B. letter. D. feasibility report.
6. Unlike memos, letters include
A. a signature above the sender’s typewritten name.
B. a general subject line.
C. indented paragraphs.
D. the sender’s name in the heading.
7. Among the various kinds of visual aids, tables are
A. the most difficult to construct.
B. the most common aid used in reports.
C. helpful for showing the relationships between two sets of data.
D. generally used to show trends in business performance.
8. When documenting your research, you should cite the sources for everything except
A. paraphrased material. C. common knowledge.
B. surveys and interviews. D. statistics from a reference book.
9. Which one of the following sentences contains a misplaced or dangling modifier?
A. Assemble the product in a well-lighted place.
B. With three children, a job, and school, my wife has little spare time.
C. When prepared correctly, the garden spot should need no further fertilizing.
D. Walking down Main Street, the cramp in my foot got worse.
10. Progress reports usually report on work that is
A. about to begin but not yet started.
B. currently being done but not yet completed.
C. finished and completed in the previous year.
D. recently finished and completed.
11. Technical instructions are almost always written for
A. technicians and line workers.
B. middle managers and supervisors.
C. people who purchase the machinery.
D. people who need to evaluate the machinery’s efficiency.
12. Jargon, or specialized words, should be used only when you
A. don’t know who your reader is. C. are writing for your CEO.
B. are writing to someone familiar with it. D. have a dictionary nearby.
3. The following four statements tell something about written
descriptions. Which one of the statements is incorrect?
A. There is a complete paragraph for each part listed in
the introduction.
B. The paragraphs in the body describe each part in greater
detail than the introduction.
C. One paragraph describes several different parts.
D. Transitional clues such as first and next guide the reader
13. Which one of the following items is included in almost all types of informal reports?
A. Final recommendations C. Summary of work completed
B. Description of the investigation D. Statement of the problem
14. A summary or abstract enables your readers to
A. get a quick overview of your report.
B. test the accuracy of your findings.
C. assess the cost effectiveness of your recommendations.
D. test your writing ability.
15. What is the main advantage of sentence outlines?
A. They are easier to write than topic outlines.
B. They supply you with internal headings.
C. They can be used in your table of contents.
D. They supply you with topic sentences for your paragraphs.
16. The table of contents in a formal report is composed of
A. first-level headings only.
B. those headings you deem most useful.
C. all internal headings.
D. whatever information you think is important.
17. The main difference between technical descriptions and literary descriptions is that
technical descriptions lack
A. details. C. irrelevant information.
B. emotional appeal. D. interest.
18. The major information sources you use in a report may include any of the following except
A. tests and experiments you’ve performed.
B. published material you’ve consulted.
C. your own personal experiences and observations.
D. the opinions of your coworkers.
19. Status reports are distinguished from progress reports primarily by their focus on the
A. absenteeism of personnel. C. solution to a problem.
B. description of an investigation. D. present conditions.
20. Unlike most reports, informal and formal proposals must
A. be logical.
B. clearly organize all information.
C. persuade readers toward the writer’s point of view.
D. present a solution to a problem.
21. Which one of the following statements shows appropriate netiquette?
A. “THE SHIPMENT ARRIVED FOUR DAYS AFTER THE REQUESTED DATE.”
B. “Don’t know when you’ll get around to this since you never seem to be in the office.”
C. Including a specific subject line
D. Sending an e-mail of five monitor screens
22. Suppose you’re writing a description of an object or a process. How many pararaphs
should you include in your introduction?
A. One C. Three
B. Two D. As many as you choose
23. To make your writing concrete and specific, you should use
A. words that encompass many meanings.
B. facts and figures wherever possible.
C. words that are emotional and therefore “real.”
D. as few words as possible.
24. When you’re writing instructions, it’s almost always helpful to
A. include a table of contents.
B. include an illustration.
C. explain why one method is better than another one.
D. show how much time and money the process will save the company.
25. When writing a technical article, it’s usually best to pick a topic that is
A. profitable. C. interesting to you.
B. appealing to firms who may hire you. D. minimally time consuming.
26. When composing technical or procedural manuals, always use
A. medium-sized sentences and paragraphs.
B. medium-sized sentences and short paragraphs.
C. sentences and paragraphs whose sizes vary for interest and readability.
D. consistently short sentences and paragraphs.
27. An effectively written sentence usually
A. starts with it is or there are to keep the beginnings similar.
B. includes passive construction that makes sentences direct.
C. ends with a direct object to provide readers with closure.
D. uses active voice with a clear subject and verb.
28. The best way to ensure that you use words correctly is to
A. use only simple words that you understand completely.
B. look up unfamiliar or difficult words every time you’re in doubt.
C. invest in a pocket dictionary.
D. hire a secretary.
29. In a paragraph, where does the controlling idea usually appear?
A. In the first sentence C. In the middle of the paragraph
B. In the second sentence D. In the last sentence
30. What can you do to increase the chances your technical article will be considered for publication?
A. Include in your cover letter how much time it took you to write the article.
B. Offer the editor a commentary on what you found helpful in the publication.
C. Include borders and artwork on your manuscript.
D. Review recent issues of the publication.

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In 2012, Gurney Construction Company agreed to construct an apartment building at a price

E18-15 (Recognition of Profit, Percentage-of-Completion) 

In 2012, Gurney Construction Company agreed to construct an apartment building at a price of $1,200,000. The information relating to the costs and billings for this contract is shown below. Balance Sheet Accounts receivable—construction contract billings $18,000 Construction in process $65,000 Less: Contract billings 61,500 Cost of uncompleted contract in excess of billings 3,500 Income Statement Income (before tax) on the contract recognized in 2012 $19,500 2012 2013 2014 Costs incurred to date $280,000 $600,000 $ 785,000 Estimated costs yet to be incurred 520,000 200,000 –0– Customer billings to date 150,000 500,000 1,200,000 Collection of billings to date 120,000 320,000 940,000 

Instructions (a) Assuming that the percentage-of-completion method is used, (1) compute the amount of gross profit to be recognized in 2012 and 2013, and (2) prepare journal entries for 2013. (b) For 2013, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.


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ACC340 R4 ACCOUNTING INFORMATION SYSTEMS I FINAL EXAM

1.) Which of the following is true?
a) An AIS must be computerized to be useful
b) An AIS always produces useful information
c) An AIS always produces financial information
d) none of these

2.) Which of the following is true about the terms “data” and “information” within the context of Chapter 1?
a) The terms are exactly the same
b) The terms are always exact opposites
c) Some “data” can also be “information”
d) none of these

3.) Most AISs perform all of these functions except:
a) Collect raw accounting data
b) Store accounting data for future uses
c) Process data into useful information
d) AISs perform all of these functions

4.) Which of the following is one of the five interacting components of an accounting information system?
a) Fuzzy logic
b) Testing
c) Certification
d) Procedures
e) Internet

5.) A computer network spanning regional, national, or global areas best describes which of the following?
a) LAN
b) WAN
c) ESPN
d) DSL
e) ISDN


6.). Documentation includes:
a) All flowcharts, narratives, and other written communications associated with the information system
b) All written communications associated with an accounting information system except flowcharts and data flow diagrams
c) All flowcharts, narratives, and other written communications associated with an accounting information system, except for program flowcharts, decision tables, and pseudocode
d) Flowcharts and data flow diagrams only

7.) A system flowchart is a block diagram that:
a) Is used only by auditors
b) Is used primarily when document flowcharts cannot be used
c) Depicts the flow of computer systems in an organization
d) Depicts the flow of data through a computerized accounting information system

8.) The financial accounting cycle ends with:
a) The production of financial statements
b) Closing journal entries
c) The production of an adjusted trial balance
d) Development of cash forecasts

9.). Which of the following is not usually a design consideration in coding systems?
a) Consistency
b) Standardization
c) Government regulation
d.) Plans for future expansion

10.) The primary objective of a manufacturing organization’s production process is to:
a) Maintain inventories at a zero level
b) Convert raw materials into finished goods as efficiently as possible
c) Make sure that there are no product defects
d) Maintain the documentation and report on an organization’s manufacturing process

11.) Which of the following is not a concern of the financing process?
a) Effective cash management
b) Optimizing an organization’s cost of capital
c) Minimizing an organization’s borrowings
d) Projecting cash flows

12.) Business process reengineering efforts sometimes fail because:
a) Management gets too involved in the process
b) Management is too optimistic regarding its expectations from its implementation
c) Management support can never overcome employee resistance
d) Employees will never accept change

13.) Resource Management Process includes which of the following?
a) Human resource management and fixed asset management
b) Human resource management, inventory management, and fixed asset management
c) Human resource management only
d) Personnel management, payroll management, and fixed asset management


14.) All of these are reasons why we think that computer crime is rising except:
a) Some Internet web sites now instruct users how to perform certain types of computer abuse
b) More people now know how to use computers
c) Computer usage continues to grow
d) all of these are reasons

15.) Thwarting computer abuse can be enhanced by all of the following except:
a) Enlisting top-management support
b) Increasing employee awareness
c) Allowing only 10% of employees access to computers
d) Identifying computer criminals

16.) Three objectives of a company’s internal control system should be safeguarding assets, checking the accuracy and reliability of accounting data, and promoting operational efficiency. A fourth objective of a company’s internal control system should be:
a) Preventing embezzlement of assets
b) Encouraging adherence to prescribed managerial policies
c) Avoiding the payment of overtime to company employees
d) Revising standards for production costs on a weekly basis

17.) The control environment is a component of a company’s internal control system that:
a) Influences the control awareness of a company’s employees
b) Stresses the development of control procedures in a company
c) Directly affects the accuracy and reliability of a company’s accounting data
d) Can be ignored when establishing a company’s internal control system

18.) The principal function of an accounting system's computerized controls is:
a) Detecting computer frauds
b) Preventing computer frauds
c) Encouraging programmer honesty
d) none of the above

19.) When a company is setting up its accounting information system, it is important for management to select:
a) A standard set of computer control mechanisms
b) Only those controls which appear to serve its needs
c) Controls whose benefits exceed their costs
d) b and c only

20.) The four phases of the systems development life cycle end with this phase:
a) Analysis
b) Design
c) Implementation, follow-up, and maintenance
d) Development

21.) According to the chapter, which of these comes closest in meaning to the term “systems approach?”
a) Narrow point of view
b) Broad point of view
c) Focus on achieving those goals important to computerized systems
d) Focus first and foremost on computerization

22.) The primary purpose of an internal audit is:
a) To verify the accuracy of a firm’s financial statements
b) To punish employees for inefficient performance
c) To meet the requirements of the accounting profession
d) To ascertain employee adherence to organizational policies and procedures

23.)   A computerized AIS is harder to audit than a manual system for all of the following reasons except:
a)   The file information is not human readable
b) The volume of transaction records and master file records is usually much larger in computerized systems than in manual systems
c) An audit trail does not exist in a computerized AIS
d) Computerized systems often use remote real-time data processing, thus complicating the tracing of transaction records to their sources

24.) An advantage of an extranet is that:
It can disseminate information corporate-wide
It can be accessed by selected trading partners
Users can employ common web browsers to access information in them
all of the above

25.)  Those companies which prefer VANs to the Internet for implementing EDI do so for what main reason?
a) Cost - VANs are cheaper than the Internet
b) Speed - VANs are faster than the Internet
c) Security - VANs are thought to be more secure
d) Convenience - VANs are everywhere

26.)  In the REA framework, which of these would be recorded as an “event?”
a) Hiring a new president of the company
b) Taking an initial sales order from a customer
c) Buying a piece of equipment for cash
d) all of these would be recorded as events

27.)  In the REA framework, an account receivable would be classified as a(n):
a) Asset
b) Event
c) Resource
d) none of these

28.)  In the context of databases, the term data redundancy refers to:
a) Storing the same information in several records
b) Repeating data on multiple reports
c) Using foreign keys which duplicate the values of primary keys
d.)  all of these are possible examples of data redundancy

29.)  A disadvantage of database management systems is that:
a) They are not flexible
b) They cannot be implemented on microcomputers
c) They rarely support file inquiries
d) They are often machine dependent (e.g., not all DBMSs can run on all types of computers)

30.) The purpose of an input mask is to:
a) Disguise data when it is first input into a database
b) Transform data from alphabetic to numeric formats
c) Help users avoid data input errors
d) Hide sensitive data such as passwords onscreen

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