A+ ANSWERS
The cost principle is the basis for preparing financial statementsbecause it is __________.
A. the most accurate measure of purchasing power
B. relevant and objectively measured, and verifiable
C. an international accounting standard
D. a conservative value
2) The cost principle requires that when assets are acquired, theybe recorded at __________.
A. list price
B. exchange price paid
C. selling price
D. appraisal value
3) “Generally accepted” in the phrase generally accepted accountingprinciples means that the principles __________.
A. have been approved for use by the managements of businessfirms
B. have substantial authoritative support
C. have been approved by the Internal Revenue Service
D. are proven theories of accounting
5) In what situations will a static budget be most effective inevaluating a manager’s effectiveness?
A. The company has no fixed costs.
B. The company has substantial variable costs.
C. The planned activity levels match actual activitylevels.
D. The company has substantial fixed costs.
6) The major reporting standard for management accounts is__________.
A. generally accepted accounting principles
B. the Sarbanes-Oxley Act of 2002
C. relevance to decisions
D. the Standards of Ethical Conduct for Practitioners of ManagementAccounting and Financial Management
7) Multinational corporations __________.
A. are U.S. companies that trade their securities on the exchangesin other countries
B. are U.S. companies that sell goods and services in othercountries
C. are firms that conduct their operations in more than one countrythrough subsidiaries, divisions, or branches in foreigncountries
D. are required to use international accounting standards
8) What is value chain management best defined as?
A. All activities associated with providing a product orservice
B. The incremental value of costs associated with hiring a newproduction floor leader
C. A large chain that keeps the machines from falling on theproduction floor
D. Management decisions that affect how quickly the production runoccurs
9) Sam’s Used Cars uses the specific identification method ofcosting inventory. During March, Sam purchased three cars for$6,000, $7,500, and $9,750, respectively. During March, two carsare sold for $9,000 each. Sam determines that at March 31, the$9,750 car is still on hand. What is Sam’s gross profit forMarch?
A. $8,250
B. $750
C. $5,250
D. $4,500
10) Which one of the following items is not generally used inpreparing a statement of cash flows?
A. Additional information
B. Current income statement
C. Adjusted trial balance
D. Comparative balance sheets
11) H55 Company sells two products, beer and wine. Beer has a 10percent profit margin and wine has a 12 percent profit margin. Beerhas a 27 percent contribution margin and wine has a 25 percentcontribution margin. If other factors are equal, which productshould H55 push to customers?
A. It should sell an equal quantity of both
B. Selling either results in the same additional income for thecompany
C. Beer
D. Wine
12) What exists when budgeted costs exceed actual results?
A. An excess profit
B. An unfavorable difference
C. A budgeting error
D. A favorable difference
13) The standards and rules that are recognized as a general guidefor financial reporting are called __________.
A. standards of financial reporting
B. operating guidelines
C. generally accepted accounting standards
D. generally accepted accounting principles
14) Managerial accounting __________.
A. places emphasis on special-purpose information
B. pertains to the entity as a whole and is highlyaggregated
C. is concerned with costing products
D. is governed by generally accepted accounting principles
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