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acc349 final exams.doc

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1) The cost principle requires that when assets are acquired, they be recorded at
__________.
A. list price
B. selling price
C. exchange price paid
D. appraisal value
2) "Generally accepted" in the phrase generally accepted accounting principles
means that the principles __________.
A. have been approved for use by the managements of business firms
B. have been approved by the Internal Revenue Service
C. have substantial authoritative support
D. are proven theories of accounting
3) The standards and rules that are recognized as a general guide for financial
reporting are called __________.
A. standards of financial reporting
B. operating guidelines
C. generally accepted accounting principles
D. generally accepted accounting standards
4) Sam's Used Cars uses the specific identification method of costing inventory.
During March, Sam purchased three cars for $6,000, $7,500, and $9,750,
respectively. During March, two cars are 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 for March?
A. $8,250
B. $750
C. $4,500
D. $5,250
5) Hess, Inc. sells a single product with a contribution margin of $12 per unit and
fixed costs of $74,400 and sales for the current year of $100,000. How much is
Hess’s break even point?
A. 2,133 units
B. 6,200 units
C. $25,600
D. 4,600 units
6) As Plant Controller, you are trying to determine which costs over which you have
the most control on a day to day basis. Your goal is to achieve better profitability.
The Plant Operations Manager suggests that overhead is the easiest area to directly

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reduce costs. Which of the following items would be classified as manufacturing
overhead?
A. The western division’s vice president’s salary
B. Cost of landscaping the corporate office
C. General corporate liability insurance
D. Factory janitor
7) What is the preparation of reports for each level of responsibility in the
company’s organization chart called?
A. Master budgeting analysis
B. Exception reporting
C. Responsibility reporting
D. Static reporting
8) Disney’s variable costs are 30% of sales. The company is contemplating an
advertising campaign that will cost $22,000. If sales are expected to increase
$40,000, by how much will the company's net income increase?
A. $6,000
B. $12,000
C. $28,000
D. $18,000
9) The cost of an asset and its fair market value are __________.
A. never the same
B. irrelevant when the asset is used by the business in its operations
C. the same on the date of acquisition
D. the same when the asset is sold
10) Which one of the following is a product cost?
A. Indirect labor
B. Sales person’s salaries
C. Advertising costs
D. Office salaries
11) What exists when budgeted costs exceed actual results?
A. A budgeting error
B. An unfavorable difference
C. An excess profit
D. A favorable difference
12) The income statement and balance sheet columns of Pine Company's worksheet
reflects the following totals:
Income Statement Balance Sheet

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Dr. Cr. Dr. Cr.
Totals $58,000 $48,000 $34,000 $44,000
Closing entries are necessary for __________.
A. permanent accounts only
B. both permanent and temporary accounts
C. permanent or real accounts only
D. temporary accounts only
13) Managerial accounting __________.
A. is concerned with costing products
B. pertains to the entity as a whole and is highly aggregated
C. places emphasis on special-purpose information
D. is governed by generally accepted accounting principles
14) H55 Company sells two products, beer and wine. Beer has a 10 percent profit
margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution
margin and wine has a 25 percent contribution margin. If other factors are equal,
which product should H55 push to customers?
A. Beer
B. Selling either results in the same additional income for the company
C. It should sell an equal quantity of both
D. Wine
15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.
A. saver who demands money from the financial system
B. borrower who demands money from the financial system
C. borrower who supplies money to the financial system
D. saver who supplies money to the financial system
16) Maurice receives $100 as a birthday gift. In deciding how to spend the money,
he narrows his options down to four choices: Option A, Option B, Option C, and
Option D. Each option costs $100. Finally he decides on Option B. The opportunity
cost of this decision is __________.
A. the value to Maurice of the option he would have chosen had Option B not been
available
B. $100
C. $300
D. the value to Maurice of Options A, C and D combined
17) A production possibilities frontier will be a straight line if __________.
A. the economy is producing efficiently

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