D196 Principles of Financial and Managerial Accounting - Set 3 - Part 1

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: Which budget includes all manufacturing costs except direct materials and direct labor?

Sales budget

Direct materials budget

Manufacturing overhead budget

Production budget

Question 2: What account represents money that is owed by customers but not yet received?

Accounts payable

Equity

Accounts receivable

Retained earnings

Question 3: On which financial statement would you see the valuation of liabilities and assets?

Income statement

Statement of cash flows

Balance sheet

Statement of retained earnings

Question 4: What is the first step in the accounting cycle?

Summarize the effects of transactions

Prepare financial reports

Analyze transactions

Record the effects of transactions

Question 5: Which of the following is an example of an internal transaction?

Purchase of inventory

Sale of goods to customers

Paying a supplier

Depreciation of equipment

Question 6: Which financial statement shows how much cash a company generated and used during a specific period?

Income statement

Statement of cash flows

Balance sheet

Statement of retained earnings

Question 7: What organization is responsible for enforcing public company disclosure laws in the U.S.?

Financial Accounting Standards Board (FASB)

American Institute of CPAs (AICPA)

International Accounting Standards Board (IASB)

Securities and Exchange Commission (SEC)

Question 8: How does a classified balance sheet benefit decision-makers?

It distinguishes between current and long-term assets

It includes non-publicly disclosed data

It distinguishes liabilities from equity

It provides information for a specific period

Question 9: Which of the following is an example of a controllable cost?

Factory rent

Depreciation

Direct labor

Insurance premiums

Question 10: Which of the following is a direct product cost?

Office supplies

Rent expense

Raw materials

Administrative wages

Question 11: What is considered an indirect cost in manufacturing?

Wages of factory workers

Utilities for the factory

Cost of raw materials

Sales commissions

Question 12: If the selling price is $50 per unit and the variable cost is $30 per unit, what is the contribution margin ratio?

0.20

0.30

0.40

0.50

Question 13: Which of the following is a variable cost in production?

Rent

Factory supervisor’s salary

Utilities

Raw materials

Question 14: What is the total contribution margin if a company has sales of $500,000 and variable costs of $300,000?

$100,000

$200,000

$300,000

$500,000

Question 15: Which of the following statements is true about fixed costs?

Fixed costs vary with production volume

Fixed costs remain the same regardless of production volume

Fixed costs decrease with increased production

Fixed costs only apply to manufacturing companies

Question 16: Which financial statement includes details about a company’s operating, investing, and financing activities?

Balance sheet

Income statement

Statement of retained earnings

Statement of cash flows

Question 17: Which costing method is most appropriate for a custom furniture manufacturer?

Job order costing

Process costing

Activity-based costing

Standard costing

Question 18: What is the variable cost ratio if the variable cost per unit is $25 and the sales price per unit is $50?

0.30

0.50

0.60

0.70

Question 19: Which of the following is included in manufacturing overhead?

Raw materials

Direct labor

Factory rent

Sales commissions

Question 20: What is the purpose of the predetermined overhead rate?

To estimate direct labor costs

To allocate overhead costs to products

To calculate total sales revenue

To determine fixed costs

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