Session:2 Building Blocks of Managerial Accounting
Multiple Choice
Principles of Accounting, Volume 2: Managerial Accounting | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-managerial-accounting
2. LO 2.1Which of the following is the primary source of revenue for a merchandising business?
- the production of products from raw materials
- the purchase and resale of finished products
- the provision of intangible goods and services
- the sale of raw materials to manufacturing firms
4. LO 2.1Which of the following represents the components of the income statement for a service business?
- Sales Revenue – Cost of Goods Sold = gross profit
- Service Revenue – Operating Expenses = operating income
- Sales Revenue – Cost of Goods Manufactured = gross profit
- Service Revenue – Cost of Goods Purchased = gross profit
5. LO 2.1Which of the following represents the components of the income statement for a manufacturing business?
- Sales Revenue – Cost of Goods Sold = gross profit
- Service Revenue – Operating Expenses = gross profit
- Service Revenue – Cost of Goods Manufactured = gross profit
- Sales Revenue – Cost of Goods Manufactured = gross profit
6. LO 2.1Which of the following represents the components of the income statement for a merchandising business?
- Sales Revenue – Cost of Goods Sold = gross profit
- Service Revenue – Operating Expenses = gross profit
- Sales Revenue – Cost of Goods Manufactured = gross profit
- Service Revenue – Cost of Goods Purchased = gross profit
8. LO 2.2Which of the following is not considered a product cost?
- direct materials
- direct labor
- indirect materials
- selling expense
10. LO 2.2Variable costs are expenses that ________.
- remain constant on a per-unit basis but change in total based on activity level
- remain constant on a per-unit basis and remain constant in total regardless of activity level
- decrease on a per-unit basis as activity level increases
- remain constant in total regardless of activity level within a relevant range
12. LO 2.2Which of the following would not be classified as manufacturing overhead?
- indirect materials
- indirect labor
- direct labor
- property taxes on factory
14. LO 2.2Which of the following statements is true regarding average fixed costs?
- Average fixed costs per unit remain fixed regardless of level of activity.
- Average fixed costs per unit rise as the level of activity rises.
- Average fixed costs per unit fall as the level of activity rises.
- Average fixed costs per unit cannot be determined.
16. LO 2.3Which of the following methods of cost estimation relies on only two data points?
- the high-low method
- account analysis
- least-squares regression
- SWOT analysis.
18. LO 2.3A scatter graph is used to test the assumption that the relationship between cost and activity level is ________.
- curvilinear
- cyclical
- unpredictable
- linear