Deck 26: Accounting for Manufacturing Activities

Question 1

The raw materials inventory,the work in process inventory,and the finished goods inventory are all shown in the Current Assets section of the balance sheet.

Answer 1

True

Question 2

Raw materials and work in process are costs incurred while manufacturing a product and are considered period expenses and thus appear on the income statement.

Answer 2

False

Question 3

The Cost of Goods Sold section of the income statement for a manufacturing business shows the work in process inventory.

Answer 3

False

Question 4

Total manufacturing cost is the sum of direct materials used,direct labor incurred plus manufacturing overhead.

Question 5

If the ending finished goods inventory is greater than the beginning finished goods inventory,the cost of goods sold will be higher than the cost of goods manufactured.

Question 6

The balance sheet of a manufacturing firm will include Raw Materials,Work in Process,Manufacturing Overhead and Finished Goods inventory accounts.

Question 7

The Cost of Goods Manufactured represents the cost of completed units that are transferred into Finished Goods and made available for sale.

Question 8

The beginning and ending balances of the finished goods inventory are not used in the computation of cost of goods manufactured.

Question 9

Gross profit for a manufacturing business is computed by deducting cost of goods manufactured from net sales.

Question 10

The total component costs of a manufactured item include direct materials,direct labor and manufacturing overhead.

Question 11

A statement of cost of goods manufactured supports the income statement.

Question 12

Raw Materials Used is not an element of manufacturing overhead.

Question 13

Products that are only partially completed are called work in process.

Question 14

Factory-related costs that cannot be cost-effectively traced to a product,like direct material or direct labor,are considered manufacturing overhead.

Question 15

Raw materials purchased during the month were $66,000.During that same period,$95,000 was used and ending inventory was $35,000.The beginning raw material inventory must have been $60,000.

Question 16

The adjusting entry to close out the beginning work in process inventory includes a debit to Income Summary and a credit to Work in Process Inventory.

Question 17

Amounts paid to factory repair and maintenance employees are considered direct labor.

Question 18

The beginning inventory of raw materials is shown in the Income Statement Credit column and the Balance Sheet Debit column of a worksheet for a manufacturing business.

Question 19

Cleaning materials and lubricants used in factory operations and maintenance are considered manufacturing overhead.

Question 20

Total manufacturing cost is the sum of beginning work in process,direct materials used,direct labor incurred plus manufacturing overhead.

Question 21

In a manufacturing company,it is not necessary to take a physical inventory of the finished goods.

Question 22

The manufacturing summary account is a temporary account used to close out manufacturing costs before transferring the balance to Finished Goods.

Question 23

Reversing entries help save time and prevent errors in the period being closed.

Question 24

The salary paid to a factory supervisor would be classified as ____________________ labor.

Question 25

Information about depreciation,insurance,and property taxes for the factory building of a manufacturing business would be shown in the Operating Expenses section of the income statement.

Question 26

All of the items that are purchased for manufacturing operations,that go into a product and become part of it,are called ____________________ materials.

Question 27

For a manufacturing business,net sales minus cost of goods ____________________ equals gross profit on sales.

Question 28

As part of the adjusting entries,the beginning inventory of work in process is closed into the ____________________ Summary account.

Question 29

The cost of goods sold will often differ from the cost of goods manufactured because of changes in the level of finished goods.

Question 30

The balance of the manufacturing summary account is closed to Income Summary.

Question 31

To compute the cost of goods ___________________,it is necessary to subtract the ending work in process inventory from the sum of the beginning work in process inventory and the total manufacturing cost.

Question 32

Finished goods inventory is used in the computation of cost of goods ___________________.

Question 33

All manufacturing costs except those for direct labor and direct materials are included in manufacturing ___________________.

Question 34

An adjusting entry to accrue salaries and wage expenses incurred,but not yet recorded is required prior to closing out a reporting period.

Question 35

The balance of the Manufacturing Summary account is closed into the Income Summary account.

Question 36

Immediately before it is closed,the balance of the Manufacturing Summary account represents the cost of goods manufactured.

Question 37

Six adjusting entries are made for inventory accounts in a manufacturing operation.

Question 38

If there are no errors,the amount needed to balance the Cost of Goods Manufactured columns of a worksheet will also be the amount required to balance the Balance Sheet columns.

Question 39

The amounts of the raw materials used,direct labor,and manufacturing overhead for a fiscal period are reported on the statement of cost of goods manufactured.

Question 40

The cost of indirect materials and supplies used in manufacturing operations would be included in the computation of total manufacturing costs as ________________________.

Question 41

The manufacturing costs incurred during the year are

A) shown by the expense accounts such as Wages Expense and Utilities Expense that are listed in the Operating Expenses section of the income statement.
B) shown as Direct Labor,Raw Materials,and Manufacturing Overhead in the Operating Expenses section of the income statement.
C) used in the computation of cost of goods manufactured.
D) shown in the Cost of Goods Sold section of the income statement.

Question 42

Gross profit for a manufacturing business is computed by

A) deducting cost of goods sold from net sales.
B) deducting cost of goods manufactured from net sales.
C) deducting the ending finished goods inventory from the total goods available for sale.
D) deducting operating expenses from the costs of goods sold.

Question 43

Closing entries for a manufacturing firm include all of the following except

A) transferring all manufacturing cost accounts to Manufacturing Summary.
B) transferring all Revenue and Expense account balances to Income Summary.
C) closing Manufacturing Summary to Income Summary.
D) closing Income Summary to Net Income.

Question 44

Indirect labor for a manufacturing business includes the wages of

A) factory repair and maintenance employees.
B) employees who assemble the product.
C) employees who sell the product.
D) office employees.

Question 45

Under the perpetual inventory method,additions and deletions are recorded as they occur to which of the following?

A) Finished Goods
B) Work in Process
C) Materials
D) All of these

Question 46

The end-of-period adjusting entries are

A) recorded and posted in the ledger.
B) recorded in the journal and posted in the ledger.
C) recorded in the ledger and posted in the journal.
D) recorded and posted in the journal.

Question 47

Once the financial statements have been prepared,the steps in the accounting cycle are complete.Which of the following is NOT one of the steps in the accounting cycle?

A) Adjusting entries
B) Closing Trial Balance
C) Post Closing Trial Balance
D) Closing entries

Question 48

Organizations that utilize the perpetual inventory method record additions and deletions

A) daily.
B) monthly.
C) quarterly.
D) yearly.

Question 49

Wages paid to the factory maintenance and repair personnel of a manufacturing business are shown

A) in the Operating Expenses section of the income statement.
B) as Direct Labor on the statement of cost goods manufactured.
C) as part of Manufacturing Overhead on the statement cost of goods manufactured.
D) as a part of the Cost of Goods Sold section of the income statement.

Question 50

The Manufacturing Summary account is closed into the ____________________ account.

Question 51

The beginning and ending ____________________ inventories appear in the Cost of Goods Sold section of the income statement of a manufacturing business.

Question 52

The cost of goods manufactured is computed by

A) adding raw materials used and direct labor to manufacturing overhead.
B) deducting the ending work in process inventory from the sum of the total manufacturing cost and the beginning work in process inventory.
C) deducting the ending finished goods inventory from the beginning finished goods inventory.
D) adding operating expenses to direct labor costs.

Question 53

The entry to close the Manufacturing Summary account includes a(n)____________________ to Manufacturing Summary.

Question 54

On a worksheet for a manufacturing business,the beginning inventory of finished goods is extended to the ____________________ Debit column.

Question 55

Which of the following is NOT an adjusting entry?

A)

B)

C)

D)

Question 56

As part of the adjusting entries,the beginning inventory of finished goods is closed into the ____________________ Summary account.

Question 57

Benefits of maintaining inventory records on a perpetual basis include all of the following except:

A) provides improved cost control.
B) easier to identify potential shortages.
C) avoid annual physical counts.
D) improved customer experiences.

Question 58

The Balance Sheet of a manufacturing firm will include which account that will not be included in the Balance Sheet of a service firm?

A) Purchases
B) Accounts Payable
C) Prepaid Wages
D) Work in Process Inventory

Question 59

The raw materials inventory is shown in the ____________________ section of the balance sheet of a manufacturing business.

Question 60

The ending inventory of raw materials is shown on the worksheet of a manufacturing business in the Cost of Goods Manufactured ____________________ column.

Question 61

The following information appears on the Statement of Cost of Goods Manufactured for the Coleman Company at the end of the year. The cost for Direct Labor was:

A) $40,000.
B) $60,000.
C) $110,000.
D) $120,000.

Question 62

The three components of total manufacturing cost are

A) cost of goods manufactured,cost of goods sold,and work in process.
B) raw materials used,direct labor,and manufacturing overhead.
C) selling expenses,administrative expenses,and manufacturing overhead.
D) raw materials used,direct labor,and cost of goods sold.

Question 63

Compute cost of goods manufactured from the information given:

A) $13,400.
B) $11,500.
C) $19,900.
D) $18,000.

Question 64

Reversing entries are required by

A) the Internal Revenue Service.
B) Generally Accepted Accounting Principles.
C) the International Accounting Standards Board.
D) none of these.

Question 65

The following information appears on the income statement of the Davis Company at the end of the year. Ending finished goods inventory was:

A) $140,000.
B) $160,000.
C) $200,000.
D) $220,000.

Question 66

The cost of goods manufactured for a fiscal period is reported on

A) both the statement of cost of goods manufactured and the income statement.
B) both the statement of the cost of goods manufactured and the balance sheet.
C) both the income statement and the balance sheet.
D) the statement of cost of goods manufactured only.

Question 67

In adjusting entries for a manufacturing business,the beginning balance of the work in process inventory is eliminated by crediting Work in Process Inventory and debiting

A) Finished Goods Inventory.
B) Manufacturing Summary.
C) Income Summary.
D) Merchandise Inventory.

Question 68

The balance sheet of a manufacturing business shows

A) the finished goods inventory and the cost of goods manufactured.
B) the cost of goods manufactured rather than inventory figures.
C) a single inventory figure-the amount of the finished goods inventory.
D) the raw materials inventory,the work in process inventory,and the finished goods inventory.

Question 69

The following information appears on the income statement of the Richer Company at the end of the year. Cost of Goods Manufactured was:

A) $246,000.
B) $280,000.
C) $264,000.
D) $240,000.

Question 70

On the completed worksheet of a manufacturing business,the accounts related to materials purchases,direct labor,and factory overhead

A) appear in the Income Statement section.
B) do not appear.
C) appear in the Balance Sheet section.
D) appear in the Cost of Goods Manufactured section.

Question 71

The statement of cost of goods manufactured

A) supports the income statement.
B) replaces the income statement.
C) is not related to the income statement.
D) supports the balance sheet.

Question 72

All manufacturing costs that are NOT classified as direct materials or direct labor are

A) indirect materials.
B) indirect labor.
C) manufacturing overhead.
D) semidirect costs.

Question 73

Compute cost of goods manufactured from the information given:

A) $38,000.
B) $50,000.
C) $24,000.
D) $18,000.

Question 74

Reversing entries for a manufacturing business are

A) made prior to preparing the postclosing trial balance.
B) made for the inventory accounts only.
C) closed into the Manufacturing Summary account.
D) made for accrual adjustments.

Question 75

The ending balance of the work in process inventory is recorded by debiting Work in Process Inventory and crediting

A) Income Summary.
B) Cost of Goods Sold.
C) Manufacturing Summary.
D) Merchandise Inventory.

Question 76

On a worksheet for a manufacturing firm,the beginning balance of the Finished Goods Inventory account should

A) be extended to the Cost of Goods Manufactured Debit column.
B) be extended to the Income Statement Debit column.
C) be extended to the Balance Sheet Debit column.
D) not be listed.

Question 77

The Indirect Labor account is closed by crediting it and debiting

A) Wages Payable.
B) Income Summary.
C) Manufacturing Summary.
D) Wages Expense.

Question 78

The following information appears on the income statement of the Richer Company at the end of the year. Gross Profit on Sales was:

A) $140,000.
B) $160,000.
C) $200,000.
D) $220,000.

Question 79

The balance of the Manufacturing Summary account is closed into

A) Income Summary.
B) Cost of Goods Manufactured.
C) Retained Earnings.
D) Manufacturing Overhead.

Question 80

Compute total manufacturing cost from the information given:

A) $20,000.
B) $49,000.
C) $25,000.
D) $23,000.