Question 1

In inventory systems, when the actual quantity and the accounting records quantity are compared it is referred to as:

Accepted Answer

The comparison of the actual quantity of inventory items with the accounting records is referred to as the physical inventory reconciliation. This process is typically carried out periodically, usually annually, to ensure that the accounting records accurately reflect the actual inventory on hand. This is an important step in maintaining accurate inventory data and ensuring that financial reports are correct. The other options, perpetual inventory and periodic inventory, refer to different inventory tracking methods and do not specifically involve a comparison of actual and recorded quantities. Inventory resolution is not a commonly used term in inventory management.

Question 2

Rework refers to:

Accepted Answer

Rework refers to additional procedures or adjustments made to a product to ensure it meets the required specifications or standards.

Question 3

Perpetual inventory systems:

Accepted Answer

Perpetual inventory systems record changes in inventory categories whenever material is moved from one category to another. This system allows for real-time tracking of inventory levels and category placements, making it easier to identify inventory issues and make quick adjustments. Options A and B are incorrect as perpetual inventory systems record changes continuously, not just at the end of each period or when sales are made. Option D is incorrect as perpetual inventory systems can track all types of inventory, including raw materials.

Question 4

The expected cost based on projections of a product's required resources which includes direct materials, direct labor and overhead is referred to as:

Accepted Answer

The expected cost based on projections of a product's required resources which includes direct materials, direct labor, and overhead is referred to as standard costs. Quality control costs, sales order costs, and rework costs are all separate categories of costs.

Question 5

Which of the following correctly lists activities within the conversion process in chronological order?

Accepted Answer

The correct sequence in the conversion process is to first prepare a bill of materials, followed by preparing a purchase requisition, then initiating production and finally inspecting goods. So, option D is the correct choice as it lists the activities in the correct chronological order.

Question 6

Perpetual inventory systems:

Accepted Answer

Perpetual inventory systems involve tracking inventory at every level necessary for production, including raw materials, work-in-progress, and finished goods. They are updated continuously rather than at the end of each fiscal period.

Question 7

Variances represent the differences between:

Accepted Answer

Variances represent the differences between actual costs and the standard costs applied. This helps in identifying areas where costs may be higher than expected and taking corrective action. Raw material variances represent differences between raw materials ordered and received, sales variances represent differences between sales targets and accomplishments, and inventory variances represent differences between actual quantity on hand and quantity according to the inventory system.

Question 8

Standard costs are the:

Accepted Answer

Standard costs are the expected costs based on required resources to produce a product or service. These costs are predetermined and provide a benchmark for measuring actual costs and performance. Thus, option B is the correct answer. The other options do not accurately describe standard costs.

Question 9

Operations may be performed by all of the following except:

Accepted Answer

Each option (A, B, C) represents a valid form of operations used in different industries and contexts, indicating that all are indeed methods through which operations may be performed.

Question 10

The final hub in the logistics function is:

Accepted Answer

The answer of The final hub in the logistics function...

Question 11

The final hub in the logistics function which involves a follow-up to production, where the products are inspected before they are moved to the warehouse or shipping area is referred to as:

Accepted Answer

This is referring to the quality control step in the logistics process. This is where the products are inspected before they are moved to their next destination. The other options, shipping notice, purchase requisition, and warehousing, do not refer to this specific step in the logistics process.

Question 12

Security of assets and documents include all of the following except:

Accepted Answer

Restricted movement of office supplies is more about inventory control than the security of assets and documents. Water sprinklers, adequate insurance coverage, and security guards are all measures to protect assets and documents from damage or theft.

Question 13

A system which involves recording purchases of raw materials inventory, recording all the components of work in process, and recording the total cost of sales for products completed and sold is referred to as:

Accepted Answer

The description given in the question corresponds to a perpetual inventory system, which is a method of tracking inventory balances continuously throughout the accounting period. This involves updating inventory records for each purchase, sale, and production activity. Therefore, option A is the correct answer. Option B refers to the broader system that captures all financial transactions in an organization, including inventory activities. Option C refers to a periodic inventory system, where inventory balances are only updated at the end of an accounting period. Option D is incorrect as the description matches option A.

Question 14

Periodic inventory systems:

Accepted Answer

Periodic inventory systems are only updated periodically, which means they may not reflect current inventory levels at all times. This is because inventory is only counted and recorded at the end of a fiscal period, rather than continuously as it is bought and sold.

Question 15

Variances:

Accepted Answer

Variances represent the differences between actual costs and the standard costs applied. While B and C may be related to variances in some contexts, A is the most accurate and comprehensive definition of variances.

Question 16

Which of the following activities in the conversion process does NOT require express authorization?

Accepted Answer

Initiation of a sales order does not necessarily require express authorization as it is usually within the scope of the sales department's responsibilities. However, the other activities listed in options A, B, and C involve the use of company resources and require proper authorization to ensure proper control and accountability.

Question 17

Variances:

Accepted Answer

Understanding the cause of both favorable and unfavorable variances can be important in identifying areas for improvement and making informed decisions. Simply investigating only unfavorable variances may overlook opportunities for optimization or fail to recognize areas where performance has exceeded expectations. Therefore, it is important to investigate and understand the causes of both favorable and unfavorable variances.

Question 18

Segregation of duties is accomplished by which of the following?

Accepted Answer

Segregation of duties refers to the practice of dividing responsibilities involving financial transactions among different individuals to prevent fraud and errors. Option A is the only choice where segregation of duties is apparent as accounting personnel are restricted from accessing physical inventory. Option B does not have segregation of duties as warehouse personnel handling material movements should not be responsible for signing all the documents as it may lead to fraud. Option C restricts production personnel to one manufacturing station, but it does not provide sufficient segregation of duties.

Question 19

Standard costs take into consideration all of the following except:

Accepted Answer

Standard costs only take into consideration the costs that are directly related to production, such as materials and labor, and factory overhead that can be directly correlated to product production. The sales manager's salary is an indirect cost and is not part of the standard cost calculation.

Question 20

Which of the following is NOT a responsibility given to the individuals making purchases for the company?

Accepted Answer

Specifying the order and sequence of payments to vendors is typically the responsibility of the accounting department, not the individuals making purchases. Their responsibilities usually include selecting vendors, purchasing raw materials for production, and specifying the quantities to be ordered.

Quiz 11: Conversion Processes and Controls

In inventory systems, when the actual quantity and the accounting records quantity are compared it is referred to as:

Rework refers to:

Perpetual inventory systems:

The expected cost based on projections of a product's required resources which includes direct materials, direct labor and overhead is referred to as:

Which of the following correctly lists activities within the conversion process in chronological order?

Perpetual inventory systems:

Variances represent the differences between:

Standard costs are the:

Operations may be performed by all of the following except:

The final hub in the logistics function is:

The final hub in the logistics function which involves a follow-up to production, where the products are inspected before they are moved to the warehouse or shipping area is referred to as:

Security of assets and documents include all of the following except:

A system which involves recording purchases of raw materials inventory, recording all the components of work in process, and recording the total cost of sales for products completed and sold is referred to as:

Periodic inventory systems:

Variances:

Which of the following activities in the conversion process does NOT require express authorization?

Variances:

Segregation of duties is accomplished by which of the following?

Standard costs take into consideration all of the following except:

Which of the following is NOT a responsibility given to the individuals making purchases for the company?