Question 1

The perpetual inventory method is used in a cost accounting system.

Accepted Answer

The perpetual inventory method is a system of tracking inventory levels and costs in real-time, which is commonly used in cost accounting to ensure accurate and up-to-date record-keeping.

Question 2

When raw materials are purchased, the Raw Materials Inventory account is credited.

Accepted Answer

When raw materials are purchased, the Raw Materials Inventory account is debited (increased) and Accounts Payable or Cash account is credited (decreased).

Question 3

Cost accounting is primarily concerned with allocating overhead.

Accepted Answer

False

Question 4

The stores ledger cards represent the subsidiary ledger for the Finished Goods Inventory control account in the general ledger.

Accepted Answer

Stores ledger cards contain detailed information about individual items in the Finished Goods Inventory, therefore serving as a subsidiary ledger to the control account in the general ledger.

Question 5

A job order cost system identifies costs with a particular activity within the production process, such as mixing, or cutting.

Accepted Answer

The answer of A job order cost system identifies costs...

Question 6

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of manufacturing overhead.

Accepted Answer

The answer of Fringe benefits and payroll taxes associated with...

Question 7

Companies generally use a variation of either a job order cost system or a process cost system.

Accepted Answer

This statement is true. Companies typically choose to use either a job order cost system, which tracks the costs associated with producing specific products or providing specific services, or a process cost system, which tracks the costs associated with producing large quantities of identical products over time.

Question 8

The Work in Process Inventory account is a subsidiary of the job order cost sheets control account.

Accepted Answer

The answer of The Work in Process Inventory account is...

Question 9

Raw Materials Inventory, Work in Process, and Finished Goods are all inventory accounts used in the general ledger when a job order cost accounting system is used.

Accepted Answer

Raw Materials Inventory, Work in Process, and Finished Goods are all inventory accounts used in a job order cost accounting system to track the cost of producing specific products or jobs.

Question 10

Factory labour is accumulated using time clocks and time cards.

Accepted Answer

Factory labour is often tracked using time clocks and time cards to record the amount of time employees spend working.

Question 11

When direct materials are requisitioned from the storeroom, the cost of the materials should be removed from the Work in Process Inventory account and added to the job cost sheets for the individual jobs on which the material was used.

Accepted Answer

The answer of When direct materials are requisitioned from the...

Question 12

A job order cost system and a process cost system are two alternative cost accounting systems.

Accepted Answer

A job order cost system is used when products are manufactured to customer specifications, whereas a process cost system is used when products are manufactured in a continuous fashion, such as in the production of chemicals or food items. These systems are two different methods of allocating costs to products and determining product costs.

Question 13

The acquisition of raw materials causes the work in process account to increase.

Accepted Answer

The acquisition of raw materials increases the raw materials inventory account, not the work in process account. The work in process account increases when raw materials are used in production.

Question 14

The Raw Materials account is used to recognize all raw materials purchases, purchases returns and allowances, and freight costs related to materials.

Accepted Answer

The Raw Materials account is indeed used to recognize all raw materials purchases, purchases returns and allowances, and freight costs related to materials.

Question 15

A job order cost system is most appropriate when products that are produced have their own distinguishing characteristics.

Accepted Answer

A job order cost system tracks the cost of each specific job, and is necessary when each job or product has unique characteristics that require specific materials and labor. This system enables companies to accurately calculate the cost of each job or product, and helps them make informed decisions about pricing and production processes.

Question 16

A job cost accounting system is appropriate for homogeneous products that are continuously mass produced.

Accepted Answer

A job cost accounting system is appropriate for unique or customized products that are produced in batches or individually. A process cost accounting system is appropriate for homogeneous products that are continuously mass produced.

Question 17

Costs of jobs are recorded in the period in which the costs are paid.

Accepted Answer

Costs of jobs are recorded in the period in which they are incurred, not necessarily when they are paid. This principle is known as the accrual basis of accounting.

Question 18

A predetermined overhead rate is used to allocate the actual costs of manufacturing overhead for the period.

Accepted Answer

The answer of A predetermined overhead rate is used to...

Question 19

In a job order cost system, each entry to the Raw Material Inventory account should be accompanied by a posting to one or more job cost sheets.

Accepted Answer

The answer of In a job order cost system, each...

Question 20

Manufacturing costs are generally recorded and incurred in the same accounting period.

Accepted Answer

The answer of Manufacturing costs are generally recorded and incurred...

Quiz 3: Job Order Costing