Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

1 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Managerial Accounting, 3e (Braun/Tietz) Chapter 2 Building Blocks of Managerial Accounting

1) Service companies must carry a large amount of inventory to meet consumer demand.

Answer: FALSE

Diff: 1

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

2) Manufacturing companies usually have three types of inventory.

Answer: TRUE

Diff: 1

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

3) Retailers sell their products to consumers.

Answer: TRUE

Diff: 1

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

4) Merchandising companies include both wholesalers and retailers.

Answer: TRUE

Diff: 1

LO: 2-1

EOC: S2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

5) All companies have the same types of inventories.

Answer: FALSE

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits Managerial Accounting 3rd Edition Braun Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 6) Only manufacturing companies have finished goods inventory.

Answer: TRUE

Diff: 2

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

7) Which of the following are merchandising companies?

• Manufacturers
• Retailers
• Wholesalers
• Both retailers and wholesalers

Answer: D

Diff: 1

LO: 2-1

EOC: E2-15A

AACSB: Analytical Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

8) Which of the following types of companies has raw materials, work in process and finished goods inventory?

• Retailers
• Manufacturers
• Wholesalers
• Service companies

Answer: B

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

9) Which type of company makes up the largest sector of the United States economy?

• Manufacturers
• Merchandising
• Wholesalers
• Service companies

Answer: D

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

3 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 10) The balance sheet of a service company has

• raw materials inventory.
• little or no inventory.
• three categories of inventory.
• two categories of inventory.

Answer: B

Diff: 1

LO: 2-1

EOC: S2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

11) Schlabig & Associates, a public accounting firm, is what type of company?

• Manufacturer
• Retailer
• Service
• Wholesaler

Answer: C

Diff: 1

LO: 2-1

EOC: S2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

12) Jiffy Lube, an automotive maintenance company, is primarily what type of company?

• Manufacturer
• Retailer
• Wholesaler
• Service

Answer: D

Diff: 1

LO: 2-1

EOC: S2-1

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

4 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 13) Among other products, Nabisco makes Oreo cookies. Which type of company is Nabisco?

• Service
• Manufacturer
• Retailer
• Wholesaler

Answer: B

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits 14) Which type of company typically produces its own inventory?

• Manufacturer
• Service company
• Retailer
• Wholesaler

Answer: A

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits

15) What type of company resells products it purchases ready-made from suppliers?

• Merchandiser
• Retailer
• Wholesaler
• All of the above

Answer: D

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Reflective Thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes in costs and volume on a company's profits