Copyright 2015 Pearson Education, Inc.

1 Copyright © 2015 Pearson Education, Inc.Managerial Accounting, 4e (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: S2-2

AACSB: Reflective thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes.

2) Manufacturing companies usually have three types of inventory.

Answer: TRUE

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.

3) Retailers sell their products to consumers.

Answer: TRUE

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.

4) Merchandising companies include both wholesalers and retailers.

Answer: TRUE

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.

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.

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.

Managerial Accounting 4th Edition Braun Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2015 Pearson Education, Inc.7) Which of the following are merchandising companies?

• Manufacturers
• Retailers
• Wholesalers
• Both retailers and wholesalers

Answer: D

Diff: 1

LO: 2-1

EOC: S2-2

AACSB: Analytical thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes.

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.

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.

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.

3 Copyright © 2015 Pearson Education, Inc.11) Schlabig & Associates, a public accounting firm that provides business consulting to a consumer, is what type of company?

• Manufacturer
• Retailer
• Service
• Wholesaler

Answer: C

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.

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: S2-2

AACSB: Reflective thinking

Learning Outcome: Define and use cost-volume-profit analysis to analyze the effects of changes.

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.

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.

4 Copyright © 2015 Pearson Education, Inc.15) What type of company resells tangible products it purchases ready-made from suppliers?

• Merchandiser
• Retailer
• Wholesaler
• All of the above

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.

16) Before these materials are used to manufacture its cars, Toyota classifies steel, glass, and plastic as

• raw materials inventory.
• finished goods inventory.
• work in process inventory.
• merchandise inventory.

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.

17) Before these materials are used to manufacture cabinets, a woodworker classifies lumber, paint, and glue as

• finished goods inventory.
• work in process inventory.
• raw materials inventory.
• merchandise inventory.

Answer: C

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.

18) Macy's (the department store chain) classifies its clothing held for sale as

• merchandise inventory.
• raw materials inventory.
• work in process inventory.
• finished goods inventory.

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.