Question : 41.Howard Lumber Company mistakenly classified a product cost as an : 1257007

 

 

41.Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made:   

A. product costs were overstated.

 

B. management bonuses were underpaid.

 

C. the company’s income statement portrayed a more favorable position than actually existed.

 

D. the company’s net income was overstated.

 

 

42.Assuming a company’s inventory increased during the period, which of the following misclassifications may increase net income?   

A. Recording administrative salaries as a product cost

 

B. Recording depreciation on production equipment as an expense

 

C. Expensing raw material costs instead of including them in inventory

 

D. Recording depreciation on production equipment as an expense and Expensing raw material costs instead of including them in inventory

 

 

43.During her first year with the company, Ann mistakenly accumulated some of the company’s period costs in ending inventory. Which of the following indicates how this error affects the company’s financial statements assuming number of units produced exceeded number of units sold during the period?   

A. Cash flows from operations are understated.

 

B. Gross margin is unaffected.

 

C. Net income is overstated.

 

D. Inventory is understated.

 

 

44.If a company misclassifies a general, selling and administrative cost as a product cost in a period when production exceeds sales:   

A. net income will be overstated.

 

B. total assets will be understated.

 

C. gross margin will be understated.

 

D. Both net income will be overstated and gross margin will be understated.

 

 

45.Which of the following is not a reason management might be tempted to classify costs as assets rather than expensing them during periods in which production exceeds sales?   

A. The company’s bank may be more likely to extend financing to the firm.

 

B. Income taxes will be lower.

 

C. Net income will be higher.

 

D. Management bonuses may be higher.

 

 

46.Certified Management Accountants (CMA) must complete a specified number of continuing professional education credits each reporting period. Which of the four standards of ethical conduct issued by the Institute of Management Accountants likely motivated this requirement?   

A. Confidentiality

 

B. Competence

 

C. Integrity

 

D. Objectivity

 

 

47.Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?   

A. Credibility

 

B. Confidentiality

 

C. Integrity

 

D. Independence

 

 

48.As a Certified Management Accountant, Suzanne is bound by the standards of ethical conduct issued by the Institute of Management Accountants. During the course of business, Suzanne learned that her company has decided to discontinue a major product line. If she mentions this fact to her brother, who is a stockbroker, Suzanne could be in violation of the:   

A. competence standard.

 

B. confidentiality standard.

 

C. integrity standard.

 

D. objectivity standard.

 

 

49.As a Certified Management Accountant, Derek is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Derek has a responsibility to:   

A. inform subordinates that they should protect confidential information.

 

B. ensure that financial accounting records are maintained as per the governing guidelines.

 

C. monitor the activities of subordinates to assure that confidentiality is maintained.

 

D. inform subordinates that they should protect confidential information and monitor the activities of subordinates to assure that confidentiality is maintained.

 

 

50.As a Certified Management Accountant, Grace is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?   

A. Integrity

 

B. Confidentiality

 

C. Competence

 

D. Objectivity