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CHAPTER 2—ACCOUNTING FOR MATERIALS
MULTIPLE CHOICE
1. An effective cost control system should include:
a. An established plan of objectives and goals to be achieved.
b. Regular reports showing the difference between goals and actual performance.
c. Specific assignment of duties and responsibilities.
d. All of these are correct.
ANS: D
An effective cost control system should include an established plan of goals and objectives, reports
comparing budgeted goals to actual performance, and assignment of specific duties and responsibilities
to operating personnel.
PTS: 1
DIF: Easy
REF: P.
OBJ: Introduction
NAT: IMA 1C - Internal Controls
TOP: AACSB - Analytic
2. The personnel involved in the physical control of materials includes all of the following except the:
a. Purchasing agent.
b. Receiving clerk.
c. Cost accountant.
d. Production department supervisor.
ANS: C
The cost accountant has the responsibility for the accounting records pertaining to inventory valuation
but not for the physical materials.
PTS: 1
DIF: Moderate
REF: P.
OBJ: 2
NAT: IMA 1C - Internal Controls
TOP: AACSB - Reflective
3. The form prepared by the purchasing agent and sent to the vendor to obtain materials is known as a:
a. Materials requisition.
b. Purchase requisition.
c. Purchase order.
d. Vendor's invoice.
ANS: C
The purchase order is prepared by the purchasing agent and sent to the vendor to order materials.
PTS: 1
DIF: Easy
REF: P.
OBJ: 2
NAT: IMA 2B - Cost Management
TOP: AACSB - Analytic
4. The form that serves as authorization to withdraw materials from the storeroom is known as the:
a. Stores requisition.
b. Purchase order.
c. Purchase requisition.
d. Returned materials report.
ANS: A
The stores requisition is prepared by the production department supervisor or an assistant and is
presented to the storeroom keeper as authorization for t