Chapter 11 Conversion Processes and Controls - Accounting Information System 1e by Turner PDF

Preview

Summary

ACCOUNTING INFORMATION SYSTEMSCONTROLS AND PROCESSESTURNER / WEICKGENANNTCHAPTER 11: Conversion Processes and ControlsTEST BANK – CHAPTER 11– TRUE / FALSE Because of the manpower and computer programmers required to control robotics, robotics has had little influence manufacturing. Resources require...

Description

ACCOUNTING INFORMATION SYSTEMS CONTROLS AND PROCESSES TURNER / WEICKGENANNT

CHAPTER 11: Conversion Processes and Controls

TEST BANK – CHAPTER 11– TRUE / FALSE

1. Because of the manpower and computer programmers required to control robotics, robotics has had little influence manufacturing.

2. Resources required in the conversion process include materials, labor, overhead, and fixed assets.

3. Even if a firm is a service or sales firm it may conduct some sort of manufacturing operation.

4. The major function within the conversion process is the logistics function.

5. The three primary components of the logistics function are 1) planning, 2) production, and 3) sales.

6. The research and development effort is part of the planning process rather than the operations process.

7. A bill of materials lists both physical items and skill requirements needed to construct an item of inventory.

8. Maintenance and control is concerned with maintaining the capital resources used to support production, including production facilities and other fixed assets.

9. Routing is the issuance and movement of materials through the sales process.

10. Inventory warehousing involves managing the holding area for finished goods awaiting sale.

11. The final hub in the logistics function is sales.

12. Standard costs are expected costs based on projections of a product’s required resources. 13. Standard costs include direct materials, direct labor, and overhead.

14. Perpetual inventory systems involve updating the inventory and cost of sales accounts only at the end of the period.

15. Because conversion processes involve the physical movement of inventory throughout the operating facility and these movements are normally accomplished by material handling personnel the burden of sufficient internal controls is not required.

16. Complete, up-to-date, and accurate documentation on production orders is needed to support the conversion process.

17. Physical controls should be in place in the company’s storerooms, warehouses, and production facilities in order to safeguard the inventories held therein.

18. When perpetual inventory concepts are utilized, a physical inventory count to determine the quantity of inventory on hand is not required.

19. To ensure that delays and shutdowns in one part of the manufacturing facility do not affect another part of the manufacturing facility IT integration of all or part of the company’s processing applications is usually not accomplished.

20. Computer-aided manufacturing (CAM) involves the complete automation of the production process, including the full replacement of human resources with computers.

21. MRP stands for Management Resource Projections.

22. Just-in-time (JIT) production systems are concerned with minimizing or eliminating inventory levels of all inventory items.

23. Earnings management is the act of misstating financial information in order to improve financial statement results.

24. Absorption costing involves the inclusion of both variable and fixed costs in the determination of unit costs for ending inventories and cost of goods sold.

25. Management should not consider the moral implications of replacing human resources with electronic resources based on the cost/benefit concept.

26. The systems, processes, and internal controls are part of a corporate governance structure.

27. Corporate governance requires proper financial stewardship, and since inventories, fixed assets, and office supplies are the largest assets reported on a balance sheet, financial stewardship in these areas is especially important.

ANSWERS TO TEST BANK - CHAPTER 11 - TRUE/FALSE:

1.

F

7.

F

13.

T

19.

F

25.

2.

F

8.

T

14.

F

20.

T

26.

F T

3.

T

9.

F

15.

F

21.

F

27.

F

4.

T

10.

T

16.

T

22.

T

5.

F

11.

F

17.

T

23.

T

6.

T

12.

T

18.

F

24.

T

TEST BANK – CHAPTER 11 – MULTIPLE CHOICE

28. A company’s conversion processes includes all of the following except: A.

materials.

B.

office supplies.

C.

labor.

D.

overhead

29. A company must have systems in place to accomplish all of the following except: A.

capture data.

B.

vocalize data.

C.

record data.

D.

summarize data.

30. The conversion process is initiated when the company recognizes: A.

the receipt of raw materials.

B.

the shipment of finished goods to customers.

C.

the need to conduct operations.

D.

None of the above.

31. Overhead includes all of the following except: A.

various other expenses necessary to run the operating facility.

B.

the president’s salary.

C.

fixed assets.

D.

indirect labor and materials.

32. The major activities within the conversion process include all but A.

strategic planning that supports the company’s operational goals.

B.

optimizing the use of the employees, property, and inventories that are needed in operations.

C.

controlling production flows, ensuring product quality.

D.

and preparing the related cost accounting and financial accounting records.

33. Which of the following company activities would not be considered a productive activity? A.

The manufacture of automobiles.

B.

The treatment of patients in a medical facility.

C.

Providing consulting services.

D.

All of the above, A, B, and C, are considered productive activities.

34. The process of logical, systematic flow of resources throughout the organization is referred to as: A.

logistics.

B.

planning.

C.

reporting.

D.

sales forecast.

35. The component of the logistics function that directs the focus of operations is referred to as: A.

logistics.

B.

planning.

C.

reporting.

D.

sales forecast.

36. The form that specifies the components of a product, including descriptions and quantities of materials and parts needed is the: A.

operations list.

B.

bill of materials.

C.

engineering.

D.

capital budgeting.

37. The form that describes the chain of events that constitute a product’s production is referred to as the: A.

operations list.

B.

bill of materials.

C.

engineering.

D.

capital budgeting.

38. The process that plans the timing for production activities is referred to as: A.

operations list.

B.

bill of materials.

C.

scheduling.

D.

capital budgeting.

39. The form that authorizes production activities for a particular sales order or forecasted needs is referred to as the: A.

production schedule.

B.

production orders.

C.

maintenance and control process.

D.

human resources process.

40. The process that is concerned with maintaining the capital resources used to support production is referred to as: A.

the production schedule.

B.

production orders.

C.

maintenance and control.

D.

the human resources process.

41. A ___________________ outlines the specific timing required for a sales order, including the dates and times designated for the production run. A.

production schedule

B.

production orders schedule

C.

maintenance and control schedule

D.

human resources schedule

42. The responsible for managing the placement and development of sufficient qualified personnel which includes hiring and training workers as well as maintaining records of their performance is the task of: A.

the production schedule department.

B.

the production orders department.

C.

the maintenance and control department.

D.

the human resources department.

43. The responsible for managing and recording the movement of inventory in the many different directions that it may go throughout the conversion process is assigned to the: A.

production schedule department.

B.

inventory control department.

C.

maintenance and control department.

D.

the human resources department.

44. The issuance and movement of materials into the various production phases is referred to as: A.

production scheduling process.

B.

inventory control process.

C.

the routing process.

D.

the production orders process.

45. Which document provides the descriptions and quantities of materials taken into production for a specified sale or other authorized production activity? A.

The routing slip.

B.

The shipping notice.

C.

The purchase requisition.

D.

The sales order.

46. Inventory ___________________ managing the holding area for finished goods awaiting sale. A.

purchase order

B.

shipping notice

C.

purchase requisition

D.

warehousing

47. The major function within the conversion process is the: A.

sales order function.

B.

sales forecast function.

C.

logistics function.

D.

reporting function.

48. The component of the logistics function that directs the focus of operations is the: A.

operations component.

B.

resource management component.

C.

planning component.

D.

the sales component.

49. The planning component of the logistics function has all of the following elements except: A.

maintenance and control.

B.

engineering.

C.

scheduling.

D.

capital budgeting.

50. The resource management component of the logistics function has all of the following elements except: A.

maintenance and control.

B.

human resources.

C.

inventory control.

D.

capital budgeting.

51. The operations component of the logistics function has which of the following elements? A.

maintenance and control.

B.

production.

C.

inventory control.

D.

capital budgeting.

52. The responsibility to conduct make/buy decisions is usually given to: A.

engineering.

B.

capital budgeting.

C.

operations.

D.

research and development.

53. Capital budgeting: A.

is responsible for the issuance of stocks and bonds to finance operations.

B.

plans the capital resources needed to support operations.

C.

is responsible for the procurement of production materials.

D.

is not a function of a company once established and functioning.

54. Engineering is responsible for: A.

designing the product while operations is responsible the bill of materials and the operations list.

B.

designing the plant and equipment used in manufacturing.

C.

is responsible for the procurement of production equipment.

D.

designing the product and creating the bill of materials and the operations list.

55. The bill of materials is the: A.

cost of raw materials purchased from a vendor.

B.

document of instructions utilized to assemble a product.

C.

form that specifies the components of a product.

D.

designing the product and creating the bill of materials and the operations list.

56. The operations list is the: A.

schedule of production for the day, week, or month as specified by the company.

B.

document of instructions utilized to assemble a product.

C.

form that specifies the components of a product.

D.

designing the product and creating the bill of materials and the operations list.

57. Scheduling: A.

plans the timing for acquisition of fixed assets.

B.

does not take into account machine breakdowns.

C.

takes into consideration all the open sales orders.

D.

does not take inventory needs.

58. Production orders: A.

outline the specific timing required for sales orders.

B.

authorize production activities for a particular need or order.

C.

are forecasts of needs based on known and anticipated sales.

D.

are issued by the engineering department to correct product deficiency issues.

59. A production schedule: A.

does not contain requirements due to sales forecasts.

B.

does not contain information from the bill of materials.

C.

contains information from the operations list.

D.

are issued by the maintenance and control department.

60. The department responsible for training production personnel is the: A.

production department.

B.

human resources department.

C.

engineering department.

D.

None of the above.

61. Economic order quantity (EOQ) is a function: A.

of the purchasing customer or client.

B.

of the sales force to provide the purchasing customer or client with the greatest value.

C.

of the responsibility of engineering through the operations list.

D.

associated with inventory control.

62. Routing is: A.

the path electronic messages follow in the inventory system.

B.

the issuance and movement of materials into the various production phases.

C.

the physical movement of materials from the point of sale to the customer.

D.

the physical movement of materials from the vendor to the inventory stores facility.

63. Inventory status reports: A:

are generated only for raw materials.

B.

are only generated for finished goods.

C.

are prepared at various stages of the production process.

D.

are only generated for work in process.

64. Select the true statement from the choices below. A:

Inventory stores and warehousing are both concerned with raw materials.

B.

Neither inventory stores nor warehousing are concerned with raw materials.

C.

Inventory stores is concerned with raw materials and warehousing is concerned with finished goods.

D.

Inventory stores is concerned with finished goods and warehousing is concerned with raw materials.

65. The term “operations” is commonly used to refer to: A:

the main function of the business.

B.

any function of the business which generates revenues.

C.

only those functions of the business accomplished by the operations department.

D.

only those functions which move inventory through the production cycle.

66. Operations may be performed by all of the following except: A:

continuous processing of homogeneous products.

B:

batch processing.

C.

custom, made-to-order processing.

D.

Each of the above is a valid form of operations.

67. The final hub in the logistics function is: A:

packaging.

B:

quality control.

C.

sales.

D.

shipping to the customer.

68. Rework refers to: A.

generating a better quote for a customer.

B.

overhaul of a manufacturing machine.

C.

additional procedures to bring a product up to specifications.

D.

parts that are beyond repair at any cost.

69. The final hub in the logistics function which involves a follow-up to production, where the products are inspected before they are moved to the warehouse or shipping area is referred to as: A.

quality control.

B.

shipping notice.

C.

purchase requisition.

D.

warehousing.

70. The expected cost based on projections of a product’s required resources which includes direct materials, direct labor and overhead is referred to as: A.

quality control costs.

B.

sales order cost.

C.

rework costs.

D.

standard costs.

71. A system which involves recording purchases of raw materials inventory, recording all the components of work in process, and recording the total cost of sales for products completed and sold is referred to as: A.

a perpetual inventory system.

B.

the accounting information system.

C.

a periodic inventory system.

D.

None of the above.

72. Perpetual inventory systems: A.

record changes in inventory categories only at the end of each period.

B.

record changes in inventory categories only when sales are made.

C.

record changes in inventory categories whenever material is moved from one category to another.

D.

does not address raw materials.

73. Variances represent the differences between: A.

actual costs and t...