question

Managerial accounting

answer

Identifies, collects, measures, classifies, and reports financial and non financial information that is useful to internal users in planning, controlling, and decision making.

question

Managerial accounting reports are prepared..

answer

To meet the needs of decision makers within the firm.

question

Financial accounting..

answer

Is concerned with the information about the firm as a whole. Has to adhere to GAAP policies. Focuses on external users.

question

The primary objective of managerial accounting is...

answer

To provide management with information useful for planning and control operations.

question

Which of the following would normally occupy a staff position?

answer

Cost Accounting Manager

question

The object of profit maximization...

answer

Should be achieved through legal and ethical means

question

Overhead includes

answer

Indirect labor, Indirect materials, and supplies.

question

Product costs consist of...

answer

direct materials, direct labor and manufactoring overhead

question

Materials in the raw materials account do not become direct materials until...

answer

They are withdrawn from inventory for use in production.

question

The unit cost...

answer

Is the total product costs divided by the number of units produced.

question

Indirect labor would include...

answer

Salary of factory supervisor

question

The unit cost...

answer

Is the total product costs divided by the number of units produced.

question

Period costs are..

answer

Selling costs and administrative costs

question

Cost of goods manufactured equals

answer

the product cost of goods completed during the current period,

question

The provision of accounting information for internal users is known as

answer

Managerial Accounting

question

The users of managerial accounting information include

answer

For-profit companies, not-for-profit companies, city governments, educational institutions. All of these.

question

Planning is

answer

Setting objectives and identifying objectives to achieve those objectives.

question

Planning is also

answer

The detailed formulation of action to achieve a particular end.

question

Decision making is

answer

The process of choosing among competitive alternatives.

question

Controlling is

answer

The managerial activity of monitoring a plan's implementation and taking corrective action needed. Comparing the actual performance and expected performance.

question

What is a characteristic of financial accounting?

answer

There is a historical orientation and is used for investment decisions, stewardship evaluation, monitoring activity, and regulatory measures.

question

Financial accounting is primarily concerned with producing information for which type of users?

answer

External users. Which include investors, creditors, customers, suppliers, government agencies, and labor unions.

question

In terms of strategic positioning, which two general strategies may be chosen by a company?

answer

Cost leadership and product differentiation.

question

Managerial accounting is primarily concerned with producing information for which type of users?

answer

Internal users, such as, managers, executives, and workers.

question

Managerial accounting is sometimes called

answer

Internal accounting

question

Financial accounting is sometimes called

answer

External accounting

question

Financial accounting is

answer

Externally focused, must follow externally imposed rules, objective financial information, historical orientation, information about the firm as a whole, more self-contained.

question

Managerial accounting is

answer

Internally focused, no mandatory rules, financial and information; subjective information possible non-financial, emphasis on the future, internal evaluation and decisions based on very detailed information, broad, multidisciplinary.

question

Managerial accountants in an organization are typically

answer

Staff positions

question

The chief accounting officer for a firm is the

answer

Controller

question

Compliance with the rule of law, integrity, honesty, competence would all be found in what?

answer

The corporation's code of ethics.

question

Activity-based costing (ABC) is

answer

A more detailed approach to determining the costs of goods and services. ABC improves costing accuracy by emphasizing the cost of the many activities or tasks that must be done to produce a product or offer a service.

question

Customer value is

answer

Is the difference between what a customer receives and what the customer gives up when buying a product or service.

question

Customer value can be increased through effective cost information which is done through which two strategies?

answer

Cost leadership and superior products through differentiation.

question

What is the objective of the cost leadership strategy?

answer

To provide the same or better value to customers at a lower cost than competitors.

question

Superior products through differentiation strategy does what?

answer

It strives to increase customer value by providing something to customers not provided by competitors.

question

These two strategies require an understanding of what?

answer

The firms value chain

question

The value chain is

answer

The set of activities require to design, develop, produce, market, and deliver products and services, as well as provide support services to customers.

question

Continuous improvement is

answer

The continual search for ways to increase the overall efficiency and productivity of activities by reducing waste, increasing quality, and managing costs. Continuous improvement is fundamental for establishing excellence.

question

Total quality management is

answer

A philosophy in which manufacturers strive to create an environment that will enable workers to manufacture perfect (zero-defect) products.

question

What is a crucial element of the value chain?

answer

Time. Firms deliver products or services quickly by eliminating nonvalue-added time, which is time of no value to the customer. (Example: the time a product spends on the loading dock).

question

What happens when you decrease nonvalue-added time?

answer

Increases quality

question

What is a critical measure of efficiency?

answer

Cost

question

How can efficiency be of value to the firm?

answer

Costs must be properly defined, measured, and assigned; furthermore, production of output must be related to the inputs required, and the overall financial effect of productivity changes should be calculated.

question

Positions that have direct responsibility for the basic objectives of an organization are called what?

answer

Line positions

question

Positions that are supportive in nature and have only indirect responsibility for an organization's basic objectives are called what?

answer

Staff positions

question

Who supervises all accounting functions and reports directly to the general manager and chief operating officer?

answer

Controller

question

Who is responsible for the finance function?

answer

Treasurer

question

Important parts of corporate codes of conduct are

answer

Integrity, performance of duties, and compliance with the rule of law.

question

What organizations have established ethical standards for accountants?

answer

The American Institute of Certified Public Accountants (AICPA) and the Institute of Management Accountants (IMA). Professional accountans are bound by these codes of conduct.

question

What are the three certifications you can get being in the accounting profession?

answer

Certificate in Management Accounting, Certificate in Public Accounting, Certificate in Internal Auditing.

question

Which certificate is designed to meet the needs of managerial accountants?

answer

Certificate of Management Accounting (CMA)

question

The Certificate of Public Accounting is

answer

The oldest and most well-known certification in accounting. This is the only certificate that is permitted by law to serve as an external auditor.

question

Which certificate require you pass a comprehensive exam ensuring your technical competence and two years experience?

answer

Certificate of Internal Auditor (CIA)

question

What is the amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization?

answer

Cost

question

Expired costs are called what?

answer

Expenses. As costs are used up in the production of revenues, they are said to expire.

question

How do we determine profit (income) on the income statement?

answer

Expenses are deducted from revenues.

question

How do we figure the PRICE?

answer

Revenue per unit

question

What is considered any item such as a product, customer, department, project, geographic region, plant, and so on, for which costs are measured and assigned? Also known as Allocating Cost

answer

Cost object

question

What is the objective to assigning costs to cost objects?

answer

To measure and assign costs as well as possible, given management objectives.

question

Which type of costs can be easily and accurately traced to a cost object?

answer

Direct Costs.

question

Which type of costs can NOT be easily and accurately traced to a cost object? These are also costs that cannot be seen or touched.

answer

Indirect Costs

question

What is allocation?

answer

It is when indirect cost is assigned to a cost object by using a reasonable and convenient method. Since no clearly observable casual relationship exists, allocating indirect costs is based on convenience or some assumed casual linkage.

question

What are the three other categories of cost?

answer

Variable cost, fixed cost, and opportunity cost.

question

Which cost increases in total as output increases and decreases in total as output decreases? Example: Starbucks coffee cups

answer

Variable cost

question

Which cost does NOT increase in total as output increases and does not decrease in total as output decreases? Example: rent

answer

Fixed cost.

question

Which cost is the benefit given up or sacrificed when one alternative is chosen over another? Example: Sleep rather than going to class, but instead went to class and gave up sleep.

answer

Opportunity cost

question

Outputs represents one of the most important cost objects. What are the two types of outputs?

answer

Products and services.

question

Which output are the goods produced by converting raw materials through the use of labor and indirect manufacturing resources, such as the manufacturing plant, land, and machinery? Example: TVs, hamburgers, cars, clothes, etc.

answer

Products

question

Which output are tasks or activities performed for a customer or an activity performed by a customer using an organization's products or facilities?

answer

Services

question

How do services differ from products?

answer

Services are intangible, are perishable, and require direct contact between providers and buyers.

question

When providing cost information, managers do what?

answer

They typically rely on managerial accounting information that is prepared in whatever manner the managerial accountant believes provides the best analysis for the decision at hand.

question

What is the one exception when providing cost information?

answer

Managerial accountant must follow external reporting rules, GAAP, when their companies provide outside parties with cost information about the amount of ending inventory on the balance sheet and the cost of goods sold on the income statement.

question

Product (manufacturing) costs are

answer

Those costs, both indirect and direct, of producing a product in a manufacturing firm or of acquiring a product in a merchandising firm and preparing it for sale.

question

Are product costs inventoried?

answer

Yes

question

Are product costs inventoried?

answer

Yes

question

How are product costs inventoried?

answer

They are initially added to an inventory account and remain in inventory until they are sold, at which time they are transferred to cost of goods sold.

question

What consists of product costs?

answer

Direct material, direct labor and manufacturing overhead.

question

What type of materials are part of the final product and can be directly traced to the goods being produced?

answer

Direct materials

question

What type of labor can be directly traced to the goods being produce and those employees who convert direct materials into a product?

answer

Direct labor

question

Manufacturing overhead is

answer

All product costs other than direct materials and direct labor. Manufacturing overhead are costs that cannot be traced to the cost object of interest. Examples are depreciation on plant buildings and equipment, janitorial and maintenance labor, plant supervision, etc.

question

Direct materials plus direct labor plus manufacturing overhead equals

answer

Product cost

question

Direct materials plus direct labor equals

answer

Prime Cost

question

Direct labor plus manufacturing overhead equals

answer

Conversion cost

question

True or False: do PRIME plus CONVERSION cost equal PRODUCT COST?

answer

FALSE - because direct labor is part of both prime cost AND conversion cost.

question

The costs of production are assets that are carried in inventories until when?

answer

Until the goods are sold

question

What are the other costs of running a company that are NOT carried in inventory?

answer

Period costs

question

Are period costs considered product costs?

answer

No.

question

What would be examples of period costs?

answer

Cost of office supplies, research and development activities, the CEOs salary, and advertising.

question

When are period costs expensed?

answer

In the period in which they are incurred.

question

What is capitalization?

answer

The asset is allocating to expense through depreciation throughout its useful life. Example: Nike buys a large sewing machine. Do not expense because it is a large purchase, instead capitalize over time.

question

Why would a period cost be recorded as an asset (capitalized)?

answer

If it is expected to provide an economic benefit (revenues).

question

Which kind of costs are those costs necessary to market, distribute, and service a product or service?

answer

Selling costs

question

Which kind of costs are costs associated with research, development, and general administration of the organization that cannot be reasonably be assigned to either selling or production?

answer

Administrative costs

question

What are some examples of administrative costs?

answer

Executive salaries, legal fees, printing the annual report, and general accounting.

question

Is indirect labor included in overhead?

answer

Yes.

question

Why is it important for service companies to distinguish between direct period costs and indirect period costs?

answer

Having the correct classification affects the numerous decisions and planning and control activities for managers.

question

If in a restaurant, what would be an example of a direct period cost?

answer

Chef salary

question

If in a restaurant what would be an example of an indirect period cost?

answer

Disposable napkins. (Basically, anything you cannot keep track of)

question

What represents the total product cost of goods completed during the current period and transferred to finished goods inventory?

answer

Cost of goods manufactured.

question

Beginning inventory plus purchases minus ending inventory equals

answer

Direct materials.

question

Direct materials plus direct labor plus manufacturing overhead plus beginning work in process inventory minus ending work in process inventory equals

answer

Cost of goods manufactured.

question

What is the cost of the partially completed goods that are still on the factory floor at the end of a time period?

answer

Work in process (WIP)

question

Work in process are

answer

Units that have been started, but not finished; they have some value, but not as much as they will when they are completed. Not exactly raw material but not read to be sold either.

question

What happens when we adjust the total manufacturing cost for the time period for the inventories of work in process?

answer

We will have the total cost of the goods that were completed and transferred from work in process inventory to finished goods inventory during that time period.

question

What represents the cost of goods that were sold during the period?

answer

Cost of goods sold

question

Beginning finshed goods inventory plus costs of goods manufactured minus ending finished goods inventory equals

answer

Cost of goods sold.

question

Price times units sold equals

answer

Sales revenue.

question

What is the difference between sales revenue and cost of goods sold?

answer

Gross margin

question

Sales revenue minus cost of goods sold equals

answer

Gross margin.

question

True or false: does gross margin equal operating income or profit?

answer

FALSE

question

Are selling and administrative expenses included in the gross margin?

answer

No

question

If gross margin, the firm at least charges the prices that cover what cost?

answer

Product cost

question

Gross margin divided by sales revenue equals

answer

Gross margin percentage.

question

Why would companies want to figure out the gross margin percentage?

answer

To compare their gross margin percentage with the average for its industry to see if it is within ballpark range for other firms in the industry.

question

Gross margin minus selling and administrative expenses equal

answer

Operating income.

Chapters 1-2 Acct 2302 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards