question

Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports.

answer

True

question

Managerial accounting applies to all forms of business organizations.

answer

True

question

Managerial accounting internal reports are prepared more frequently than are classified financial statements.

answer

True

question

The Sarbanes-Oxley Act replaces generally accepted accounting principles in a manufacturing company.

answer

False

question

Decision-making is an integral part of the planning, directing, and controlling functions.

answer

True

question

Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead.

answer

True

question

Raw materials are equal to direct materials minus indirect materials.

answer

False

question

The total cost of a finished product does not generally contain equal amounts of materials, labor, and overhead costs.

answer

True

question

Period costs include selling and administrative expenses.

answer

True

question

Direct materials and direct labor are the only product costs.

answer

False

question

Total period costs are deducted from total cost of work in process to calculate cost of goods manufactured.

answer

False

question

Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company.

answer

True

question

In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales.

answer

False

question

Finished goods inventory does not appear on a cost of goods manufactured schedule.

answer

True

question

product cost

answer

components-direct material

question

beginning work in process inv + total manufacturing costs

answer

total work in process

question

total work in process- ending work in process=

answer

cog manufactured

question

The balanced scorecard approach attempts to maintain as little inventory on hand as possible

answer

false

question

Many companies have significantly lowered inventory levels and costs using just-in-time inventory methods.

answer

true

question

Planning involves coordinating the diverse activities and human resources of a company to produce a smooth running operation.

answer

false

question

Product costs are also called inventoriable costs.

answer

true

question

The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.

answer

false

question

Cost accounting is primarily concerned with accumulating information about product costs.

answer

true

question

A process cost accounting system is appropriate for similar products that are continuously mass produced.

answer

true

question

a job order cost system and a process cost system are two alternative methods for valuing inventories

answer

true

question

A company may use either a job order cost system or a process cost system, but not both.

answer

false

question

Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

answer

true

question

Manufacturing costs are generally incurred in one period and recorded in a subsequent period.

answer

false

question

When raw materials are received, there's no effort at this point to associate the cost of materials with specific jobs.

answer

true

question

When raw materials are purchased, the Work in Process Inventory account is debited.

answer

false

question

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

answer

true

question

In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.

answer

true

question

Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred

answer

false

question

There should be a separate job cost sheet for each job.

answer

true

question

The formula for the predetermined overhead rate is: estimated annual overhead costs/ an expected annual operating activity.

answer

true

question

A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.

answer

false

question

When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited

answer

false

question

Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

answer

false

question

A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.

answer

true

question

The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.

answer

false

question

The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.

answer

true

question

At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold.

answer

false

question

Traditional costing systems use multiple predetermined overhead rates.

answer

false

question

Traditionally, overhead is allocated based on direct labor cost or direct labor hours.

answer

true

question

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

answer

true

question

a cost driver does not generally have a direct cause-effect relationship with the resources consumed

answer

false

question

To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.

answer

true

question

Low-volume products often require more special handling than high-volume products.

answer

true

question

ABC leads to enhanced control over overhead costs.

answer

true

question

ABC usually results in less appropriate management decisions.

answer

false

question

ABC eliminates all arbitrary cost allocations.

answer

false

question

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity

answer

true

question

Activity-based management focuses on reducing costs and improving processes

answer

true

question

Any activity that increases the cost of producing a product is a value-added activity.

answer

false

question

Non-value-added activities increase the cost of a product but not its market value.

answer

true

question

Machining is a non-value-added activity.

answer

false

question

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

answer

true

question

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

answer

false

question

Plant management is a batch-level activity.

answer

false

question

Painting is a product-level activity.

answer

false

question

Quality control is less important in just-in-time than in traditional manufacturing philosophies

answer

false

question

Inventory storage costs are reduced in just-in-time processing.

answer

true

question

Inventory system in which goods are manufactured or purchased just as they are needed for use.

answer

Just-in-time (JIT) inventory

question

A method of allocating overhead based on each product's use of activities in making the product

answer

Activity-based costing

question

Systems that are especially important to firms adopting just-in-time inventory methods.

answer

Total quality management (TQM)

question

One part of the value chain for a manufacturing company.

answer

Research and development, and product design

question

Research and development, and product design

answer

Service industries

question

A performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company's operations in an integrated fashion

answer

Balanced scorecard

question

manufacturing overhead rate for the year

answer

expected total cost for year / estimated hours

question

predetermined overhead rate

answer

estimated overhead / direct labor cost

Acct 212 – Managerial Accounting – Flashcards

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