Cost/Managerial Accounting – Chapter 1 – Flashcards
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Managerial accounting differs from financial accounting in that financial accounting is
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Primarily concerned with external financial reporting. Financial accounting is primarily concerned with historical accounting i.e., traditional financial statements, and with external financial reporting to creditors and shareholders.
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Which of the following is least likely to be an objective of a cost accounting system?
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Sales commission determination. A cost accounting system has internal and external reporting objectives. These include product costing; assessment of departmental efficiency; inventory valuation; income determination; and planning, evaluating, and controlling operations.
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Which is the best description of traditional cost accounting?
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The general ledger and subsidiary accounts and related records, etc., used to accumulate the costs of goods or services provided by an entity.
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Management should implement a different and/or more expensive accounting system only when
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The benefits of the system exceed the cost. Changing to a different and/or more expensive accounting system requires cost-benefit analysis. Changes should be undertaken only if the benefits of the proposed change exceed its cost.
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Cost and managerial accounting systems are goods in the economic sense and, as such, their benefits must exceed their costs. When managerial accounting systems change, the cost that is usually frequently ignored is the cost of
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Educating users. Users, i.e., managers, must be both willing and able to use the new accounting systems.
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An accounting system that collects financial and operating data on the basis of the underlying nature and extent of the cost drivers is
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Activity-based costing. An activity-based costing system (ABC) system identifies the casual relationship between the incurrence of cost and activities, determines the cost driver for each activity, and applies costs to products on the basis of resources (drivers) consumed.
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Companies characterized by the production of heterogeneous products will likely use which of the following methods for the purpose of averaging costs and providing management with unit cost data?
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Job-order costing. The job-order cost system of accounting is appropriate when products have varied characteristics and/or when identifiable groupings are possible e.g., batches of certain styles or types of furniture. The unique aspect of job-order costing is the identification of costs to specific units or a particular job.
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Companies characterized by the production of basically homogeneous products will most likely use which of the following methods for the purpose of averaging costs and providing management with unit-cost data?
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Process costing. Like products that are mass produced should be accounted for using process costing to assign costs to products.
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The primary reason for adopting total quality management is to achieve
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Greater customer satisfaction. TQM is an integrated system that identifies internal and external customer and establishes their requirements.
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Companies that adopt just-in-time purchasing systems often experience
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A reduction in the number of suppliers. The objective of JIT is to reduce carrying costs by eliminating inventories increasing the deliveries made by suppliers. Suppliers are limited to those who guarantee perfect quality and prompt delivery.
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The perpetual inventory method differs from the periodic in that the former (perpetual)
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Maintains a continuous record of transactions affecting the inventory balances. Perpetual inventory records provide for and continuous record of transactions affecting the inventory balances.
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Controllers are ordinarily not concerned with
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Investor relations. Controllers are usually in charge of budgets, accounting, accounting reports, and related controls. Treasurers are usually involved investments.
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The treasury function is usually not concerned with
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Financial reporting. Treasurers are usually concerned with investing cash and near-cash assets, the provision of capital, investor relations, insurance, etc. Controllers are responsible for financial reporting.
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Which professional organization represents management accountants in the united states?
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The Institute of Management Accountants.
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The professional certification program most suited for one interested in a career in management accounting leads to which of the following designations?
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CMA. The Certified Management Accountant (CMA) program is administered by the IMA through the ICMA.
