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Managerial Accountin
Flashcards
| Question | Answer |
|---|---|
| What is the effect of a company's accounting department maintaining high ethical standards. | The company's accounting information will increase in value. |
| Why might employees be interested in their company's financial accounting information? | Financial statement data can determine employee bonuses. |
| Which group establishes financial accounting rules in the United States? | Financial Accounting Standards board (FASB) |
| Which report is one of the three primary financial statements | Statement of cash flows |
| A company paid $5,000 cash in advertising costs. How does it affect accounting equation? | Assets decrease by $5,000; expenses increase by $5,000. |
| What is a transaction? | Two parties exchanging something of value. |
| A company borrowed $80,000 cash from a bank. How does it affect accounting equation? | Assets increase by $80,000; liabilities increase by $80k. |
| What is the impact of expenses on the accounting equation? | Expenses decrease owners' equity. |
| Which type of account are accounts payable and notes payable both examples of? | Liability |
| What is the purpose of the financial accounting cycle? | To turn information about transactions into financial statements |
| According to accounting equation, the amount of liabilities and equity must equal | Assets |
| Which item is an expense item | Cost of goods sold |
| How is gross profit computed? | Sales minus cost of goods sold |
| Which type of account is retained earnings? | Equity |
| For the purpose of cash flow classification in the statement of cash flows, which item is an operating activity? | Paying employees |
| How does a classified balance sheet provide useful information to a decision maker? | It distinguishes between current and long-term assets. |
| What information does a balance sheet provide to a decision maker? | Summary of the financial position of a company at a particular date |
| What is an account payable? | The amount owed by a company that purchased goods or services on credit. |
| What is an example of a financial cost that would result from poor direct labor budgeting | Increased hiring, training, and overtime costs. |
| What does a manager have control over in a cost center? | Costs |
| What should be considered when developing a measure to evaluate the performance of a manager? | Only controllable costs |
| In some companies, the performance measures for profit center managers are heavily influenced by cost allocations downward from organizational units (such as company headquarters). | Uncontrollable costs should not be included in the performance evaluation measure of a profit center manager |
| Which budget should include the expected cost of supplies used by office staff at the corporate headquarters | Administrative expense budget |
| Which items are uncontrollable , external variables that make it difficult to forecast the level of sales | Customer tastes and economic conditions |
| What is the correct sequence of budgets in a manufacturing business? | Sales, production, direct materials |
| Which type of business organization has a major focus on direct materials, direct labor and overhead | Manufacturing |
| What are the three primary functions that company managers use managerial accounting for? | Planning controlling and evaluating |
| What is the proper accounting for a period cost? | Record as an inventory cost until the item is sold. |
| How could a period cost be reported in an income statement? | As an administrative expense. |
| A retail company purchased inventory costing $100k. By the end of the year, inventory costing 75K had been sold. How is the remaining $25k to be reported on the financial statement | As an asset in the balance sheet |
| How are the wages of cashiers classified in a MERCHANDISING company? | Selling expense |
| How are wages of office staff in a company headquarters building classified? | Administrative expense |
| Which label is given to the cost of the wood used in the construction of a piece of wood furniture | direct materials |
| Which label is given to the cost of electricity in a furniture factory? | Manufacturing overhead |
| What is the sequence of the flow of costs through a manufacturing operating | Raw materials, WIP, finished goods, cost of goods sold |
| What is the CVP equation? | Sales-variable costs-fixed costs = profit |
| Which cost category is not formally tracked in a company's accounting system | opportunity costs |
| A company reports: Total sales revenue: $250k; no. of units sold = 50,000 units; variable costs = $100k - what is the break even point | $250,000-$100,000 = $150,000 |
| A company reports these data: Price per unit = $25, variable costs per unit = $15, fixed costs = $15k - what is the variable cost ratio? | $15/$25 = .60 or 60% |
| Why is the concept of relevant range important to a manager? | Outside the relevant range, the variable cost per unit can change |
| Which statement correctly describes applied manufacturing overhead? | The amount of manufacturing overhead that is assigned to the goods produced |
| What is the label given to the quantity computed as estimated overhead costs | Predetermined overhead rate |
| In a job order costing system, what is the proper accounting for a product cost | It is reported as a part of cost of goods sold. |
| Which item is a period cost | Utility bills to heat the headquarters building |
| Which statement is true with respect to activity based costing (ABC) ssystems? | An ABC system allocates overhead based on multiple activities. |
| How is overhead allocated in an ABC system? | Activity rate multiplied by number of cost driver events |
| In an ABC system, which name is given to a numerical measure reflecting the particular overhead cost activity? | Cost driver |
| How are production costs treated in a process costing system? | Costs are accumulated by process and averaged over all products made during the period. |
| How is the production cost per unit computed in a process costing system? | Amount of total production cost divided by the number of units completed during a particular period of time. |
| For which production process is process costing the appropriate costing method? | Refining gasoline in a petroleum facility |
| Which overhead allocation method should be used for a business that mass-produces breakfast cereal? | Process costing |
| What is the correct sequence for the flow of costs through a job order costing system? | Raw materials inventory, work-in-process inventory, finished goods inventory, cost of goods sold |
| Which type of company cannot use job order costing? | Petroleum refining plant |
| What is an example of direct materials? | Cost of aluminum in making an airplane. |
| What is an example of direct labor | Wages for furniture assemblers in a wood furniture manufacturer |
| What is an example of manufacturing overhead? | Cost of sandpaper in making wood furniture |
| What is JOB ORDER COSTING? | Job order costing is a costing method which is used to determine the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces a variety of products which are different from one another and needs to calculat |
| What is PROCESS COSTING? | Process costing is a method of costing used mainly in manufacturing where units are continuously mass-produced through one or more processes. ... The method used is to take the total cost of the process and average it over the units of production. |
| What are period costs (vs. Product costs)? | Period costs are all costs not included in product costs. Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. ... Therefore, period costs are listed as an e |
Created by:
dyarboro45