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Chapter 10

Terms in this set (79)

Primary users of reports
Financial Acc - External Users

Managerial Acc - Internal Users
Decision-making is management's most important function. T/F
F
Types of reports
Financial Acc - Financial Statements

Managerial Acc - Internal Reports
Frequency of reports
Financial Acc - Quarterly and annually

Managerial Acc - As frequently as needed
Purpose of reports
Financial Acc - General-purpose

Managerial Acc - Special-purpose information for specific decisions
Content of reports
Financial Acc - Generally accepted accounting principles

Managerial Acc - Relevance to decisions
Verification process
Financial Acc - Annual audit by certified public accountant

Managerial Acc - No independent audits
_______ requires management to look ahead and to establish objectives. A key objective of management is to add value to the business.

- planning
- directing
- controlling
planning
_______ involves coordinating the diverse activities and human resources of a company to produce a smooth-running operation. This function relates to the implementation of planned objectives.

- planning
- directing
- controlling
directing
_______ is the process of keeping the activities on track. Management determines whether goals are being met and what changes are necessary when there are deviations.

- planning
- directing
- controlling
controlling
Managerial accounting reports focus on manufacturing and non-manufacturing costs, but are also used in the budget process. T/F
F
Financial accounting reports pertain to subunits of the business and are very detailed. T/F
F
Managerial accounting reports must follow GAAP and are audited by CPAs. T/F
F
Financial accounting focuses on providing information to internal users. T/F
F
Managers' activities and responsibilities can be classified into three broad functions: planning, directing, and controlling. T/F
T
Preparation of budgets is part of financial accounting.
F
Staff positions are directly involved in the company's primary revenue-generating activities. T/F
F
Managerial accounting applies only to merchandising and manufacturing companies. T/F
F
Both managerial accounting and financial accounting deal with many of the same economic events. T/F
T
Managerial accounting reports are prepared only quarterly and annually. T/F
F
Financial accounting reports are general-purpose reports. T/F
T
Managerial accounting reports pertain to subunits of the business. T/F
T
Managerial accounting reports must comply with generally accepted accounting principles. T/F
F
The company treasurer reports directly to the vice president of operations. T/F
F
Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.
T/F
T
Which of the following statements is not true about managerial accounting?

- It is primarily for internal users such as officers and managers.
- It does not require an audit by a CPA.
- It is highly aggregated.
- Reports are generated as needed.
It is highly aggregated
Which of the following statements is true about managerial accounting?

- It pertains to a business as a whole.
- It provides more detailed information than financial accounting does.
- It is primarily for internal users such as stockholders and managers.
- It must be prepared using generally accepting accounting principles.
It provides more detailed information than financial accounting does.
Managerial accounting

- pertains to the entity as a whole and is highly aggregated.
- is limited to cost data.
- places emphasis on special-purpose information.
- is governed by generally accepted accounting principles.
places emphasis on special-purpose information.
Managerial accounting information generally pertains to an entity as a whole and is highly aggregated.
T/F
F
Planning is the process of keeping the company's activities on track.
T/F
F
Which of the following are considered to be management's three broad functions?

- Controlling, directing, manufacturing
- Conducting, directing, manufacturing
- Planning, directing, and controlling
- Planning, calculating, and controlling
Planning, directing, and controlling
Managerial accounting applies to all forms of business organizations. T/F
T
Determining the unit cost of manufacturing a product is an output of financial accounting. T/F
F
The controller of a company is responsible for all of the accounting and finance issues a company faces.
T/F
F
Controlling is the process of determining whether planned goals are being met. T/F
T
The major reporting standard for presenting managerial accounting information is

- the cost principle.
- the current tax law.
- relevance.
- generally accepted accounting principles.
relevance
Managerial accounting is also called

- management accounting.
- inside reporting.
- controlling.
- analytical accounting.
management accounting
Which of the following is not an internal user?

- Department manager
- Controller
- Treasurer
- Creditor
Creditor
Managerial accounting does not encompass

- profit planning.
- determining cost behavior.
- calculating earnings per share.
- calculating product cost.
calculating earnings per share.
Managerial accounting is applicable to

- service entities.
- manufacturing entities.
- not-for-profit entities.
- all of these.
all of these.
Mel Finney claims that the distinction between direct and indirect materials is based entirely on physical association with the product. Is Mel correct? Y/N
N
Frames and tires used in manufacturing bicycles.

- direct materials
- direct labor
- manufacturing overhead
direct materials
Wages paid to production workers.

- direct materials
- direct labor
- manufacturing overhead
direct labor
Insurance on factory equipment and machinery.

- direct materials
- direct labor
- manufacturing overhead
manufacturing overhead
Depreciation on factory equipment.

- direct materials
- direct labor
- manufacturing overhead
manufacturing overhead
Windshield

- direct materials
- direct labor
- manufacturing overhead
direct materials
engine

- direct materials
- direct labor
- manufacturing overhead
direct materials
wages of assembly line worker

- direct materials
- direct labor
- manufacturing overhead
direct labor
depreciation of factory machinery

- direct materials
- direct labor
- manufacturing overhead
manufacturing overhead
factory machinery lubricants

- direct materials
- direct labor
- manufacturing overhead
manufacturing overhead
tires

- direct materials
- direct labor
- manufacturing overhead
direct materials
steering wheels

- direct materials
- direct labor
- manufacturing overhead
direct materials
salary of painting supervisor

- direct materials
- direct labor
- manufacturing overhead
manufacturing overhead
manufacturing overhead

- product costs
- period costs
product costs
selling expenses

- product costs
- period costs
period costs
administrative expenses

- product costs
- period costs
period costs
advertising expenses

- product costs
- period costs
period costs
direct labor

- product costs
- period costs
product costs
direct materials

- product costs
- period costs
product costs
utilities for manufacturing equipment

- direct materials
- direct labor
- manufacturing overhead
factory overhead
raw materials (CPU, chips, etc)

- direct materials
- direct labor
- manufacturing overhead
direct materials
depreciation on manufacturing building

- direct materials
- direct labor
- manufacturing overhead
factory overhead
wages for production workers

- direct materials
- direct labor
- manufacturing overhead
direct labor
advertising

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
period costs
not applicable
blank CDs

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
direct materials
depreciation of CD image burner

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
manufacturing overhead
salary of factory manager

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
manufacturing overhead
factory supplies used

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
manufacturing overhead
paper inserts for CD cases

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
direct materials
CD plastic cases

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
direct materials
salaries of sales representatives

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
period costs
not applicable
salaries of factory maintenance employees

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
manufacturing overhead
salaries of employees who burn music onto CDs

- product costs
- period costs

- direct materials
- direct labor
- manufacturing overhead
- not applicable
product costs
direct labor
Indirect material costs are easily traced to products because of their physical association with the finished product.
T/F
F
Factory automation in the US has resulted in all of the following EXCEPT

- increase in relative share of factory overhead cost.
- increase in output per worker.
- decrease in labor cost per unit.
- increase in manufacturing jobs in sixty years prior to 2010.
increase in manufacturing jobs in sixty years prior to 2010.
Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product. T/F
T
Which one of the following is not a manufacturing cost?

- Wheels that are being installed on new automobiles being manufactured
- Advertising cost
- Wages of assembly workers
- Factory maintenance
Advertising cost
Which of the following answer choices lists the three manufacturing costs?

- Work in process, finished goods, and cost of goods sold
- Raw materials, work in process, and finished goods
- Indirect materials, indirect labor, and factory-related costs
- Direct materials, direct labor, and manufacturing overhead
Direct materials, direct labor, and manufacturing overhead
Product costs are costs that are a necessary and integral part of producing the finished product. T/F
T
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