Managerial Accounting Test 1 Exam questions with well verified answers
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Course
Managerial Accounting
Institution
Managerial Accounting
Balance Sheets - correct answer 1. snapshot of resources (assets) and claims (liability+equity)
2. based on accounting equation
Statement of Earnings (Income Statement) - correct answer - operating performance over period of time
- Revenues and expenses
Statement of Cash Flows - correct an...
Managerial Accounting Test 1
Balance Sheets - correct answer 1. snapshot of resources (assets) and claims (liability+equity)
2. based on accounting equation
Statement of Earnings (Income Statement) - correct answer - operating performance over period of time
- Revenues and expenses
Statement of Cash Flows - correct answer - flows of cash over time
- Shows operating, investing, and financing activities
Financial vs. Managerial Accounting - correct answer - Financial accy: users are external persons, has a
historical perspective, emphasis on verifiability, emphasis on precision, focus on whole organization,
follow GAAP formats, mandatory for reports
- Managerial accy: users are managers, future emphasis, emphasis on relevance for planning and control,
emphasis on timeliness, focus on segments of organization, don't need to follow GAAP, reports not
mandatory
Managerial Accounting - correct answer also called management accounting, is a field of accounting that
provides economic and financial info for managers and other internal users
Direct Materials - correct answer raw materials that become an integral part of the product and that can
be traced directly to it (physically and conveniently associate with the product
-example: door attached to car
Direct Labor - correct answer labor costs that can be easily traced to individual units of product (touch
labor)
-cannot be traced directly to specific units produced
-example: indirect materials (lubricants and cleaning supplies used in car assembly plant)
-example: indirect labor (wages to maintenance workers, janitors, security guards)
, Managerial Accounting Test 1
**factory depreciation, factory utility, factory property tax are all considered overhead as well**
Non-manufacturing Costs (Period Costs) - correct answer - Selling Costs: costs necessary to secure and
order/deliver the product (marketing costs, sales commissions)
- Administrative Costs: all executive, organization, and clerical costs (executive salary, accountant salary)
- SG&A: selling, general & administrative costs
Product Costs vs. Period Costs - correct answer - Product Costs: direct materials, direct labor, MOH
- Period Costs: not included in product costs, they're expensed on the income statement
Merchandising vs. Manufacturing Activities - correct answer - Merchandisers: purchase finish goods from
suppliers for resale to customers
- Manufacturers: purchases raw materials, produce and sell goods to customers (our focus in this class)
Cost Behavior - correct answer - how a cost will react to changes in the level of business activity
Variable Cost - correct answer - a cost that varies in direct proportion to a change in business activity
(long distance phone call example)
- variable cost per unit remains the same over wide ranges of activity
Fixed Cost - correct answer - total fixed cost remains the same even when activity level changes
- average fixed cost per unit goes down as activity level goes up
Cost Systems - correct answer - how firms measure, record, and report their product costs
- two basic cost systems:
1. job order cost system
2. process cost system
Job Order Cost System - correct answer - Used in situations where each product has:
1. own distinguishing characteristics; each product is assigned by a job/batch
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