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Managerial Accounting Test 1 questions answered correctly.
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Managerial Accounting Test 1 questionsanswered correctly.
Balance Sheets ANS - 1. snapshot of resources (assets) and claims (liability+equity)
2. based on accounting equation
Statement of Earnings (Income Statement) ANS - - operating performance over period of time
- Revenues and expenses
Statement of Cash Flows ANS - - flows of cash over time
- Shows operating, investing, and financing activities
Financial vs. Managerial Accounting ANS - - 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 ANS - also called management accounting, is a field of accounting that provides
economic and financial info for managers and other internal users
Direct Materials ANS - 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 ANS - labor costs that can be easily traced to individual units of product (touch labor)
-example: wages paid to car assembly worker
, Manufacturing Overhead ANS - -all manufacturing costs except DM & DL
-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)
**factory depreciation, factory utility, factory property tax are all considered overhead as well**
Non-manufacturing Costs (Period Costs) ANS - - 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 ANS - - 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 ANS - - 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 ANS - - how a cost will react to changes in the level of business activity
Variable Cost ANS - - 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 ANS - - 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 ANS - - how firms measure, record, and report their product costs
- two basic cost systems:
1. job order cost system
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