Chapter 1- Managerial Accounting

T/F Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.

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

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.

Managerial accounting -places emphasis on special-purpose information. -is limited to cost data. -is governed by generally accepted accounting principles. -pertains to the entity as a whole and is highly aggregated.

All of the following are distinguishing features of managerial accounting except -to provide special-purpose information - internal users - reports pertaining to subunits of the entity -independent audits

T/F Planning is the process of keeping the company's activities on track.

What are considered to be management's three broad functions?

Which of the following is considered part of the controlling process? -Keeping the company's activities on track -Implementing planned objectives -Coordinating activities and human resources to produce a smooth running operation -Looking ahead and establishing objectives

The management of an organization performs several broad functions. They are

After passage of the Sarbanes-Oxley Act of 2002

The management function that requires management to look ahead and establish objectives is

The process of keeping the company's activities on track is

T/F Indirect material costs are easily traced to products because of their physical association with the finished product.

T/F Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product.

Which one of the following is not a manufacturing cost? -Advertising cost -Factory maintenance -Wages of assembly workers -Wheels that are being installed on new automobiles being manufactured

List the three manufacturing costs

Which of the following costs would a computer manufacturer include in manufacturing overhead? -The cost of the memory chips. -The wages earned by computer assemblers. -The cost of the disk drives. -Depreciation on testing equipment.

Which of the following is not an element of manufacturing overhead? -Plant manager's salary. -Factory repairman's wages. -Sales manager's salary. -Product inspector's salary.

Manufacturing overhead includes all of the following except -indirect labor. -maintenance. -depreciation. -direct materials.

On average, studies have shown that the smallest component of total manufacturing cost is

T/F Product costs are costs that are a necessary and integral part of producing the finished product.

Which group of costs consists of only product costs? -Direct labor, indirect labor, factory utilities -Factory maintenance, sales commissions, salaries paid to sales clerks -Indirect labor, factory building depreciation, administrative expenses -Direct labor, direct materials, and selling expenses

Direct materials are a -product cost -manufacturing overhead -period cost

Indirect labor is a

Which of the following costs are classified as a period cost? -Wages paid to a cost accountant department supervisor. -Wages paid to a factory custodian. -Wages paid to a production department supervisor. -Wages paid to an assembly worker.

Product costs include each of the following except -direct labor. -direct materials. -manufacturing overhead. -selling and administrative expenses.

Each of the following is a period cost except non-manufacturing costs. selling expenses. administrative expenses. indirect labor.

T/F Manufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods purchased and subtracting the ending finished goods inventory.

Which of the following would you find on the income statement of a manufacturing company, but not on the income statement of a merchandising company? -Cost of goods manufactured -Cost of goods purchased -Raw materials -Work in process

One key difference appears when comparing the income statements of a manufacturing company to a merchandising company. What is that difference?

Cost of goods available for sale is reported on the income statement of

For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to

The principal difference between a merchandising and a manufacturing income statement is the

T/F The costs assigned to beginning work in process inventory are based on the manufacturing costs incurred in the prior period.

A cost of goods manufactured schedule shows beginning and ending inventories for

The formula to determine the cost of goods manufactured is

The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the

Companies compute cost of goods manufactured by subtracting ending work in process inventory from

T/F Companies generally list manufacturing inventories in the order of completion—raw materials, work in process, and finished goods.

T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheet Raw materials is to a manufacturer what merchandise inventory is to a merchandiser.

T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheet A merchandiser reports its inventories as a current asset, and a manufacturer reports inventories as an expense.

T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheet Manufacturer's include raw materials, work in process, finished goods, and cost of goods sold on the balance sheet, while merchandisers include only merchandise inventory and cost of goods sold on their balance sheet.

T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheet Finished goods is to a manufacturer what merchandise inventory is to a merchandiser.

A manufacturer may report three inventories in its balance sheet: (1) raw materials, (2) work in process, and (3) finished goods. Indicate in what sequence these inventories generally appear on a balance sheet.

The cost applicable to units that have been started into production but not completed is shown as

T/F Under the just-in-time inventory method, goods are manufactured or purchased just-in-time for use.

T/F Trend in industry The majority of workers in the U.S. are in manufacturing which is growing substantially.

T/F Trend in industry The U.S. economy has shifted toward an emphasis on providing services.

T/F Trend in industry Companies now have larger amounts of inventories than in the past.

T/F Trend in industry Large batch processing in manufacturing is becoming more common.

Trend in managerial accounting?

Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion? Balanced scorecard. Just-in-time inventory. Total-quality management. Activity-based costing.

Examples of recent trends in the economic environment of U.S. businesses are

Many companies have significantly lowered inventory levels and costs using

All activities associated with providing a product or service is referred to as