CH1

Question 1

Managerial accounting is..

Answer 1

… is more flexible (not constrained by GAAP)
… is more timely
… but may be less “accurate”

Question 2

Managerial is focused on:

Answer 2

… present and future transactions of the business (as well as the past),
… internal users needs,
… segments of a business rather than the company as a whole!

Question 3

Long Term Planning

Answer 3

Strategic Planning

Question 4

Short term Planning

Answer 4

Operational Planning

Question 5

Sunk Costs

Answer 5

Costs that have already been incurred

Question 6

Future Costs

Answer 6

Costs that will be incurred in the future

Question 7

Opportunity Cost

Answer 7

Benefits forgone by choosing one alternative over another

Question 8

Relevant Costs

Answer 8

Future Costs that differ in the circumstances
Opportunity Costs
Cash inflow that will be sacrificed as a result of a particular management decision is also a relevant cost.

Question 9

Irrelevant Costs

Answer 9

Sunk costs

Costs that do not differ among alternatives

Question 10

Relevant cost avoidable??

Answer 10

These are avoidable OR can be eliminated by choosing one alternative over another.

Question 11

Sunk Costs avoidable??

Answer 11

These are costs that have already been incurred. They cannot be avoided and thus are irrelevant!!

Question 12

Opportunity Cost

Answer 12

Benefits forgone by choosing one alternative over another. They are relevant.