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ACC200 > CHAPTER 14: Managerial Accounting Concepts and Principles > Flashcards

CHAPTER 14: Managerial Accounting Concepts and Principles Flashcards

1
Q

What is Managerial Accounting?

A

It provides financial and non-financial information for managers

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2
Q

What *purpose *does managerial accounting serve?

A
  1. To help plan and control decisions
  2. Determine cost of goods sold
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3
Q

Define Planning

A

Process of setting goals and making plans to achieve them

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4
Q

Define Control

A

Process of monitoring and evaluating an organization’s activties and employees

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5
Q

What is a Fraud Triangle?

A

List of factors that pushes a person to commit fraud

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6
Q

What is an Internal Control System? What is it used for?

A

It is to help prevent fraud, managers uses it to…
1. Ensure reliable accounting
2. Protect assets
3. Uphold company policies
4. Promote efficiency

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7
Q

Why are costs important to managers

A

It impacts financial position and profitability of a business

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8
Q

Users of Managerial accounting are Internal users, such as managerial and executive employees. TRUE or FALSE

A

TRUE

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9
Q

There are no GAAP rules in Managerial accountign when it comes to reporting. TRUE or FALSE

A

TRUE

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10
Q

Managerial Accounting provides information to internal users as they request it. TRUE or FALSE

A

TRUE

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11
Q

Managerial Accounting information get real-time reports. TRUE or FALSE

A

TRUE

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12
Q

Managerial Accounting Information focuses on specific activities, products, and departments, or division for which they are responsible. TRUE or FALSE

A

TRUE

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13
Q

Managerial Accounting reports have nonmonetary information, includes customer and employee satisfaction data, and percentage of on-time deliveries. TRUE or FALSE

A

TRUE

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14
Q

How can you prevent or limit the occurence of Fraud?

A
  1. By establishing internal controls; financial or non-financial, as well as human or computer interaction
  2. Code of ethics; promoting ethical decision making
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15
Q

What are types of businesses?

A
  1. Manufacturing - create products
  2. Service - perform services for customers
  3. Merchandising - companies that purchase finished inventory to sell
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16
Q

Variable Costs

A

change in proportion to changes in activity volumes; as volume increase, so does variable cost

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17
Q

Fixed Costs

A

Does NOT change as activitiy volume change

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18
Q

Direct Costs

A

Can be traced to a product, process, department or customer

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19
Q

Indirect Costs

A

Can NOT be traced to a product, process, department, or customer

20
Q

Product Costs

A

Necessary to create a product; cosist of direct materials, direct labor, and factory overhead

21
Q

Period Costs

A
  1. Non-production costs linked to a time period (not to specific products)
  2. Reported on income statement as selling expense or general administrative expenses
22
Q

What are examples of selling expenses?

A

Advertisement, delivery, salesperson salaries, commisions, and travel expenses

23
Q

What are examples of General Administrative Expenses?

A

Accounting expenses, office employee wages, office rent, and manager salaries

24
Q

What are examples of direct costs?

A

tires, seats, handlebars, cables, bike maker wages, frames, benefits

25
Q

What are examples of indirect costs?

A

Factory accounting, rent, manager’s salary, light and head, insurance, equipment depreciation

26
Q

What is direct materials?

A

Materials acquired by manufacturing company to be used in making a product; raw materials
Example: tires, seats, handlebars, etc.

27
Q

What is Direct Labor?

A

Wages and salaries for direct labor that cost-effectively traced through manufacturing process
Examples: wages paid to bike assembly worker

28
Q

What is Manufacturing Overhead?

A

CANNOT be easily traced to specific finished goods
Examples: Indirect labor, material, other costs

Other costs: Maintenance workers, screws, nuts, stables, factory utility

29
Q

What are the THREE types of inventories manufacturers report on the Balance Sheet?

A
  1. Raw Materials
  2. Work In Process
  3. Finished Goods
30
Q

What are raw materials?

A

Cost of materials a company acquires to use in making products (direct materials)

31
Q

What is Work In Process?

A

Consists of costs of direct materials, direct labor, and overhead for partially completed products

32
Q

What are Finished Goods?

A

Consists of costs of direct materials, direct labor and overhead completed products ready for sale

33
Q

How does a Merchandiser compute the Cost of Goods Sold?

A

Beg. Merchandise Inventory + Cost of Merchandise Purchased - Ending Merchandise Inventory = Cost of Goods Sold

34
Q

How does a Manufacturer compute the Cost of Goods Sold?

A

Beg. Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory = Cost of Goods Sold

35
Q

Service Companies do not report Cost of Goods Sold. TRUE or FALSE?

A

TRUE

36
Q

How do you compute the Net Income?

A

Gross Profit + Selling Expenses + General and Administrative Expenses = Net Income

37
Q

How do you compute the Total Raw Materials Available for use?

A

RM inventory, beg. + RM purchases = Total RM avail. for use

38
Q

How do you compute the Total Finished Goods available for sale?

A

FG inventory, beginning + Cost of goods manufactured = Total FG available for sale

39
Q

How do you compute the Direct Materials used?

A

RM inventory, beginning + Raw materials purchased = Total RM Available for use
[THEN] Total RM available for use - RM inventory, ending = DM used

40
Q

How do you compute the Total Factory Overhead?

A

Indirect labor + Depreciation expense( Factory) + Factory utilities = Total Factory Overhead

41
Q

How do you compute the Total Cost of Work in Process or Manufacturing Cost?

A
  1. Total Manufacturing Costs + WIP, beginning = Total cost of WIP
  2. WIP, beginning + DM used + Direct Labor + TF Overhead used = Total cost of WIP (Total Manufacturing Cost)

These are the same thing

42
Q

How do you compute the Cost of Goods Manufactured?

A

Total cost of WIP - Work in process, ending = Cost of goods manufactured

43
Q

How do you compute the Goods Available for Sale?

A

Finished goods inventory, beginning + Cost of goods manufactured = Goods Available for sale

44
Q

How do you compute the Cost of Goods Sold?

A

Cost of Goods Available for sale - Finished goods inventory, ending = Cost of goods sold

45
Q

Compute the** Raw Materials Inventory Turnover**

A

Raw materials use / Average raw materials inv. = RM Inventory Turnover

46
Q

Compute the Days’ Sales in RM Inventory

A

Ending raw materials inventory/Raw materials used x 365
= Days’ Sales in RM Inventory

ACC200 (4 decks)

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