Chapter 19 - Notable Notes Flashcards
T/F: Managerial accountants have a single role within an organization: collecting and reporting costs to management.
False. Managerial accountants determine product costs. In addition, managerial accountants are now held responsible for evaluating how well the company
employs its resources.
As a result, when the company makes critical strategic decisions, managerial accountants serve as team members alongside personnel from production, marketing, and engineering.
T/F: Financial accounting reports are general-purpose and intended for external users.
- True.
T/F: Managerial accounting reports are special-purpose and issued as frequently as needed.
- True.
T/F: A managers’ activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control.
- False. Managers’ activities are classified into three broad functions: planning, directing, and controlling.
Planning requires managers to look ahead to establish
objectives.
Directing involves coordinating a company’s diverse activities and human resources to produce a smooth-running operation.
Controlling keeps the
company’s activities on track.
T/F: Managerial accounting reports must now comply with generally accepted accounting
principles (GAAP).
- False. Managerial accounting reports are for internal use and thus do not have to
comply with GAAP.
A bicycle company has these costs: tires, salaries of employees who put tires on the wheels, factory building depreciation, advertising expenditures, lubricants, spokes, salary of factory manager, salary of accountant, handlebars, and salaries of factory maintenance employees.
Classify each cost as direct materials, direct labor, overhead, or a period cost.
Tires, spokes, and handlebars are direct materials.
Salaries of employees who put tires on the wheels are direct labor.
Factory building depreciation, lubricants, salary
of factory manager, and salary of factory maintenance employees are manufacturing overhead.
Advertising expenditures and salary of accountant are period costs.
- ______ All activities associated with providing a product or performing a service.
g. Value chain
- ______ A method of allocating overhead based on each product’s use of activities in making the product.
a. Activity-based costing
- ______ Systems implemented to reduce defects in finished products with the goal of achieving zero defects.
e. Total quality management (TQM)
- ______ A performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company’s operations in an integrated fashion.
b. Balanced scorecard
- ______ Inventory system in which goods are manufactured or purchased just as they are needed for use.
d. Just-in-time (JIT) inventory
- ______ A company’s efforts to employ sustainable business practices with regards to its employees, society, and the environment.
c. Corporate social responsibility
- ______ A code of ethical standards developed by the Institute of Management Accountants.
f. Statement of Ethical Professional Practice
Activity-based costing (ABC)
A method of allocating overhead based on each product’s use of activities in making the product. (p. 850).
Balanced scorecard
A performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company’s operations in an integrated fashion. (p. 850).
Board of directors
The group of officials elected by the stockholders of a corporation to formulate operating policies and select officers who will manage the company. (p. 839).
