Chapter 2

Question 1

system

Answer 1

set of interrelated parts that performs one or more processes to accomplish specific objectives

Question 2

accounting information systems

Answer 2

consists of interrelated manual and computer parts and uses processes such as collecting, classifying, summarizing, analyzing, and managing data to provide information to users
The overall objective of an accounting information system is to provide info to users
Two key features of the accounting info system
first the inputs are economic events
two the operational model of an accounting info system is critically involved with the user

Question 3

Accounting Info Systems subsystems

Answer 3

1. the financial accounting info system

2. the cost management info system

Question 4

Financial Accounting System

Answer 4

primarily concerned with giving outputs for external users

Question 5

Cost Management Information System

Answer 5

concerned with producing outputs for internal users
provides
1. Costing Services, products, and other objects of interest management
2. Planning and control
3. Decision Making

Question 6

value chain

Answer 6

the set of activities required to design, develop, produce, market, deliver, and provide post sales service for the products and services sold to customers

Question 7

Cost Accounting Information Systems

Answer 7

cost management subsystem designed to assign costs to individual products and services and other objects of interest to managers

Question 8

Operational Control Information System

Answer 8

a cost management subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control of activities

Question 9

Cost

Answer 9

the cash or cash equivalent value sacrificed for goods and services that are expected to bring a current or future benefit to the organization.

Question 10

Expenses

Answer 10

Expired costs

Question 11

Assets

Answer 11

Un-expired costs

Question 12

Cost objects

Answer 12

anything for which costs are measured and assigned

Question 13

Activity

Answer 13

basic unit of work performed within an organization

Question 14

Indirect Costs

Answer 14

costs that cannot be traced easily and accurately to a cost object

Question 15

Direct Costs

Answer 15

costs that can be traced easily and accurately to a cost object

Question 16

Traceability

Answer 16

the ability to assign a cost directly to a cost object

Question 17

Direct Tracing

Answer 17

the process of identifying and assigning costs to a cost object that are specifically or physically associated with the cost object

Question 18

Drivers

Answer 18

factors that cause changes in resource usage, activity usage, costs, and revenues

Question 19

Driver Tracing

Answer 19

the use of drivers to assign costs to cost objects

Question 20

Allocation

Answer 20

assignment of indirect costs to cost objects

Question 21

tangible products

Answer 21

goods produced by converting raw materials into finished goods

Question 22

services

Answer 22

tasks or activities performed for a customer or an activity performed by a customer using an organizations product or facilities

Question 23

production costs

Answer 23

are those costs associated with the functions of selling and administration

Question 24

non-production costs

Answer 24

costs associated with the functions of selling and administration

Question 25

direct materials

Answer 25

those materials traceable to the good or service being produced

Question 26

direct labor

Answer 26

labor that is traceable to the goods or services being produced

Question 27

overhead

Answer 27

all production costs other than direct materials and direct labor are lumped into one category called overhead

Question 28

supplies

Answer 28

generally those materials necessary for production that do not become part of the finished product or are not used in providing a service

Question 29

indirect materials

Answer 29

direct materials that form an insignificant part of the final product are usually lumped into the overhead category called indirect materials

Question 30

prime cost

Answer 30

the sum of direct materials cost and direct labor cost

Question 31

conversion cost

Answer 31

the sum of direct labor cost and overhead cost

Question 32

period costs

Answer 32

are expensed in the period in which they occur

Question 33

Marketing (selling) costs

Answer 33

costs necessary to market and distribute a product or service

Question 34

administrative costs

Answer 34

all costs that cannot be reasonably assigned to either marketing or producttion

Question 35

absorption costing income or full costing income

Answer 35

all manufacturing costs are fully assigned to the product

Question 36

costs of goods sold

Answer 36

the cost of direct materials, direct labor, and overhead attached to the units sold

Question 37

cost of goods manufactured

Answer 37

the total manufacturing cost of goods completed during the current period

Question 38

work in process

Answer 38

consists of all partially completed units found in production at a given point in time

Question 39

COGM

Answer 39

B Inv + Purchases - E Inv+ DL + MO +B WIP - E WIP = COGM

Question 40

COGS

Answer 40

COGM + B Fin Goods=COG Available for sale-E Fin Goods=COGS

Question 41

Traditional cost system

Answer 41

uses only unit based activity drivers to assign costs to a cost object

Question 42

traditional operation control system

Answer 42

assigns costs to organizational units and then holds the organizational unit manager responsible for controlling the assigned costs

Question 43

Activity based cost system

Answer 43

cost accounting system that uses both unit and non unit based activity drivers to assign activity costs to cost objects is called

Question 44

Activity based management

Answer 44

focuses on the management of activities with the objective of improving the value received by the customer and the profit received by the company in providing this value

Question 45

measurement costs

Answer 45

the costs associate with the measurements required by the cost management system

Question 46

error costs

Answer 46

the costs associated with making poor decisions based on bad cost information