Chapter One

Question 1

What characterizes financial accounting?

Answer 1

• used by external users
• completed on quarterly and annual basis
• general-purpose
• pertains to business as whole
• highly aggregated
• limited to double-entry and cost data
• follow GAAP
• audited by CPA

Question 2

What characterizes managerial accounting?

Answer 2

• used by internal users
• internal reports, frequent as needed
• special-purpose
• pertains to subunits
• very detailed
• extends beyond double entry
• standard is relevance to decisions
• no independent audit

Question 3

What are three management functions?

Answer 3

Planning, directing, and controlling

Question 4

What are manufacturing costs?

Answer 4

Direct materials, direct labor, and manufacturing overhead

Question 5

What is manufacturing overhead?

Answer 5

Factory costs that don’t apply to direct labor or direct materials

Question 6

What are period costs?

Answer 6

Selling costs and administrative costs

Question 7

How are cost of goods sold calculated by manufacturers?

Answer 7

Add beginning finished goods to cost of goods merchandised and subtract ending finished goods inventory.

Question 8

How is cost of goods manufactured calculated?

Answer 8

Add beginning work in progress inventory to total manufacturing costs to find total cost of work in process. Then subtract ending work in process inventory.

Question 9

What is corporate social responsibility?

Answer 9

Consideration directed at stakeholders beyond the stockholders.