Final Exam quizlet Flashcards by Erica Rodrigues

Provides financial and nonfinancial information to an organization’s managers

What is managerial accounting?

How well did you know this?

Not at all

Perfectly

Determining the costs of an organization’s products and services
planning future activities 3. comparing actual results to planned results

What is the purpose of managerial accounting?

How well did you know this?

Not at all

Perfectly

Key differences between managerial and financial accounting

Managerial Accounting: Internal users, no GAAP rules, available quickly without audit, uses real time information, focuses on the company’s project, processes and divisions, mostly monetary

How well did you know this?

Not at all

Perfectly

What is the fraud triangle?

Opportunity: A person must be able to commit fraud with low risk of getting caught
Pressure: A person must feel pressure
Rationalization: Justifies fraud or does not see its criminal nature

How well did you know this?

Not at all

Perfectly

Uses of the internal control system

-Ensures reliable accounting
-Protects Assets
-Uphold company policies
-Promote efficienct

How well did you know this?

Not at all

Perfectly

Beliefs that distinguish right from wrong (accepted standards of good and bad behavior)

Ethics

How well did you know this?

Not at all

Perfectly

Requires that management accountants be competent, maintain confidentiality, act with integrity and communicate information in a fair and credible manner

Institute of Management Accounting (IMA) Requirements

How well did you know this?

Not at all

Perfectly

Product, process, department, or customer to which costs are assigned

Cost Object

How well did you know this?

Not at all

Perfectly

Costs that can be cost-effectively traced to a cost object and consist of direct materials and direct labor

Direct Costs

How well did you know this?

Not at all

Perfectly

Costs that cannot be cost-effectively traced to a cost object

Indirect Costs

How well did you know this?

Not at all

Perfectly

Raw material that physically becomes part of the product and is clearly identified with specific (batches) of products

Direct Materials

How well did you know this?

Not at all

Perfectly

Costs for direct materials that can be cost-effectively traced through the manufacturing process to finished goods

Direct Material Costs

How well did you know this?

Not at all

Perfectly

Work of employees who physically convert materials to finished products

Direct Labor

How well did you know this?

Not at all

Perfectly

Wages and salaries for direct labor that are separately traced through the production process to finished goods

Direct Labor Costs

How well did you know this?

Not at all

Perfectly

All manufacturing costs that are not direct materials or direct labor

Factory Overhead

How well did you know this?

Not at all

Perfectly

Manufacturing costs that cannot be cost-effectively traced to finished goods

Factory Overhead Costs

How well did you know this?

Not at all

Perfectly

Materials used in manufacturing that cannot be cost-effectively traced to finished goods

Indirect Materials

How well did you know this?

Not at all

Perfectly

Labor needed in manufacturing that cannot be cost-effectively traced to finished goods

Indirect Labor

How well did you know this?

Not at all

Perfectly

Other Indirect Costs Include:

Factory utilities

How well did you know this?

Not at all

Perfectly

Total Manufacturing Goods (Equation)

Direct Materials + Direct Labor + Factory Overhead

How well did you know this?

Not at all

Perfectly

Conversion Costs (Equation)

Direct Labor + Factory Overhead

How well did you know this?

Not at all

Perfectly

Prime Costs (Equation)

Direct Materials + Direct Labor

How well did you know this?

Not at all

Perfectly

Costs necessary to create a product. Capitalized as inventory because they produce benefits expected to have future value (direct materials and labor, overhead costs)

Product Costs

How well did you know this?

Not at all

Perfectly

Non-production costs linked to a time period (not to specific products). Expenses in the period when incurred and reported on income statement as selling or general and administrative expenses

Period Costs

How well did you know this?

Not at all

Perfectly

Total Nonmanufacturing Costs (Equation)

Selling expenses + General and admin expenses

Costs of materials a company acquires to use in making products

Raw Materials Inventory

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

Work in Process Inventory

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

Finished Goods Inventory

How many inventory types of inventory does a manufacturer, merchandiser, and service company report on balance sheet?

manufacturer: 3 types merchandiser: 1 type service company: 0

Cost of Goods Sold (Merchandiser equation)

Beginning Merchandise Inventory + Costs of Merchandise Purchased - Ending Merchandise Inventory

Cost of Goods Sold (Manufacturer equation)

Beginning Finished Goods Inventory + Costs of Goods Manufactured - Ending Finished Goods Inventory

Key Difference in Computing Cost of Goods Sold Between Merchandisers and Manufactures:

- Merchandise Inventory (merchandisers) vs. Finished Goods Inventory (manufactures) -Merchandisers have cost of merchandise purchased (cost of buying products to sell) -Manufacturers have cost of goods manufactured (cost of direct materials, direct labor, and factory overhead in making finished goods)

Raw materials are either used in production or remain in raw materials inventory for use in future periods

Manufacturing Activities (Materials)

Total Raw Materials Available for Use (Equation)

RM Inventory, Beginning + RM Purchases

Cost of Goods Manufactured (Equation)

Direct Materials + Direct Labor + Factory Overhead (finished products) Carried over to current period income statement in the computation of costs of goods sold

Ending Work in Process Inventory (Equation)

Direct Materials + Direct Labor +Factory Overhead (unfinished products) Carried over to the current period balance sheet

Costs of finished goods sold is reported on income statement. Cost of any finished good not sold is a current asset (finished goods inventory) on the balance sheet

Sales Activity

Total Finished Goods Available for sale (Equation)

Finished Goods Inventory, Beginning + Cost of Goods Manufactured

Schedule of Costs of Goods Manufactured

1. Compute Direct Materials Used 2. Compute Direct Labor Used 3. Compute Factory Overhead 4. Compute Cost of Goods Manufactured

Combines machines, computers, and human control to manufacture products

Digital Manufactuirng

Managers and Employees understand the changing needs of customers and align operations accordingly

Customer Orientation

Expands competitive boundaries and provides customers more choices

Global Economy

Online Transactions

E-Commerce

Goal is to eliminate waste while "satisfying the customer" and "providing a positive return" to the company

Lean Business Model

Requires every employee to continually look to improve operations

Continuous Improvement

Focuses on quality improvement to business activites

Total Quality Management

Process of acquiring or producing inventory only when needed

Just-IN-Time Manufacturing

Series of activities that add value to a company's products or services

Value Chain

Focuses on 3 measures: Environmental, Economic, and Social

Triple Bottom Line

Raw Materials Inventory Turnover

Raw Materials Used / Average Raw Materials Used Reveals how many times a company turns over (uses in production) its raw materials inventory

Days' Sales in Raw Materials Inventory

Ending Raw Materials Inventory / Raw Materials Used x 365 Measure of how long it takes raw materials to be used in production

Accumulates production costs and assigns them to products and services (managers use this information to control costs and set selling price)

Cost accounting system

Production of special-order products

Job order production

Production of a customized product or service

Job

Production of more than one unit of a customized product or service

Job Lot

Mass production of large quantities of similar products in a continuous flow of steps

Process Operation

While a job is being produced, its costs are recorded here (all jobs not yet done)

Work in process inventory

When a job is finished, its total costs are transferred from work in process inventory to here (all jobs complete but not yet sold)

Finish Goods Inventory

When a finished job is delivered to a customer, its total costs are transferred from finished goods inventory to here (all jobs sold in that period)

Cost of goods sold

Cost accounting system to determine the cost of producing each job or job lot

Job Order Costing System

Cost recorded maintained for each job identifies the customer, job number, the costs, and key dates includes direct material and labor costs

Job cost sheet

Total job cost (equation)

Direct Labor + Direct Materials + Overhead (estimate) `

Form used to report that ordered goods were received and to describe their quantity and condition

Receiving report

Perpetual record updated each time materials are purchased or issues for production use

Materials Ledger Card

Purchasing raw materials for production

Raw materials inventory (D) Accounts payable (C)

Source document to track how much time employees spend on each job

Time ticket

Requires managers to estimate total overhead costs because they need to set prices and monitor job profitability

Overhead process

Predetermined over head rate (equation and step for over head process)

Step 1 Estimated overhead costs/Estimated base activity Estimated activity base: measure of production

Apply Estimated overhead to jobs (step and equation for overhead process)

Applied overhead = overhead rate x actual amount of activity base used step 2

Record actual overhead (step for overhead process)

Record indirect materials used (over head process)

Factory overhead (D) Raw materials inventory (C)

Record indirect labor used (overhead process)

Factory overhead (D) Factory wages payable (C)

Record other overhead costs

Factory overhead (D) Accumulated Depreciation Rent payable Utilities payable Prepaid insurance (all credit)

the remaining debt balance when actual overhead is more than applied overhead (jobs not charged enough overhead)

Under-applied overhead

resulting credit balance when actual overhead is less than applied overhead (job charged too much, cogs is overcosted)

Over applied overhead

Close under applied costs (step 4 overhead costs)

COGS (D) Factory overhead (C)

Close over applied costs (step 4 overhead costs)

Factory overhead (D) COGS (C)