INTRODUCTION TO COST ACCOUNTING

Question 1

is considered as the “language of business”.

Answer 1

ACCOUNTING

Question 2

is a service activity which function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions among alternative courses of action.

Answer 2

ACCOUNTING

Question 3

BRANCHES OF ACCOUNTING

Answer 3

1. FINANCIAL ACCOUNTING
2. MANAGERIAL ACCOUNTING
3. COST ACCOUNTING
4. TAXATION

Question 4

preparation of general-purpose financial statements

Answer 4

FINANCIAL ACCOUNTING

Question 5

governed by Philippine Financial Reporting Standards Council (PFRS)

Answer 5

FINANCIAL ACCOUNTING

Question 6

financial information to internal and external users

Answer 6

FINANCIAL ACCOUNTING

Question 7

(PFRS) means

Answer 7

Philippine Financial Reporting Standards Council

Question 8

are individuals or enterprises that have financial interest in the business but they are not involved in the day to day activities of the organization.

Answer 8

EXTERNAL USERS

Question 9

EXAMPLES OF EXTERNAL USERS

Answer 9

• Business Contacts
• Lenders
• Customers
• Investors
• Analysts/Advisers
• Government and their
  Agencies
• Independent Auditors
• Public

Question 10

provides accounting information to internal users.

Answer 10

MANAGERIAL ACCOUNTING

Question 11

not governed by the PAS set financial accounting.

Answer 11

MANAGERIAL ACCOUNTING

Question 12

needs accounting information for planning, organizing, directing, and controlling business operations.

Answer 12

MANAGERIAL ACCOUNTING

Question 13

are those who make decisions directly affecting the internal operations of the business.

Answer 13

INTERNAL USERS

Question 14

INTERNAL USERS EXAMPLE

Answer 14

• Managers
• Employees
• Officers
• Internal Auditors

Question 15

focused on gathering cost information that is useful in determining prices.

Answer 15

COST ACCOUNTING

Question 16

key players of COST ACCOUNTING

Answer 16

selling price, cost and profit

Question 17

helps in making decision as to reduction or increase of selling prices

Answer 17

COST ACCOUNTING

Question 18

preparation of tax returns

Answer 18

TAXATION

Question 19

2 tax advices

Answer 19

1. tax avoidance
2. tax evasion

Question 20

: legal way of reducing or eliminating tax dues (tax minimization)

Answer 20

tax avoidance

Question 21

: illegal way of reducing or eliminating tax dues (tax dodging)

Answer 21

tax evasion

Question 22

COST ACCOUNTING AS TO INHERENT MEANING

Answer 22

Cost accounting revolves around cost computation, cost control, and cost reduction.

Question 23

COST ACCOUNTING AS TO APPLICATION

Answer 23

Cost accounting prevents business from incurring cost beyond budget.

Question 23

COST ACCOUNTING AS TO SCOPE

Answer 23

SCOPE IS MUCH NARROW

Question 24

COST ACCOUNTING AS MEASURING GRID

Answer 24

Quantitative only.

Question 25

COST ACCOUNTING AS TO SUBSET

Answer 25

Cost accounting is one of the many sub-sets of management accounting.

Question 26

COST ACCOUNTING AS TO BASIS OF DECISION-MAKING

Answer 26

Historic information is basis of decision making.

Question 27

COST ACCOUNTING AS TO STATUTORY REQUIREMENT

Answer 27

Statutory audit of cost accounting is a requirement in big business houses.

Question 28

COST ACCOUNTING AS TO DEPENDENCE

Answer 28

Cost accounting is not dependent on management accounting to be successfully implemented.

Question 29

COST ACCOUNTING AS TO ITS USE

Answer 29

Management, shareholder, and vendors.

Question 30

MANAGEMENT ACCOUNTING AS TO INHERENT MEANING

Answer 30

Management Accounting helps management make effective decisions about business.

Question 31

MANAGEMENT ACCOUNTING AS TO APPLICATION

Answer 31

Management Accounting offers a big picture of how management should strategize

Question 32

MANAGEMENT ACCOUNTING AS TO SCOPE

Answer 32

Scope is much broader.

Question 33

MANAGEMENT ACCOUNTING AS MEASURING GRID

Answer 33

Both quantitative and qualitative.

Question 34

MANAGEMENT ACCOUNTING AS TO SUB-SET

Answer 34

Management accounting itself is pretty vast.

Question 35

MANAGEMENT ACCOUNTING AS TO BASIS OF DECISION-MAKING

Answer 35

Historic and predictive information are basis of decision making.

Question 36

MANAGEMENT ACCOUNTING AS TO STATUTORY REQUIREMENT

Answer 36

Audit of management accounting has no statutory requirement.

Question 37

MANAGEMENT ACCOUNTING AS TO DEPENDENCE

Answer 37

Management accounting is dependent on both cost and financial accounting for successful implementation.

Question 38

MANAGEMENT ACCOUNTING AS TO ITS USE

Answer 38

Only for management.

Question 39

GROSS PURCHASE FORMULA

Answer 39

Purchased Raw Materials/ Purchases + FREIGHT IN

Question 39

EXAMPLES OF INVENTORIES

Answer 39

- RAW MATERIALS INVENTORY - WORK IN PROCESS INVENTORY - FINISHED GOODS INVENTORY

Question 40

NET PURCHASE FORMULA

Answer 40

GROSS PURCHASE -Purchase Discount & Purchase Returns and Allowances

Question 41

DIRECT MATERIALS USED FORMULA

Answer 41

Direct Materials, beginning + Net Purchases - Direct Materials Ending

Question 42

TOTAL MANUFACTURING COST FORMULA

Answer 42

Direct Material + Direct Labor + Manufacturing Overhead

Question 43

TOTAL GOODS PUT INTO PROCESS FORMULA

Answer 43

Work in Process, Beginning + Total Manufacturing Cost

Question 44

COST OF GOODS MANUFACTURED FORMULA

Answer 44

TGPIP - Work in Process, Ending

Question 45

COST OF GOODS AVAILABLE FOR SALE FORMULA

Answer 45

COST OF GOODS MANUFACTURED + Finished Goods Inventory, Beginning

Question 46

COST OF GOODS SOLD FORMULA

Answer 46

COST OF GOODS AVAILABLE FOR SALE - Finished Goods Inventory, Ending

Question 49

Tax minimization

Answer 49

Tax avoidance

Question 50

Tax dodging

Answer 50

Tax evasion