Lesson 2

Question 1

True or false? Manufacturing entities prepare the same financial statements as merchandising or service firms.

Answer 1

True

Question 2

Manufacturing firm will carry at least three different inventories, other industries will normally report one inventory

Answer 2

Current assets for manufacturing system

Question 3

Cost of good sold section reflects, manufactured cost of goods

Answer 3

On the income statement for a manufacturing firm

Question 4

How many inventories do manufacturing companies have on the balance sheet?

Answer 4

Three

Question 5

What are the three inventory accounts on a manufacturing firms balance sheet

Answer 5

Raw materials, work and process inventory, finished good inventory

Question 6

Shows the cost of raw materials on hand

Answer 6

Raw direct materials inventory

Question 7

Shows the cost of applicable to units on which production has started, but is only partially complete

Answer 7

Work in process inventory

Question 8

Shows the cost of completed goods on hand

Answer 8

Finished goods inventory

Question 9

How many categories of inventory does merchandising companies have?

Answer 9

One and it is called merchandise inventory

Question 10

Product costs move through the inventory accounts as the product moves the manufacturing process. Product costs remain on the balance sheet until the unit is sold.

Answer 10

Flow of product costs

Question 11

The what statement for a manufacturer is similar to that of a merchandiser, except for the cost of good sold section

Answer 11

Income statement

Question 12

Partially completed units

Answer 12

Work in process

Question 13

Sum of direct, material costs, direct, labour costs, and manufacturing overhead incurred during the current year

Answer 13

Total manufacturing cost

Question 14

What type of accounting includes the measuring, recording, and reporting of product costs

Answer 14

Cost accounting

Question 15

True or false? Manufacturing or product costs are not integrated within the companies, general ledger

Answer 15

False they are fully integrated

Question 16

What type of system is this? Costs are assigned to each individual job or batch. Requires that each job or batch can easily be identified.

Answer 16

Job order cost system

Question 17

Automotive repair, accounting and law, firm client, work, building a house

Answer 17

Examples of job order cost system

Question 18

What is the objective of job order cost system?

Answer 18

To calculate the cost per job

Question 19

At the end of an accounting. Work in process inventory for those jobs that are not complete. What do you do for finished goods inventory?

Answer 19

Jobs that are complete, and not yet sold

Question 20

True or false? The flow of the manufacturing cost mirrors, the physical flow of inputs as they are converted into finished goods.

Answer 20

True

Question 21

Is this the correct flow of manufacturing costs? All manufacturing costs are assigned to work in process inventory as the costs are incurred. When units are sold, the cost is transferred to cost of good sold. Cost of completed jobs is transferred to finished good inventory.

Answer 21

Nope. Second and third steps swap.

Question 22

Step one. Accumulate all manufacturing costs as incurred. Step two. Assigned costs to each specific job or unit.

Answer 22

Two. Major steps in flow of costs.

Question 23

Are all materials debited or credited to Rob materials inventory when purchased?

Answer 23

Debited

Question 24

True or false? Costs are assigned only as materials are used.

Answer 24

True

Question 25

True or false? Factory labour includes both direct and indirect labour costs.

Answer 25

True

Question 26

Gross earnings or wages. Employer portion of payroll taxes like CPP and EI. Fringe benefit costs like medical insurance, pension are incurred by the employer.

Answer 26

Factory labour costs include

Question 27

True or false factory labour costs are credited to factory labour as incurred

Answer 27

False. They are debited.

Question 28

True or false? Factory labour acts as a clearing account, and should have a full balance at the end of the accounting period

Answer 28

False they should have a zero balance at the end of the accounting period

Question 29

True or false? Manufacturing overhead includes all manufacturing or product costs that are not direct costs. Manufacturing overhead costs are accumulated in the manufacturing overhead account. Manufacturing overhead is a clearing account, and should have a zero balance at the end of the accounting period. Manufacturing overhead costs are assigned to work in process, as work is done on each unit or batch.

Answer 29

True

Question 30

Debits to work in process inventory. Credits to things like raw materials, inventory, factory, labor, manufacturing overhead.

Answer 30

Manufacturing costs are assigned to work in process with

Question 31

Used to record the cost of each specific job. Used to determine the total and unit cost of a completed job. Postings to job cost sheets are made daily. The total of all job cost sheets must balance to work in process inventory.

Answer 31

Job cost sheet