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Managerial Accounting > Midterm Flash Cards > Flashcards

Midterm Flash Cards

From all Quizes + Random Questions added

1
Q

Managerial Accounting involves gathering accounting data primarily for external users

A

False, Why and How?

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2
Q

Managerial Accounting aids management in planning, controlling and making sound business decisions regarding company operations.

A

True, Why and How?

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3
Q

Managerial Accounting can add substantial value to essentially all business majors - regardless of his or her major

A

True, Why and How?

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4
Q

Managerial Accounting is applicable solely to large corporations.

A

False, Why and How?

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5
Q

Financial Accounting provides financial information primarily to external users, but can be useful for internal users as well.

A

True, Why and How?

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6
Q

Managerial Accounting emphasizes relevance, timeliness,precision, and verifiability.

A

False, Why and How?

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7
Q

Financial Accounting focuses primarily on segment operations.

A

False, Why and How?

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8
Q

Management and Leadership essentially mean the same thing.

A

False, Why and How?

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9
Q

Business Ethics is a subordinate concept that can be lightly understood and should be used in both the US and Worldwide economy only when desired (i.e. Competence, Integrity, Credibility).

A

False, Why and How?

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10
Q

Corporate Social Responsibility focuses only on the needs of customers, employees and, shareholders.

A

False, Why and How?

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11
Q

Business Ethics and Integrity have been very highly regarded in US business operations over the past decade.

A

False, Why and How?

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12
Q

The three primary functions of management are - Planning, Controlling, and Decision Making.

A

True, Why and How?

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13
Q

What are the 3 basic classes of manufacturing costs:

A

Direct Materials, Direct Labor and Manufacturing Overhead

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14
Q

A Manufacturing Company President’s salary is part of direct labor.

A

False, Why and How?

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15
Q

The salary of a janitor working in the manufacturing plant is considered a manufacturing overhead cost

A

True, Why and How?

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16
Q

The cost of glue, nuts, and bolts for a manufacturing company are classified as DM.

A

False, Why and How?

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17
Q

Direct materials are product costs

A

True, Why and How?

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18
Q

The salary of a company sales associate is a product cost.

A

False, Why and How?

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19
Q

Non-manufacturing costs are period costs.

A

True, Why and How?

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20
Q

Manufacturing overhead costs are period costs.

A

False, Why and How?

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21
Q

Periods costs are reflected on the balance sheet.

A

False, Why and How?

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22
Q

Product costs are reflected on both the balance sheet and income statement.

A

True, Why and How?

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23
Q

Prime Costs are Product Costs.

A

True, Why and How?

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24
Q

Conversion Costs are Period Costs.

A

False, Why and How?

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25
Q

MO are Prime costs.

A

False, Why and How?

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26
Q

DL are Prime Costs / Are Conversion Costs / Period Costs. (Provide 3 T/F answers).

A

True, True, False

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27
Q

What are the Classes of Costs based on Cost Behavior?

A

Variable, Mixed, Fixed

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28
Q

Variable Costs per unit increases or decreases as activity increases or decreases.

A

False, Why and How?

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29
Q

Fixed cost per unit remains the same as volume increases or decreases.

A

False, Why and How?

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30
Q

In the Mixed Cost formula Y=a+bx, Y=Total Manufacturing Costs, a = Total Fixed Manufacturing Costs, b= Variable Costs per unit, x = volume

A

True, Why and How?

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31
Q

Indirect Costs as MO costs are period costs.

A

False, Why and How?

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32
Q

Direct Costs includes DM, DL and MO.

A

False, Why and How?

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33
Q

The contribution format income statement is primarily used for internal management decision making.

A

True, Why and How?

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34
Q

The fair market valueof an assetis a sunk cost.

A

False, Why and How?

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35
Q

Costs that impact decision making the same way are differential costs.

A

False, Why and How?

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36
Q

Opportunity costs address the benefit given up as a result of incurring a given cost.

A

True, Why and How?

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37
Q

What are Prime Costs?

A

Direct Labor & Direct Materials

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38
Q

What are Product Costs?

A

Direct Materials, Direct Labor and Manufacturing Overhead

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39
Q

What are non manufacturing costs?

A

Administrative + Selling Expenses

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40
Q

What are manufacturing costs?

A

Direct Materials, Direct Labor and Manufacturing Overhead

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41
Q

What are conversion costs?

A

Direct Labor & Manufacturing Overhead

42
Q

What are period costs?

A

Administrative + Selling Expenses

43
Q

Job Order Costing is used in companies that manufacture products to customer specifications.

A

True, Why and How?

44
Q

Job Order Costing is only used in manufacturing companies

A

False, Why and How?

45
Q

Job Order Costing captures all costs in bulk for assignment to jobs.

A

False, Why and How?

46
Q

Direct Materials and Direct Labor are allocated to jobs.

A

False, Why and How?

47
Q

All pending jobs are reflected in the Work In Process account.

A

True, Why and How?

48
Q

The omission of manufacturing overhead cost seriously impairs the determination of total product cost

A

True, Why and How?

49
Q

The job cost sheet is used to capture DM, DL, MO, and total cost per unit for each job.

A

True, Why and How?

50
Q

Manufacturing Overhead costs are recorded on the job cost sheet based on actual costs.

A

False, Why and How?

51
Q

Predetermined Overhead Rate is based on actual manufacturing overhead costs and actual allocation base.

A

False, Why and How?

52
Q

The Allocation Base is the same as the Cost Driver.

A

True, Why and How?

53
Q

Plantwide POHR provides a more accurate allocation of MO than departmental POHRs.

A

False, Why and How?

54
Q

The 4-step process to compute the predetermined overhead rate involves the formula: Y = a + bx.

A

True, Why and How?

55
Q

Total estimated manufacturing costs and total fixed estimated manufacturing costs are the same.

A

False, Why and How?

56
Q

Assigning manufacturing costs to products reasonably ensures profits.

A

False, Why and How?

57
Q

Actual and Estimated MO usually equals, and rarely require account adjustments at year end.

A

False, Why and How?

58
Q

Under-applied MO occurs when actual MO is greater than applied MO.

A

True, Why and How?

59
Q

Over-applied MO results in an overstatement of COGS and an understatement of Net Profit.

A

True, Why and How?

60
Q

The correction of an under-applied MO results in an increase in COGS and a decrease in Net Profit.

A

True, Why and How?

61
Q

What is Overapplied overhead?

A

Overapplied means that we assumed our expenses were higher, than the actual. Which means we understated net income

62
Q

What is Underapplied overhead?

A

Underapplied means we assumed our expenses were lower, than the actual. Which means we overstated net income

63
Q

How does one fix a overapplied or under applied adjustment?

A

You can either do a fix by crediting crediting COGS, and Debiting MO , or you can split it by WIP, Finished Goods and Cogs , MO

64
Q

What is a sunk cost?

A

Cost that has already been incurred and cannot be changed

65
Q

What is a opportunity cost?

A

Loss of benefit from another alternative if one alternative is chosen

66
Q

Work in process consists of units of production that are partially complete and will require further work before they are ready for sale to customers.

A

True, Why and How?

67
Q

Finished goods consist of completed units of product that have been sold to customers.

A

False, Why and How?

68
Q

Raw materials immediately after purchase goes straight to Work in Process inventory

A

False, Why and How?

69
Q

Selling and Administrative expenses first go through the manufacturing overhead account and then to work in process.

A

False, Why and How?

70
Q

Selling and Administrative expenses are reflected on the income statement only.

A

True, Why and How?

71
Q

While direct materials go to WIP as needed for a particular job, indirect materials for the same job go to manufacturing overhead as incurred.

A

True, Why and How?

72
Q

When raw materials are purchased on credit, the company’s raw materials account is debited and their accounts payable account is credited.

A

True, Why and How?

73
Q

As direct labor is incurred , the work in process account is debited and wages payable account is credited.

A

True, Why and How?

74
Q

As indirect labor is incurred, the work in process account is also debited and wages payable account is credited.

A

False, Why and How?

75
Q

As other manufacturing overhead costs are incurred (i.e. insurance premiums, rents), the manufacturing overhead account is debited and the work in process account is credited

A

False, Why and How?

76
Q

When MO is applied, the MO account is credited and WIP is debited.

A

True, Why and How?

77
Q

When good are completed, WIP is credited and the Finished Goods Account is debited.

A

True, Why and How?

78
Q

When goods are sold, two journal entries are required - one for recording the sale, and the other for recording the cost of goods sold.

A

True, Why and How?

79
Q

When recording the cost of goods sold, the company will debit the Finished Goods account and credit the Cost of Goods Sold account.

A

False, Why and How?

80
Q

Estimated MO will almost never equal Actual MO.

A

True, Why and How?

81
Q

When actual MO is greater than estimated MO, the company has overapplied MO.

A

False, Why and How?

82
Q

An underapplied MO situation results in an overstatement of net income.

A

True, Why and How?

83
Q

The correction of an overapplied MO situation results a decrease to cost of goods sold and a decrease to net income.

A

False, Why and How?

84
Q

Overapplied or Underapplied overhead can be closed out directly to cost of goods sold or proportionately to Work In Process, Finished Goods and Cost of Goods Sold.

A

True, Why and How?

85
Q

What is POHR?

A

Predetermined OverHead Rate

86
Q

Process Costing is used by companies that make customized products.

A

False, Why and How?

87
Q

Process Costing has some similarities with Job Order Costing.

A

True, Why and How?

88
Q

Both Process and Job Order Costing seek to determine the proper product unit cost.

A

True, Why and How?

89
Q

Process Costing accumulates costs based on jobs completed.

A

False, Why and How?

90
Q

MO is an important cost element of Process Costing.

A

True, Why and How?

91
Q

What is EUP?

A

Equivalent Units of Production

92
Q

EU is a vitally important concept in determining units produced and unit costs in Process Costing.

A

True, Why and How?

93
Q

EUP computed under the Weghted-Average Method requires the use of beginning inventory and units added to production for the period.

A

False, Why and How?

94
Q

EU computed under the Weighted-Average Method focuses on units completed and transferred, and beginning inventory.

A

False, Why and How?

95
Q

Total EUs require the determination of units completed and transferred + the percentage of DM and Conversion in ending inventory.

A

True, Why and How?

96
Q

What is a Mixed Cost?

A

A cost behavior. Can have both variable and fixed elements. to determine mixed cost you would use the Y = a + bX formula

97
Q

What is a variable Cost?

A

Total variable costs varies when there are changes to activity , however if its by unit, its constant. They are cost behaviors

98
Q

What is a Fixed Cost?

A

Another cost behavior. In total, it remains the same, and per unit, it changes based off of level of activity

99
Q

What is GAAP

A

Generally Accepted Accounting Principles

100
Q

What is IFRS

A

International Financial Reporting Standards

101
Q

What are differential costs

A

future costs between two alternative choices

102
Q

What is the meaning of each of these letters in the formula Y = A + BX

A

Y = Total mixed Cost, A = Total fixed cost, B = Variable cost per UNIT of activity, and X = level of activity

Managerial Accounting (3 decks)

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