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ull mba acct 526 > Midterm Material Condensed > Flashcards

Midterm Material Condensed Flashcards

1
Q

Describe a financial accountant.

A
  • provides historical information to external users in accordance with GAAP
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2
Q

Describe a managerial accountant.

A
  • provides detailed financial information and nonfinancial information to internal users for decision making, planning, and control purposes
  • planning, directing, controlling
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3
Q

___ establishes goal and ___ assesses whether goals were achieved.

A

Planning

Control

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4
Q

Describe the hierarchy of typical organization.

A

Board of directors
CEO
VP and CFO
Controller, treasurer, and internal auditor
Managerial accountant, financial accountant, and tax accountant

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5
Q

Describe IMA and ethical decision making.

A

Use resources provided by internal company policies
Four standards: competence, confidentiality, integrity, credibility
Yes, consult an attorney regarding your rights!

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6
Q

Describe ERP systems.

A
  • benefits must outweigh cost of implement
  • recording, sorting, analyzing, and reporting financial information for internal users
  • instant worldwide updates
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7
Q

Describe manufacturing costs vs nonmanufacturing costs.

A
  • manufacturing costs (product costs) are classified as DM, DL or MFOH and expensed when sold
  • nonmanufacturing costs (period costs) are not related to production and are classified as selling costs or general and administrative costs and expensed in the period in which it was incurred
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8
Q

Describe inventory accounts.

A
  • raw material inventory account
  • work-in-process inventory account
  • finished goods inventory account
  • ALL asset accounts on the balance sheet
  • COGS is recorded as an expense when inventory is sold and appears on the income statement, NOT balance sheet!
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9
Q

F. Describe income statement of merchandising company.

A
  • merchandise inventory account
  • use term net purchases
  • include schedule of COGS in income statement
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10
Q

Describe job costing vs process costing.

A
  • job costing used for unique products

- process costing used for batches of identical units

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11
Q

F. Describe material requisition vs job cost sheet.

A
  • material requisition used for transferring raw materials to WIP and identifies the job in which the materials will be used by using a timesheet to track workers hours on each job
  • job cost sheet is used for accumulating manufacturing costs (DM, DL, MFO) for each job and serves as a ledger for the WIP account to determined total job cost
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12
Q

Describe normal costing.

A
  • tracks actual DM and DL costs for each job, but records MFOH estimates using predetermined overhead rate
  • predetermined overhead rate = estimated overhead costs / estimated activity in allocation base
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13
Q

F. Describe predetermined overhead rate.

A
  • used for MFOH
  • relationship between estimated overhead and expected annual operating activity
  • allocation bases: DLhrs, DL costs, and machine hours
  • MFOH is usually not known until after a job cost sheet is completed
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14
Q

Describe manufacturing overhead expense accounts.

A
  • account used for MFOH to accumulate before moving to WIP
  • actual overhead recorded as debit
  • applied/estimated overhead recorded as credit
  • closed to COGS at end of the period
  • MFOH is usually not known until after a job cost sheet is completed
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15
Q

F. Describe job costing system.

A
  • track costs by customer
  • track revenue and profit for each job
  • identify areas of concern by comparing cost estimate before with completed job cost sheet
  • revise for future jobs
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16
Q

Describe four methods used to estimate fixed and variable costs.
What are the two assumptions for using these methods?

A
  • account analysis: determine whether costs are fixed, variable, or mixed
  • high low method: separates variable costs from total costs to determine fixed costs (used when a quick estimate is needed) volume determines high costs
  • scattergraph method: uses historical data to determine cost behavior by plotting all points on a graph and fitting a line through the points
  • regression analysis: statistical calculation to find the lines which best fits the data (costs equation); uses all data points and most often done in excel by Y=f+vX (most accurate cost estimates) to estimate fixed and variable costs

Two assumptions:

  1. The activity level is within the relevant rage
  2. Costs are estimated assuming they are linear
17
Q

F. CM income statement.

A 
Revenue
- Variable costs
= CM
- Fixed costs
= Operating income
18
Q

CVP

A
  • involved finding the break-even and target profit point in units or sales dollars
19
Q

Sensitivity analysis.

A
  • Shows how CVP model will change with changes in any variables
  • Accountants use to analyze impact on the break-even point and target profit, as well
20
Q

Cost structure.

A
  • proportion of fixed and variable costs to total costs
21
Q

Operating leverage.

A
  • level or fixed costs within an organization
  • high operating leverage means companies have relatively high fixed costs and tend to profit from increasing sales and lose more from decreasing sales than a firm with low operating leverage
22
Q

CM per unit of constraint.

A
  • measure of how constrained resources should be utilized
23
Q

Three steps to find target profit before taxes.

A
  1. determine the desired target profit after taxes
  2. convert desired target profit after taxes to target profit before taxes using forumula [target profit after taxes / (1 - tax rate)]
  3. use the target profit before taxes in the appropriate target profit formula to calculate the target profit in units or sales dollars
24
Q

Absorption costing.

A
  • all MFO costs (fixed and variable) are absorbed into inventory until the goods are sold
  • fixed MFO is reported as a product cost
  • selling and administrative costs are period costs
25
Q

Variable costing.

A
  • treats MFO as a period cost (expensed on income statement as incurred)
26
Q

Three rules for comparing variable costing and absorption costing.

A
  1. When units produced equals units sold, profit is the same for both costing approaches
  2. When units produced is greater than units sold, absorption costing yields the highest profit
  3. When units produced is less than units sold, variable costing yields the highest profit
27
Q

F. *___ are costs related to the overall management of an organization which include accounting, HR, legal, executive, and IT

A

General and admin costs

28
Q

*___ are costs incurred to obtain customer orders and provide customers with a finished product which include advertising, sales commission, salaries for marketing and advertising personnel, etc.

A

Selling costs

29
Q

*___ is the use of a predetermined overhead rate rather than actual data to apply overhead to jobs. It averages the costs out over the course of a year.

A

Normal costing

30
Q

F. *___ occurs when actual overhead costs are higher than overhead applied to jobs; MFO has a debit balance at this time. This occurs because fewer costs were applied to jobs than were actually incurred. Often transferred to COGS to correct as a debit.

A

Under-applied overhead

31
Q

F. *___ occurs when actual overhead costs are lower than overhead applied to jobs; MFO has a credit balance at this time. This happens because more costs were applied to jobs than were actually incurred. Often transferred to COGS to correct as a credit.

A

Over-applied overhead

32
Q

*___ records revenues and costs for each job/unique product I.e., custom home, custom furniture, etc.

A

Job costing

33
Q

*___ records revenues and costs for batches of identical units of products, I.e., soft drinks, milk, lumber, paper, etc.

A

Process costing

34
Q

*___ costs which change in total with direct proportion to changes in volume and per unit cost remains constant.

A

Variable

35
Q

*quiz: The range of activity index over which the company expects to operate during the year is the ___.

A

Relevant range

ull mba acct 526 (9 decks)

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